All Forum Posts by: Jacob Haskins

Hi, Brad.  Best of luck on your first deal!  I would recommend networking and using the "D" method as you have stated below. Below are a few thought to why I think this might be best:

A. You can absolutely invest in syndication, but if you want to hand it down to the kids/grandkids, this will look a little different because you won't own/control the actual asset.

B + C. Everybody wants a turnkey property that has good cash flow and equity appreciation.  You could do this yes, but it is harder to scale (in my opinion).  I also don't always trust the face value of the analytics for turnkey properties, make sure you run the numbers yourself!

D. Building a team in the long run is so important.  Not to mention if you are able to "manually" find a property and build a team around you to manage your portfolio and grow.  Also the best deals will be the ones you go out and find yourself whether it be wholesalers, off market, or other.  In addition, I always trust my own analysis anyways compared to the numbers of what some "turn key" properties may boast.   

In general, real estate can be as passive or as manual as you would like.  I personally like to be hands-on in my investments and learn the ropes through analytics, property management, and deal finding.  This is just my 2 cents!

 @Jeff Copeland This is exactly what I needed to hear! I would love an estoppel if you could send it to me, I will reach out.  I will be doing a final walk through tomorrow before closing, so this would be a good time to get the tenants to fill this out!  If not, we will likely delay until Monday or Tuesday.

Hello BP community!

Tomorrow I am slated to close on a duplex, and I will inherit tenants.  The seller has stated they do not have any paper leases, as everything is verbal.  The tenants are long-term (about 10+ years), and he just drives to the property and collects a rent check every month.  The seller has never raised rents in the 10+ years he has owned it.  I know what they currently pay, but I know nothing else in regards to security deposit or anything.  The closing company was supposed to receive said "leases" so they could prorate the rent and credit the security deposits to me at closing, but they (of course) call me the day before and gave me this news.

I will be asking tenant A to move out because the unit is trashed, and it will need to be rehabbed/updated so I can get market rent (around $1250).  As far as tenant B, I was just planning to get them to fill out an application and sign a month-to-month lease after closing.  The plan is to increase their rent from $750 to around $1100 (if their application looks good), which would still be below market rent but fair since their unit is in good shape, just outdated.  The thought behind doing Tenant B in a month-to-month is that I will not be locked in to having that other unit below market rent, and I can have flexibility around that unit if we needed them to get out for renovations as well.  I know Tenant B might not agree to the new lease (which would be fine) as we have built in a "holding period" into our analysis if they decide to leave.  

I want to hear from the BP community around this situation. Is it necessary to get an estoppel since I am planning to get Tenant A out, and then asking Tenant B to sign a lease?  Should I fear that the tenants may "squat" if I do not get a new lease/estoppel?

@Giacomo Gesualdo

I definitely am not discriminating, but that is a good point. I have though of that, but as of right now, I don’t have another application in my hand. I’m really hoping for one soon, so I can use that to my advantage.

Thanks for your response.

@Theresa Harris thank you for your response! My gut is definitely telling me no, but I am trying to tactfully deny them in a way that doesn’t contradict the “rules” I established for applicants. I fear backlash may ensue because they could argue “we do meet the 3x rule as you had stated.”

I realize the laws are different in every state (we are in AR), and I am unsure of all of the laws around denying an applicant in my state. Is not having enough cash/reserves good enough reason?

Hello BP Community!  I am looking for some insight.

We are getting ready to rent out our first unit to long term tenants! We have listed a 2/2 home for $1200, and today we set a physical appointment with some interested tenants and they filled out an application.  They seemed to be a great fit and they were very interested and want to move in next week.  Well, when I saw the application come through (we have the application set up online through Apartments.com), something stood out to me like a red flag.  For all applicants to be considered, we were up front with them about the requirements. The requirements are:  3x the monthly rent in gross income, 620+ credit score, and clean background check.  Also, to get the keys they would have to pay 1st months rent and security deposit.

So, on their application, they had great credit (near 720) and passed the background check.  However, I am a little concerned on the income.  If you add the couples income together, they barely scrape by the 3x rule.  However, they shared bank statements to prove their income and cash balance, and that is what alarms me -- the applicants have almost no available cash!  They shared screenshots of bank statements since Jan 2022 and they typically have less than $200 at the end of each statement.  The most recent statement (April) has barely enough money to cover 1 month of rent. They also do not even rent currently, they actually "split" a mortgage with a family member which is less than $300 per month for their part.

Do you all have any advice or feedback?  If I had not seen their bank statements, and only seen or been given their paystubs, then they would technically pass the "3x rule". 

@Vasilii Baban

Have you looked at a SFH with mother-in-law suite? Many investors in my area are converting SFH homes with 2 car garages into mother-in-law quarters. Some choose to then reside in the addition and then Airbnb the main living area. This is also a great way to add equity to a home and gain off of the appreciation, while taking advantage of the higher cash-flow short term rental.

I personally bought a SFH that needed a LOT of work. I fixed it up mostly by myself, and then I'll use the equity as down payment on my next investment with a HELOC. This was a great way for me to add value to the home and gain on the appreciation.

@Gabe Christiansen

Gabe, this is a great idea and I just completed a deal myself on my first investment in Bentonville. I was able to get a first time home buyers loan with was 3% down CONV at a great rate! My purchase was a SFH that I rehabbed myself and plan to move out and rent when my 12 month anniversary rolls around. My plan is to cash flow around $700 when I move out because I got such a good loan!

I think you might have a hard time finding a lender letting you put 3% down CONV on a multi family, however I know of some that will let you do a low down FHA loan which could be a great alternative.

My recommendation would be to try and find a SFH with a mother in law or converted barge, and secure it with a conventional loan.

Try calling Conrad at Iberia Bank Mortgage in Fayetteville, that’s who I used. Feel free to reach out, I would love to connect with another local investor.

@Jaron Walling I’ve done some research, and I believe my home would rent for $1350-$1400.

I currently have PMI, but I believe that my bank will let me eliminate mortgage insurance if I pay for another appraisal (hopefully). This will make my mortgage payment more like $550 per month, so I am aiming for about $700 in monthly cash flow. Of course I plan to use this cash flow to build up reserves first (probably $5k).