All Forum Posts by: Jennifer Hamon

@Account Closed I never saw a bill of any kind. They returned our full deposit when we moved out. My best guess is that this is some utility charge that was applied to our balance after we'd already vacated and gotten our deposit back. I called twice today and couldn't get them on the phone. I plan to mail a check tomorrow and hopefully that will be the end of it, but I'm anxious because the way this came up out of nowhere leads me to believe they are pretty disorganized.

@Robert C. Thanks for your thoughts. Just to clarify, I don’t care about $200 and fully expect to suffer significant losses at some point due to bad tenants. That should be priced in to my investment plans.

I care a lot about my credit score, as that has a direct impact on my ability to borrow and the terms I receive. I have pretty good credit and have been working to get into the excellent range by being intentional about my utilization ratio, etc, and that’s why this feels so emotional.

For the last 6 weeks or so I've been studying RE investing intensely and trying to settle on my medium term strategy. I have about a year before I'm in a strong financial position to buy my first property and I want to be ready when the right opportunity presents itself. RE excites me because it seems like there's a lot of rewards available for those who are good at analyzing the numbers and thinking creatively.

So today I came home and opened my mail to find a demand letter from the real estate company I rented from back in 2015. It alleges an unpaid balance of $200 (no details about what this charge actually is for) and says if I do not pay within 10 days they will report the delinquency to credit reporting agencies and turn the debt over to collections. I feel blindsided as this is the first communication I have received about this matter; I always pay early or on time and they even returned my deposit after I concluded an 18 month tenancy in 2016. My partner called the leasing office while I was at work and confirmed the letter is not a scam but they did not provide detailed information about the charges over the phone.

The building is owned and managed by Tod Speiker who has built an empire by buying up all the B and C class units in Silicon Valley, evicting long-term residents, putting in a couple stainless appliances and jacking up rents 50% or more while providing basically no service to tenants on issues of pest control, in-unit maintenance, noise, etc. I paid $2100/month for a 500 square ft unit that, despite the shiny appliances, was overrun with german cockroaches that the management refused to acknowledge. This is a very profitable way to operate in the context of the Bay Area where there is a severe housing shortage and people have few alternatives. You can read a puff piece about this dude's company here: http://www.siliconvalleymultifamily.com/wp-content/uploads/2015/09/Tod-Spieker-Profile.pdf

The $200 is no big deal for me, but the prospect of having a bogus delinquency from this scammy property management company show up on my credit report right as I'm gearing up to buy into this game is conjuring a lot of negative emotions. On the one hand there is fear, helplessness, and anger -- because if this doesn't get resolved correctly how will it impact my ability to get good financing terms next year? But beyond that, really it's making me feel shame that I wanted to get into this landlord business at all. 2000+ multifamily units is what success looks like in real estate, but I don't want to make my fortune by stepping on little people like this guy.

Right now I'm thinking about the hundreds of tenants that got kicked out of their homes so Mr. Speiker could quickly ratchet up his NOI. I'm thinking about how I would feel if I were the kind of person for whom an unexpected $200 charge represented an existential financial crisis.

Do any of you ever struggle with the morality of landlording? Does it impact your sense of self-worth in a negative way?

@Mike F. Thanks for the tips, it definitely gives me some things to think about especially regarding taking a holistic approach to the banking relationship. If I play my cards well, I think there's no reason I won't be a HNWI before it's said and done.

I am an engineer at Twitter and the shares in my grant are unvested at this point (I started in this job in Dec 2018 and the first year's worth of stock will vest will in January 2020 and quarterly thereafter). My compensation plan has a target equity value and Twitter will top up that value with refresh grants if the shares underperform expectations; there is still some volatility, but the way they've structured it significantly limits the downside to employees. I get that these forms of compensation are complicated for lenders to assess because every employer has a different approach to vesting schedules, refreshes, etc.

If I could save just a little bit longer I think the money wouldn't be so tight but I feel some urgency about being on the sidelines through too much of the 2020 home-buying season. In the Boston market, most leases turn over Sept 1 to sync with the academic calendar and seasons so if you aren't getting in position by early summer you might find yourself struggling to lease up vacancies in the fall.

The money in my 401k belongs to me and can be accessed in an emergency via a 401k loan although it would take a few days for funds to be released. If I needed to pay for something immediately (e.g. plumbing issue flooding my building) I could easily float 20k on a credit card; right now I have about 40k of available credit. That would give me the time needed to arrange a much lower interest self-loan from my 401k funds.

If they require the actual cash sitting in my checking account I could loan myself $50k of 401k funds. But it seems unnecessary to do preemptively.

My cash on hand will recharge rapidly after closing due to the variable income I have that is not considered in the DTI calculation. And if the building comes with tenants in place, there will be gross rents covering part of the debt service.

I live in a HCOL area (Boston) and am aiming to get started on a house hack next year. My situation is perhaps a little unusual in that I have a relatively new big tech job where about 50-60% of my compensation is coming from variable sources (RSUs, bonus, ESPP, etc) but I'm told lenders won't consider those forms of variable income until you have a few years of historical earnings for them to mull over. This means I am able to save a large downpayment but am constrained by DTI. By next summer I will have a substantial amount of investable liquidity for a first time buyer (likely $150-200k depending on how company shares perform) and no other debt but still a relatively low lendable income on paper for this area ($155k/yr). Small MFRs in transitional Boston neighborhoods appear to commonly sell in the 800k's. I think I may be able to acquire one of these by going out to the very limits of allowable DTI ratio if I bring enough cash to the table.

Taking the example of an $850k property with $170k down to avoid PMI, I'd need to finance the remaining $680k. That's near the absolute limit of what I think somebody might lend on $155k/yr gross income at current rates. It's not as reckless as it sounds if you consider that I have all the variable income coming on top that isn't considered in the loan application process.

Aside from the cash I plan to use for down + closing costs, a large fraction of my current net worth is tied up in my 401k plan. I'm reluctant to touch any of that money for the down payment, but I'm wondering if lenders will typically consider funds held in the 401k to count as cash reserves? They are not as liquid as cash in the bank but in an emergency I could definitely borrow from my 401k to cover the mortgage. Getting some clarity on this would help me model how much of my future cash-on-hand I will need to hold back as reserves instead of putting them toward down and closing costs.

This is my first post on BP and I am mainly still in the education phase of my RE journey so I appreciate any advice.

I am married, age 31 in a HCOL area, and have:

• No debt of any kind (paid off student loans, modest vehicle, and expensive dental work)
• No kids but want some starting in 3-5 years so I have some flexibility to pursue a househack.
• Credit score: high 700s
  
• Income: $155k base + around $150k/yr in bonuses and RSUs. My spouse is finishing up some education and will soon be earning about $100k/yr.
• Investible liquidity: $60k today, set to rise by ~$100k net after my first ESPP purchase and RSUs vest on Jan 1.

That all sounds positive but I am currently sending out $3100/month in rent for my 2/1 condo. I would like to stop paying my landlord's mortgage and start building my own equity, possibly with a MF househack; I still have a lot of work to do as far as analyzing the feasibility of the MF househack scenario in my area.

Up until recently I have focused on paying off debts and getting my income up, never really considered trying to buy property because I felt I didn't have the income needed to get into a place I would be happy to live. That changed about 6 months ago when I started a new job with a big tech company that effectively doubled my compensation overnight. My base salary did not change much from my previous role (about $150k) but in my new job I will be getting another $150k/yr in performance bonuses and RSUs. The job is going well and I anticipate staying for several years.

Obviously income history is important in the decision to lend, but I'm wondering how such a large step change in compensation will be viewed by lenders. Do I have to wait 2-3 years to build up my history of earning at this level before they will give me financing that considers these new forms of income (bonus + RSUs + ESPP)? How do they factor in the volatility of stock-based compensation? I plan to talk with some lenders, of course, but I like to prepare by having some idea how it will play out.