All Forum Posts by: Anna Laud

@Josiah Horn

Hi Josiah! 

Congrats first of all on the first step in your REI journey = )

To answer your question about getting an idea of rent comps- this is no different than someone putting a house up for sale either FSBO or with an agent that has no intent on moving and plans on using the buyer interest as a gauge in terms of it being the right time to sell/asking price.

The reality of it however is that it just doesn't seem to make much sense to do now. If you're not planning on moving out for over a year, you're not really getting accurate rent comps. Do you really need to know right now how much rent you could get in other words to be able to go back and say, "Well this time 1 or 2 years ago I could have rented it out for x amount"? I don't really see the point in that maybe as much in useful purpose/information. 

You can get a better idea of rent base in percentages from current rent comps to move forward with in terms of how much you should invest in rehab/updating by an area search. Generally speaking 1% area is just that, a 1% area. A 1.5% (these are all monthly rental yields) are just that, 1.5% areas. Meaning it makes more sense to look at what few SFR are for rent in your area, and see what their fair market value is now as it compares directly with how much they are renting for.

So let's say (and this is not market specific to your location) most home sin the area have a avg fair market value of $130K and rent for $1300/mo- then you should probably keep your rehab/updating costs (along with purchase price) in mind moving forward to plan on getting about 1% of the area avg. In other words, don't overprice yourself in rehab/updates thinking you'll get more rent on the back end. 

There are a couple of ways to go about this without going through the process of putting up an ad- which you wouldn't really want to do as you're going to have more drive by traffic, calls, texts, etc than you'd probably like. 

- Connect with an agent in your area and ask them to run some rent comps for you so you have an idea of what the area average is in terms of %. I would be transparent and say you're simply asking for area averages now and that you're not ready to list a rental just yet. In most cases, they want an investor as a client anyway and this is simply another way for them to develop an additional professional relationship for future business.  

- Use a tool like rentometer, but be sure to select the option of SFR as apartment rates will drive your comps down some. Don't discount apartment rates altogether however as you need this information to get an idea of a realistic tenant pool. By this I mean if the average income for the area would mainly support rental rates of apartments, and the nearest SFR rental is miles away, you're going to likely need to average these out rather than go with the comps from the SFR rental miles away by itself. https://www.rentometer.com/

- Use Zillow to look at rent comps as well and it should pull up not only current rental listings, but currently rented properties- just be sure to verify that you're looking at similar properties

- Another tool to further cross reference avg area rents will be propstream. You can find an address that is nearby and already a 3/2 and under 'details' the average area rents will come up. https://www.propstream.com/

In a nutshell, there are a few more effective ways to go about getting an area average to work with now in rehab/update budget projections than an address specific projection that would be outdated data when it came time for you to use it it seems. 

Hope this helps some! 

@Hannah Stern

You bet and happy to try and help with this situation = )

@Hannah Stern

Hi Hannah! 

I think it comes down to how you're looking at it maybe and while you attached to the property, maybe thinking along the lines of what your mother would want you to do with it as well. If she was savvy enough to invest and house hack before it was the cool thing to do- she sounds pretty visionary in her planning. I would make a pretty safe bet she realized what she was doing and making an investment for the long run here, otherwise she wouldn't have maybe put so much into it. 

With that in mind, it sounds like maybe she would see the financial benefit to her child be able to retire sooner and enjoy the quality life and stability that retirement can bring. Maybe it's more moving 'with mom' and your memoires than 'saying goodbye to' if that makes sense. 

It can be really helpful to think of the home/property as having a new chapter in its lifetime and your time there is simply over with and beginning somewhere else.  Here's the personal aspect of it; selling a home that not only my father lived in, but spent his final days in and knowing that he would have wanted me to do this very thing to reinvest again. He would have told me I couldn't save it for good (the property) because in his words, "this is as good as it gets kid" as in this very day to be had, not those days of the past -not to hold on when there was a financial gain possible. He was also very savvy in real estate as it sounds like your mother was. 

Here's another personal story and time of separation from a loved home- my grandparent's farm house. This was a situation where so many family get togethers had transpired and was a 'sanctuary' for not only my grandparent's children, but grandchildren, cousins etc. No one wanted to sell it and see it slip from the family's grasp emotionally, but it didn't make sense to keep it on paper. They had all moved at least two hours away, in some cases more and no one would have been able to transfer jobs to live there, making it a weekend place at most (long before Airbnb days) so it was sold and given new life in a family that has lived there from purchase over 20 years ago and it's new chapter began. 

If it makes sense on paper, it doesn't make you heartless to sell it, but the opposite in some ways- being grateful and filling each day with gratitude for the opportunity that your mother gave to you in retiring early. Can you do more in this as well to generate even further memories to honor her - maybe there is a women's shelter or something that you can teach other women about your mother's story and explain that in time, with proper employment, they too could be like your mom and house hack their way into their very own home someday? Something that would keep your memories alive from your youth and this property- making her even more proud of your sound financial decision in other words rather than holding onto something beyond your time to. 

Look at this apartment building you're maybe buying just the same; it may not be your childhood home, but it could be someone's and there are so many more beautiful stories yet to come, all from the legacy your mother created. 

I know it's difficult, but hope this helps some! 

@Joy Allen

Hi Joy!

While I'm not an area expert I can give you maybe more MLS description wording here that could increase traffic possibly- based on the best version you have, No.2.

Low maintenance layout loft, conveniently located in Nobe, one of Emeryville's most desired neighborhoods. Nestled inside of an architectural award-winning building, and just minutes from the Bridge and steps from the Emery-Go-Round. A 5-minute walk in any direction offers great restaurants, unique shops, and tons of atmosphere. With a walk score of 92 and a bike score of 85, the quality of life here is the best in the East Bay!

This corner loft is one-of-a-kind. Great natural light and quiet, it is also the only loft in the building with a private outdoor living area to grill, entertain, or just relax. The loft’s entrance is off the beautiful, planted outdoor courtyard, truly an urban oasis for relaxing and getting away while never leaving home. Privacy is key to this loft, yet it offers the opportunity for a community feel in alternate shared spaces- be as private or social as you desire! 

Five-star Mujiri Sushi is on the ground floor of the building and award-winning Novel brew is across the street. Learn to cook at Kitchen on Fire or check out the local art scene at Compound Art Gallery – entertainment within in walking distance is a huge bonus here .

The open floorplan offers an abundant amount of natural lighting, while also making cleaning and daily maintenance a breeze. This is a unique opportunity to have a derisible open layout and retreat in privacy, while still being located in the heart of it all!  

Check out this Nobe gem during the open house on Saturday and Sunday.

* If your agent is suggesting however to lower the price by $100K, that's pretty significant it seems and worth evaluating. It makes me wonder how the original asking price was determined. Maybe this is more if an area/market specific thing however and dropping by this much is more the norm in your location as purchase price points are higher. The main reason I'm questioning this is the agent will stand to lose more of the % based commission, so it's a big number (at least here in the Midwest!) to drop by. 

If you're truly not able to sell it at this time, perhaps the consideration of what it would look like to do some structural changes for ARV outcome needs done. If it cost you $50K to add some separation walls etc, would it then sell for more in other words- your agent should be able to help you determine this.

I did note that there was nothing mentioned in your MLS description of it being a place for children- even if someone had just one child and the condo would work for them just fine. Maybe this isn't a family friendly area as much and that's why. However, if it is, as a mother I would not have guessed this from the listing as a potential out of state buyer. If there's anything to include that would extend your buyer pool (maybe xyz private school x amount of distance away, etc) I would consider including this.

Hope that helps some and good luck! 

@John Jackson Jr

You bet! Happy to help and offer some input = ) 

@John Jackson Jr

Hi John! 

It seems like this is pretty situational based most of the time and the reason behind it. During COVID moratorium periods it was not so unheard of to accept partial payments - this is what tenants were supposed to be doing if at all possible to avoid nonpayment all together.  Evictions for nonpayment were virtually halted at this time anyway, so a partial was better than nothing it seemed in most cases. 

In most every other case however it seems a dangerous precedent to begin - this month a partial payment, next month or so a missing payment to be paid later altogether and it can be a bit of a mess to backtrack and get the positioning back as a 'serious' landlord in terms of rent again. Often it falls into , "Oh he/she (landlord) is pretty relaxed and won't mind if I'm late this month- they took a partial payment last month and it was no big deal". The classic children's book "If you give a Mouse a Cookie" can offer the best insight on this (kidding...kind of) 

Once this road begins that's when other things can happen as well and turn into  a game of he said she said. We've had tenants offer things like "Oh, you're here for the rent- yeah we don't have that at the moment but here's some fresh (blank) we've just made, you want some?" Well there you go, you're instantly dealing with someone who can know the ins and outs of renting better than a landlord - technically this can fall under a barter system and turns into "Nope- I made them x,y,z and we were square on rent last month" - never accept anything (and if you're dealing with certain tenants they will try to give you just about anything they can in being 'nice'- nope all for a reason haha) but funds at any time would be my advice and the full amount due. 

It's really hard when you see someone struggling at times to not accept a partial payment but it seems 9 times out of 10 never a good can to open as it most often leads to other issues down the line. Once you start derailing from contract terms, it can be very difficult to go back. 

Hope that helps!

@Andrea Rivera

Hi Andrea! 

I think a couple of different things here will come into play maybe. 

First of all, the live in care giver is an adult that will be residing in the property as well, so it's likely that you would want to screen them just as you're doing with the tenant. - I'm assuming here this isn't a situation where the live in care giver is a niece or nephew that's like 16 years old and taking care of uncle/aunt in exchange for being in a better school district etc. 

Moving forward with this in mind it might be worth determining if this is a live in care giver that is simply an individual who has decided to undertake this career path that needs fully screened just as any other tenant- or has this person been hired through an agency, where screening ahs already transpired? If an agency hire, you might be able to simply contact the agency as a reference and one call saving you the small screening fee/legwork. 

If this prospective tenant and caregiver have been together awhile, it's likely you would be able to contact previous landlord's as well, simply as part of the background check process. 

I would advise on being clear it is to be one live in caregiver and the prospective tenant isn't meaning a live in care giver at all times that would rotate out. Not that that's an issue at all, but I can say from personal experience with my father that someone may need 24hr care on a live in basis, but these providers may rotate out every couple of days. - usually agency hires at this point.

If it's a case of rotating caregivers, I would probably go with the agency screening of them - staffing changes can occur often as these are demanding jobs in some cases, but they usually screen employees thoroughly. 

If it's a case of one caregiver, full time I would either proceed with the agency's screening them alone. 

If this is simply an individual that's not affiliated with an agency, I would screen them just as I would anyone else and in every case try to reach out to previous landlords. 

Hope this helps and usually these agencies are very forthcoming with information and trying to help as it's in the best interest of their clients!  

@Bhushan Walde

You bet = ) Happy to try and help answer any further questions that come up

@Bhushan Walde

Hi Bhushan! 

It seems like one of the first things you need to do is determine some goals and have a more set criteria in mind that would allow you to make some clearly outlined plans/steps. 

1. I think it might pay to have a goal in mind that is more number based than emotional and making sure the numbers are the driving force apart from the desire to simply own multifamily alone. If you have a clear picture of COC returns, cap rates, etc- you can reverse engineer that and see how to get there easily.

2. Having specific numbers in mind will help you determine if you're  in need of assistance with a more traditional loan product or if you're looking into a commercial loan product. In other words, are you speaking of acquiring a duplex or two, or are you thinking 4+ units to reach your goals faster?  

3. Ideally, before you meet with a lender you'll have a clear picture of personal finances and how much you'll have to put down as well - this may take you from thinking you're not qualified for a commercial loan or (obviously depending on other factors, DTI, credit, etc.) to speaking with a lender and realizing you are able to obtain a commercial loan if that's the goal in multifamily.

4. These properties needing work in Austin should probably be looked at in a few different ways; 

    4 A. 'Too much work'- indicates you're not really looking at being involved with too much rehab work, which is fine but needs paired with realistic market availability so you may need to expand your search outside of Austin.

    4B.  If you're expanding your search outside of Austin, which areas will these include (either still in TX or outside of TX) that will  keep you more in line with what seems to be the goal of more rent ready with affordable purchase price? 

    4C. How comfortable are you in looking at areas outside of Austin to achieve your goals or how realistic is it for you to do? Meaning are you okay with having a multifamily an hour or so away from Austin that's more affordable or are you comfortable with an out of state market that's simply more affordable? 

    4D. If you're even considering the possibility of an out of state deal, get familiar with things like out of state non owner occupied tax rates (for things like a duplex), commercial tax rates if that will apply to you, landlord friendly legislation, rent control caps if they apply etc. 

5. "Homework"; 

-Define financial objectives/goals that are numbers based 

- Gather realistic personal financial information and what you think you can afford and cross reference with goals as well as an expanded search of various markets both outside of Austin and out of state to research availability - pinpoint locations in state/out of state (Education phase)

- meet with lenders, either commercial or otherwise to see what you indeed qualify for once you've narrowed down property types and locations (Education phase)  

- Start interviewing PM's if you're looking outside of your current investing area and will not serve as your own PM (Education phase)

- Get with an agent in your desired area and for your desired property type and start looking at deals (Shopping phase) 

- submit offers/LOI armed with your information from Education phase & Shopping phase (Transaction phase)

This is the breakdown that can be helpful as an outlined plan of action/phases for some of the out of state investors clients I have, but should work for you to start with in TX as well. Overall, once you've got goals in mind and know how much you can afford it will be easier to find deals based on areas you can afford to be in or not that should match your financial goals.

Hope this helps! 

@Patrick Davenport

Hi Patrick! 

Typically it's more difficult to purchase through an LLC if your LLC isn't fully cash funded as you're going through the process of getting the finances of the LLC squared away. This usually means lenders are looking for a credit history of the LLC, etc. which if it's brand new is going to often run into the stumbling block of 'lack of credit history'.

You can buy the property in your name and transfer it, but you would maybe need to be careful of the loan product terms specifically as in some cases the lender might enforce a 'due on sales' clause. I don't typically find that a lot of lenders recommend using personal income, credit etc. to 'co-sign' too for the LLC loan as it can defeat the purpose of keeping personal finances apart from those of the LLC- the exception here usually being the funding. What I mean by this is if you currently own a home you could cash out refinance for example and use those funds to fund the LLC as a cash buying entity, or simply have the cash reserves to fund the LLC from the start. Usually, apart from acquisition, there shouldn't be any commingling of personal and LLC funds though. So, if you did buy in your name and then transferred, you would need to make sure that this was in line with the terms of your loan product it seems.

One option to maybe consider is the possibility of purchasing in your name (if financing through the LLC isn't doable right now with a traditional loan product and keeping yourself fully separated) and obtaining an umbrella policy - some investors do this and skip the LLC altogether, others use this in combination with LLC's. While it won't offer the separation of assets an LLC will and other LLC benefits of protection, in and of itself is more protection than simply buying in your name alone, being the co-signer of your LLC, or running into possible issues with the enforcement of a 'due on sale' clause if you transfer.

You could speak with some insurance providers in your area about how this would work, what it would cost/cover, and see if it might be a good fit for you. Another option is to get with a local REIA in your area and simply ask around to see if others are doing this, who they have used if so, or ask them about lenders they've worked with and had success in transferring real property from their personal name to that of an LLC.

Hope this helps some and gives you a little bit of an idea on how to maybe proceed! You may have other investors in your area chime in here as well as lenders that will give some profession specific advice, but this is what I can offer/suggest as an investor and real estate broker in the Hoosier state = )