All Forum Posts by: Jack Edgar jr

That's a challenge, more info needed. Inc. How much $$talking about, their plans to have incoming in, lease term, and their payment history with other creditors.  I'd treat them just like any other prospect and run the full application on them and compare to other prospects. If ur challenged in getting this rented you might also want to evaluate your marketing strategy. 

Last thought, if they inherited money and they had none before you may run into a shortage sooner rather than later. Character goes a long way. Push comes to shove, rent out for 18 months (to get out of winter) and get them to pay in advance. 

Why not start marketing the property for rent now or at least by Feb. You can start feeling out what kind of tenants are interested and see if your pricing is in line. The beauty of owner occupied is that u can show when u want. 

Regarding management: see what it will cost to manage, inc all that's included. Now see if this is worth your time to do. Say u make $40/hr at work, now add up the time you would need to manage each month and divide the cost of management. This should give you a good sense. Other formulas are out there. Gotta go. Wife needs me. 

Are we talking about your client as the owner of a building you are managing or the tenant? In either case, I believe transparency is warranted and maintence receipts would help in understanding what is being done to the building to keep it staying maintained and healthy. Especially, if these maintence costs are coming out of the owners pocket at the end of the day as an extra cost.  With that said, agreements setup before hand should spell out different expense allowances so that you don't have to get approval on every little thing. If it's the tenant paying, they should also have a similar picture of the costs if paying for them outside of their base rent. Keep in mind, I'm assuming we are dealing with small residential. CAM budgets are something to consider, that are used in larger complexes. However, yearly reconciliation is still required with actual receipts as back up if audited by the stakeholders.  Just some thoughts from a landlords perspective. 

trulia and zillow are great sources to start. U.S. census bureau has tons of stats as well. Just a couple thoughts to start ur search. If you are on MLS that has great resources too.

Camille,

Depending on how you are going to find your first deals, I'd suggest reaching out to area brokers to get a sense of what they are seeing in the market too. Challenge is they might not take you too serious until you have a solid plan to discuss.  On that note, focusing on 8+ units I believe requires some management experience, even some lenders on 2-4 unit require mgt experience. I also found Rich Dad Advisors Real Estate Investing by Ken McElroy book worth the read or listen in helping with strategy. 

Jack

Hi Brian,

From one newbie to BP to another, welcome. We are just SE of you in Irving Park. Look forward to hearing what you looking to get into.

Best,

Jack

fyi, before going too far down the rabbit hole you will need something in writing for underwriting. With that said, you would want to occupy the lowest rentable space so that your numbers work out the way they should. 

we ran into this in one of our last deals.

1. See if leases have a kick out clause if no leases expire soon (I believe fha occupancy is 60days after closing). 

2. If not, see if one of the tenants would sign an addendum to the lease to leave within 60 days after closing (double check with  fha occupancy  req.) 

In tandem with this addendum, one may have to offer incentives to agree to leave early. 

3. Can u Roomate with one of the tenants until lease is up. Then u would just need to add yourself too the lease and pay a portion of the rental as an incentive. 

These are examples are case studies used, and should be checked with your lender for proper approval. I'm am not a lender. 

Jovim,

It sounds like you have narrowed your choices down to a couple investment options. Now comes the point of understanding your needs and expectations to decide what works best for you. Both options are great but from my experience it comes down to where your at in your life, time, money, comittement. 

Example: when buying our first investment property, we had to ask ourselves several questions to ultimately buy, renovate, rent out, and hold. Some of the key elements to determining our stategy included: the type of property we wanted to buy, amount of time commitment we had to work on the investment, level of risk involved and amount of money we had at stake ie return on investment expectations compared to other options (risk vs reward), skill set including knowledge of market as well as comfort with the team we had assembled, and return seen in both scenarios. 

This is just a board view, and apologize for not being more detailed. (Typing on a phone that keeps freezing up) I hope this helps. Pm me if you would like to discuss the 2flat purchase cashflow project. 

Best,

Jack

Seller carry may be an option for the 25% limit overage. Very very rare case.