All Forum Posts by: Jamie Lutch

can you give me a rundown onf the type of info it provides? heres whati got froma recent e-renter screen. propspective tenant got a notification that they failed and called me asking why as her credit score is apparently above 630

Credit Check

Your applicant does not meet your minimum criteria at this time.

6	Total Trade Accounts	$5,xxx.00	Current Balance Reported on All Accounts
2	Total Negative Trade Accounts	$1,xxx.00	Past Due Reported on All Accounts
0	Negative Accounts in Collection	$0.00	Total Monthly Payments
0	Disregarded School/Medical Loans		Latest Delinquent Payment (if reported)
Top Risk Factors Affecting Grade Serious delinquency, and public record or collection filed Time since delinquency is too recent or unknown Proportion of balances to credit limits on revolving accounts is too high Number of accounts with delinquency

for $40 it only gives a "rating" and no specifics.

is there a service of reasonable cost that actually give me a credit report and details on results of background checks?

thanks

Quote from @Thomas O'Donnell:

Hello all,

I have decided to list one of my units as section 8 due to the neighborhood and lack of leads from non section 8 tenants. Does anyone have any advice about renting to section 8? I know people have very mixed experiences in doing so. I currently have it listed on Affordable Housing for $1,575 (3b, 1ba two-story duplex) with water included in that. I have also read that you're supposed to include all utilities in the rent and it must all be at or less than the amount their voucher is worth. If this is the case, then I would need to list it for around $1,700.

Part of me is afraid of the unexpected from these tenants, but another part of me does want to provide a good home to people in need. I do also think I may have rent listed too high, but based on comps in the area and then doing section 8 instead of a regular rental, $1,575 with water included seems reasonable.  

I would love some input about renting to section 8 and any tips on it, such as certain things I should include in the lease or look for when screening (obviously income/credit will not be great from the tenant). TIA!

its less opaque than you make it out to be. you need to find the payment schedule for your exact property (based on zip code and number of bedrooms), then back out the utilities, then ask for rent close to that. you dont *need* to include utilities in the rent, i usually put electric and gas on the tenant and cover water/sewer to prevent leins. listen to the BP podcasts with the guy from DC who is renting $700K homes to HCV voucher holders and keeping tenants for 20+ years

thanks! 

brentwood/overbrook/southside

any general feedback on how to begin search for mgmt also welcome

I understand the ups and downs of leaseholds, but had a specific question

if you were to BRRRR a property (say you bought it cash or owner carry) and had a fair bit of equity in it after rehabbing, and could demonstrate cash flow, would it be able to be refi'd to roll the next project? Assuming the usual rules-of-thumb for financing leaseholds (loan term less than lease term, for example)

is it equally as difficult as financing a property with a lease expiration (just) under 30 years, which banks are very leery to do?

Thanks. I have existing relationships with multiple small banks here on the mainland who are familiar with our cashflow from our businesses. I suppose thats just numbers that are translatable to any lender, though, and that you are recommending that someone local to the properties with a track record for closing similar deals in same market is the way to go. Will do some diligence. 

Thanks everybody for all the help. i backtracked a bit after binging many podcasts over last month, to listen to the more popular audiobooks to get a better grasp of all the fundamentals. It helped put a lot of what i learned in context. I look forward to learning and networking with the folks here on the course of my journey.

It seems that the "you make your money on the way in" is indeed the most contributing factor to success so i will continue to be patient and learn, building a better financial base, as well as establishing a lender relationship, so i can be ready to execute quickly when the deal i need arrives. 

I really do feel like i am ahead of the pack of most real estate investors on my first purchase, just from what ive learned in a few short months. Listening to the common failures of investors on podcast and the audiobooks, everybody, whether in RE or not, knows that person that followed their heart and lost their butt because they didnt use their brain! All i have to do is not be "that guy"!

all great info. I guess i need to try to grab one of the 150K units for 120K to assure at least 100-150/month 

since this thread is so newb-centric and not super specific, how would you recommend finding the best lender to work with? building a lender relationship seems to be the most valuable thing one can do.

so basically be patient, wait, keep saving, searching...

putting another 10K down gets my mortgage down to where it will cashflow $100/mo. on a BPRE podcast i recently listened to brandon said that putting more money down to make a deal more secure is a myth... that money in the bank is more useful

so that said, there is no case in where a property that doesnt cash flow at 20% down makes sense? just need to keep scouring? i feel like im at a disadvantage because all the 'success stories' on the podcast had an in, they all found their first properties well below market. there arent any regular people that started out with mediocre deals to get their feet wet?

the properties im looking at are on hawaii, which is our end goal, but its so inflated right now. hoping more inventory comes on the market within the year to cool it a bit.

i feel like ill never see worthwhile properties come up on the MLS. such is a sellers market i suppose.

id like to do stuff around here (reno tahoe) but its at such a level that i cant get into condos. trailers are $200K here

 

Hi everybody, first post, thanks for being such a  great resource.

We are looking at buying our first rental, it is a condo in a remote area (remote to us, the area itself is developed)
my numbers on the one unit ive looked at. 

$160K selling price

1400 net rent

700 monthly fees: HOA/taxes/maintenance/insurance

so it nets about $700 before mortgage and management. if i put 25% down at 3.5% 30yr, monthly payment will be about $540.

The property is currently being managed at 11% ($165). If i add that on, cash flow is basically zero, but the mortgage is covered. This is allowing for maintenance expenses based on previous owner's history ($300-$600/yr).

Assuming 3% appreciation in the property per year, and the equity that would increase from paying down the mortgage, this $40K investment would return over 15%/year in the  first few years. enough that i could have enough to refi a second property of similar economics in about 4 years. (Thats not our only investment, we are in a position to buy a few of these at these terms in the next few years. maybe target 1 a year out of our current income without tapping the equity of the existing rentals) 

A few notes: this is in an area we ultimately want to retire to, and are looking to accumulate more properties in this complex/area, to ultimately have 5-10 units in over the next 5-10 years. We are trying to keep it simple, but 10 units could provide level 1 independence for us (and our primary residence will be paid off by then, its a pretty lateral move). Once we move there i would take on the property management to increase revenue.

thoughts? i saw this article here about the woes of no cash flow

https://www.biggerpockets.com/...

but not sure if its really applicable to us. While there may be better rentals which cash flow *and* build equity, is one like this which only builds equity but doesnt cash flow a deal killer?

TBH there are probably better deals out there, but in our specific situation (limited amount to invest right now, self employed, first property, trying to keep risk low) this seems like a fit. Its basically our training wheels property, low downside, and if it works as expected we buy more similar ones and increase our portfolio a little at a time. We would like to eventually get some nicer short-term rentals in same area but those are out of our budget for now and the lender requirements are higher % down as well. And then there is the risk of low occupancy, etc. Perhaps down the road when we arent rookies and have better lender relationships

thanks!