All Forum Posts by: James Wong

Like the title states, I am interested in connecting with property management companies for licensed RCFE's. I was not able to find a directory or accredited list of Property Managers specific to RCFE. Can anyone help me out? Thank you!

Craigslist, Dealcheck, Trulia, Zillow, Rentpad, Rentometer

@Mike McCarthy

I’m a huge advocate of life insurance. My father recently passed unexpectedly and the amount of estate issues is tremendous. Lots of creditors and it’s a nightmare to deal with. What if you are hospitalized, need long term care services, need to burn through your emergency funds, etc. I give an extreme case but this is what happened to me. The point is, your family members might not know what’s out there and they may get stressed out dealing with a passing and all the financial issues left behind. I think it’s selfish to not have it. I would not want my family members to stress out financially over my business ventures. Yes they can liquidate your assets but that will take time. I respect all perspectives on this forum but just consider how your family will be if they had to deal with everything you’re dealing with. Right now, I have a high policy term insurance for dirt cheap.

@John Corey

I have been able to avoid PG in loans by guaranteeing the assets of my business (non real estate). I ended up passing on it because of the amount of disclosure requirements in my line of business. (More paperwork, lot of headaches)

@Terry N.

Yes you have to pay federal and state taxes on capital gains.

Why not defer the capital gains and do a 1031? Unless you need cash on hand for other ventures then that is understandable.

@Jacob Turner

What's the Rent to Value ratio? This is monthly gross rent to purchase price? If it's less than 1% it may not cash flow correctly which means a lower CoC return. The only way to get around this is to increase your down payment, lower your LTV%, and purchase points to bring down your interest rate. I'm not familiar with Houston market but I have heard from colleagues that you will need more capital to deploy to get a property to positive cash flow.

I settled with Kansas City and neighboring cities. I first filtered areas of interest, growth and overall job development. I next looked at cities and states that were landlord friendly. One of the things that attracted me to Missouri was the eviction process for nonpayment. It's pretty straight forward and not that long of a judicial process. If you compare to the Kansas side, you will end up needing an attorney and it takes longer to get possession of property. I have property in California and it requires a lot of patience and time to evict someone for non-payment.

I screened the company recently and I will share with you my thoughts. I liked the business model with giving 5% down with a commitment of ~$1000/mo for 30 months. This 30 month window allows you to build enough for a downpayment (80% ltv mortgage) at month 30. I think the problem is that it is very difficult to predict the interest rate in 2.5 years. If the interest rate increases to a number more than what it currently is, then the property will not have a positive cash flow at month 30. In that situation, you'll be finding to increase your down payment to achieve positive cash flow. There's too much risk to chase an investment. The other issue is tax benefits for me. The downside is that the first 30 months, you do not get any rental income. Since you don't have title to the property, you wont be able to utilize depreciation. Additionally, if you're at month 30 and you do not want to finalize the PSA and obtain title, the amount you put in is non-refundable. There's just way too much risk for myself to get enjoy the model. Don't get me wrong, Denver is a great area to invest in. I think there's appreciation that can be awarded but I do not count on appreciation with my investment criteria. Hope that helps. Cheers!

I am in a similar situation as OP. I'm from California and I agree it is really difficult to get into the market without risking significant amount of capital or time. Where are you looking at properties for 400k? I have property in Central Valley and they are in rough areas. Just consider the fact that there are guides online for tenants to live rent free for up to 6 months and how to game the system. 

There are a lot of guides on BP on how to invest out of state. If you're open to it, download "Long Distance Real Estate Investing" by David Greene as a primer.

The lender will look at debt to income ratio. If you are living rent free, that's a good thing because it will help you qualify for a larger loan. The lender will need a note from your parents acknowledging you are living rent free. I had difficult getting a loan at first because I am self employed and I transitioned from W2 recently. If there is an existing tenant in the property, you may be able to qualify using the rental income from the property. This helps your DTI. Would your parents be able to assist you with the down payment? The lender may be able to increase the loan amount.

After months of lurking and researching, I invested out of state into KCMO. I started with zero knowledge and experience in the area. I like the area, it's growing and there is a lot of opportunity. It is affordable as well. What I love the most was the landlord friendly laws. If the tenant breaches contract for nonpayment, its rather quick to evict. Consider the fact you're paying a mortgage and you need to run a business.  Would you want a tenant playing the legal system so they can skip paying rent for a couple months? Make sure to have a criteria you want and follow it so you can mitigate your risk.  

In terms of finding a property manager, there are a ton. Try to find accredited property managers since they have a standard to follow. You can bring in the property manager at any time. I recommend getting one before signing a purchase sale agreement so you aren't scrambling to find one that just conveniently fits. Look at the term sheet they give you. What is the management fee? Are there seller contingencies? How much of a deposit is the PM asking for? If the tenant has a clogged sink, is your PM willing to coach the tenant over the phone how to fix it before sending a contractor? If there is light rehab work that needs to be done, how will the PM charge you? Screen your property managers and ask them difficult scenario questions. Look on review sites to see what people say about them. If they have a lot of bad reviews, it is most likely from a disgruntled tenant and that means the property manager is doing a great job in managing your property. If you are completely unsure if the area is good or bad, ask for third opinions. I find people on thumbtack or willing to a short gig to take a video of the neighborhood and the house. This is pretty cheap and can help you mitigate risk of investing.

Good luck and I wish you the best!

For foreclosures, the property is bought as-is. There may be liens included that need to be factored in. Usually liens need to be paid upfront for clear title unless you can work something out with lien-holder.