All Forum Posts by: James Conaway

Thank you for the reply. I have investigated a few of these types of places, Star Dust and Builders outlet. They do have deals, but its like trying to find a needle in a haystack for what you want. You sacrifice time for cash savings.

I am pretty sure all the contractors are not doing to Home Depots, Lowes or these goodwill type places, where are they going to get all their materials?

I purchased a 4plex that needs significant renovation. I am subbing out some of the work and doing other pieces myself.

I need to buy materials and wonder where do general contractors get their supplies? I typically go to Home Depot or Lowes, but would like to not pay retail for my materials if possible.

I am located in Phoenix, AZ.

Update on this, I decided against CC Financing and settled on a Hard money lender for the partial financing of the purchase. I am going to use credit cards for repairs and didn't want to have the partial purchase financing and repairs just on credit cards, too much CC debt would impact my FICO. Using the credit cards for the purchase financing also had fee costs associated with it.

The issue with the HM lender was the fees and high interest. It turned out that I could qualify for a personal loan from my bank which didn't have any fees and the interest rate was reasonable and significantly lower than the HM lender. I was surprised how much you can get with a personal loan, I was able to get at $60k loan, apparently there isn't a limit it's entirely based on your income, credit history and DTI.

The personal loan is for 60 months, but I really only need it for 6-8 months.

Between myself and my wife we have about $200k in credit card credit. Our credit card debt is about $2k right now.

I have been building up credit lines for a long time in anticipation of being able to do something with this capital opportunity.

I would like to finance purchasing a property using credit cards for as a short term interim way to quickly close on a deal. The property price would be a maximum of $70-80k. The property needs some renovation and wouldn't qualify for a traditional loan.

The plan would include repairing the property up to the point I can do a cash out refinance of up to 75-80% of the property within 3 months. The other 20-25% would be my personal cash.

Yes, I would have to pay interest on the money, but its manageable. The rates I have are very good.

The question I have is:

Would a escrow company accept credit card checks for deposit into the escrow account for purchasing the property?

I have done my own research into this and have found many instances of people saying it's a bad idea because of the lender having a big problem with it, but this is a all cash purchase with no lender involved.

I have checked with a few credit card companies and they stated they don't care what you use the checks for.

I see the benefit of doing this is avoiding the use of a hard money lender and their heavy fees. I become my own hard money lender.

Risks:

When it comes to do the cash out refinance my DTI would be a factor, but assume that wouldn't be an issue. I have a good income and no other debt. I would run the numbers to make sure I could still qualify for a cash out with an acceptable DTI 30-35%.

FICO score. I would be the one financing the cash out, so most of the debt burden would be on my wifes cards, which I would not be factor as she wouldn't be on the loan.

What is the common rental best practice for qualifying multiple occupant applicants that will reside in a single property?

By qualifying I mean, asking for an application, running a background/credit check, verify income, etc....

Do you only check one that qualifies for all the misc requirements? or every adult that is going to reside in unit?

I think I know the answer, but want to verify. You would require qualification for each resident because if one leaves the others have to qualify individually.

What is policy if one has good credit but the other doesn't? For example, if it's a married couple where one has great credit, but the other has terrible credit?

I called TVS to find out and apparently its a mandate imposed by the credit agencies. I am assuming all the other screening services have had to follow suit.  I am curious to know how this change has worked out for other landlords? Do the tenants typically do well getting through the new process?

I have rented before and used screening service called TVS, Tenant Verification Service to pull credit, rental and criminal reports.

I have not pulled a report in a while and they have apparently changed the way they operate, in that the renter now pulls their own reports and supplies them to me. They are presenting this change as a better way of doing the checks in that the renter has to invest time to get the report pulled to supply it to me. The reasoning being that if they are slow in pulling their own reports they are going to be slow in paying the rent.

I do not like this change and was curious to know if some law was passed that requires all landlords into this new process. Do all other screening services now follow this procedure or is it just TVS?

I have used the website calculator to analyze the property, but I am struggling with the following questions:

Typical Cap Rate for your Area (%)? I do not understand what this is asking.

Struggling with predictive numbers…

Vacancy Rate. 3-10% suggested in calculator.

How do you estimate for vacancy?

How does one calculate vacancy %, say 2 months of vacancy over 3 years? 2/36=5.6% vacancy?

Repairs and Maintenance. 5-15% suggested in calculator.

I was planning on including a base amount each month for repairs. How much is reasonable?

For appliances, I figure out age, estimate time left to replace an factor in the cost for appliances.

Really struggling with future Assumptions. How do you predict these %?

Income increases per year?

Property value increases per year?

Expenses increases per year?

I am new to bigger pockets. I have a Phoenix short sale condo rental I have been in the works to buy since February and would like some feedback on the investment thesis.

I am planning on paying off the condo through additional principal payments to have it as a long term rental property to help support a financial independence plan.

The condo unit is 2br/2ba, 15 years old, and is located in a desirable area with luxury amenities. It has a significant HOA fee, but includes all exterior building maintenance for the property which I really like from a future maintenance time/cost perspective.

I am putting 20-25% down. I am pretty confident on the numbers included in the picture below. The analysis shows a negative cash flow which I am ok with due to the long term nature of the investment. I suspect it may be break even on cash flow because of my repairs and vacancy numbers are conservative.