All Forum Posts by: Lorraine Pennington

I would raise the rent and go month to month. Request a 60 day notice.  In order to cover your own financial interests ... I would be clear with the tenant that the uncertainty puts you in a bad position. BUT you want to help support them and their business as much as you can and so you will be looking for a long-term tenant to take their place and if so, you will be exercising your own 60 day notice to vacate. So keep the lines of communication open on both sides. 

But I don't see any reason to kick them out. They pay the rent and you don't have another tenant yet. I would move forward in the spirit of "helping" instead of some of the *hole options! Who knows ... you may have business dealings with them again or with someone they know. World is a small place sometimes! Good luck. 

I do the same as Steve mentioned. The units I've purchased all needed some repairs and so I highlighted on my welcome letter that we would be making these upgrades in the upcoming months to ensure they could fully enjoy their homes, etc, etc. 

I also do a annual letter to all tenants basically wishing them a new year and thanking them for taking the property. I also state that our property managers will be reaching out to them in the following weeks to set up times to replace batteries in the smoke detectors and other basic maintenance. It's basically is my way to get an annual walk through of each unit. 

My experience with private lenders is that their return is simply interest on the money loaned. No reason to give him any more unless he is going to take an active part on the rehab. 

You could do a point over current rates and set it to a minimum of 6 months with a balloon payment at end. Then he knows how much he is making on his money and hopefully it will be worth his while.  

Hi Tina, 

I live nearby. As another member said ... there isn't much to see if you're looking to flip in the long beach market. You'd have to be experienced since the margins are slim ... no room for newbie error. But open up your search to other CA markets and you will find something. Plus you will start learning and educating yourself even more as you wait for the right opportunity. 

I attend a monthly FIBI meet up in Long Beach. I've gone to 2 so far and its been informing and the networking has been enjoyable. I'm attending on March 26th if you're around. Look it up on Meetup.com. I'm not affiliated with FIBI in any way. 

Best of luck to you. 

Lorraine

I would suggest you run the numbers as if you were NOT living on the property. If you can collect enough rents to cover all operating expenses + keep an accural account for bigger repairs down the road AND still have cash flow left over ... then buy it. But I would run the numbers in the worst case scenario that you had to leave the area for whatever reason. 

If not, then you are buying as a personal residence with no investment strategy side. Which is fine too. Good luck to you and let us know what you decide! 

By analyzing properties and putting them on spreadsheets to show him the numbers. All my numbers were conservative with built in buffers to calm his fears of "what-if" scenarios. Now years after and 6 units later ... the properties are blowing away our conservative numbers and over performing. It is nice to under promise and over deliver ... and now I have the green flag to kick up the momentum! :) 

Thanks @Jonathan Wilks ! I agree. I suggested they stay put for another year or so to save more cash and put themselves in a better position to hold onto the primary home. I wonder what will happen to their interest rate on the new home when they have leveraged 70% of their primary. Plus they'd have to look at the monthly payment on the new home + the refinanced portion and whether that would be affordable. Really appreciate your chiming in ~ thank you!

Hi All,

I am close friends with a couple and I would love to see them create an asset by holding on to their primary home. I've brainstormed ideas with her about various financing options ... but I'm afraid I simply don't have the experience to provide any real solutions. I am hoping that someone may have a great idea out there! Here is the scenario ...

Primary Home ~ Value $500k with approx. $175k in equity. She owns a hair salon business (2 yrs old). First year broke even, 2nd year showed net profit of $40k. She pays herself a salary of ~ $75k/year. He is employed by a company also showing $75k/yr.

They are looking to upgrade to a larger home and need the down payment. Estimate cost of new home is $800k and will require 20% down. They have $30k in savings so they are $130k short.

Couldn't they loan the $130k against their primary home? And/or against profits of the business? In your experience, would the bank mortgaging the new home frown upon this?

Their existing home is in a good rental market in CA and they would be in the positive immediately. I want everyone to have success in owning rental property so really appreciate any creative ideas you may have!!

Many thanks in advance!

Lorraine

Welcome @Tom G. 

I own units in my home state NM, but am now too starting to look in California. I've got a list of cities that I've been tracking here in CA that show promise ... and which other BP members have reported decent cash flows. I've been focusing on getting through some real estate courses so I haven't done my due diligence on them yet. You can take a look yourself though ... San Jose, Victorville, San Bernardino and Perris. I have a family friend that has been investing out of state in Portland Oregon so that may be an out of state lead. PM me if you need more info. Best of luck to you and welcome!

Welcome @Andrea Gault ! 

I'm in northern orange county and I agree with the other posters ... meet ups are a great way to network and gain info. Welcome to the site. :)