All Forum Posts by: Jim Costa

You could also do coop farming.  Allow people in town to lease a section of ground and grow their own crops-flowers.  Almost like local gardens.  $100/yr for a 10x10 section (do the math).Have a farmers market on the weekends.  Bring in food trucks and outdoor movies.  Make it a local event for families.  People will start venturing out.  You can get a USDA zoning for a commercial building (kitchen).  Process fruit into jams, pies, make salsas.  Pumpkin patch is a great idea.  Get bigger every year.  Grow hops or a specialty varietal and have a tasting room for those that use that hop or varietal.  Covered area for foodcart tap house.  Contact your local 4-H (county) or FFA (Highschool)and offer land/corral for kids in town to raise animals for the fair that don't have the facility in town.  Tax write off and keep the zoning.  Can also use as a petting zoo.  Good luck!  

I Copied @Isaac Allen response because I have the same system in place.  I am looking at Hemlane.  I am too lenient on late fees (1 or 2 days)and forget to send out notices for renewals which throws off the schedule.  Hemlane will automate this. Tons of other features for very little cost.  Still want to be hands-on but will have the option to upgrade and turnover more responsibility when I plan on traveling.

All of my tenants are required in their lease to deposit rent at the local bank that I use for my business accounts. Each property (or group of properties on the same street) have a separate checking account named after the address (or street) i.e. "123 High St."

Tenants simply visit any of the branches of the bank (all of my 18 units happen to be <.5 miles from the nearest branch), and ask the teller to deposit their rent (in the form of cash or check) into the corresponding account named after their address i.e. "123 High St." They're directed to write their street and unit number i.e. "25-3" on the deposit slip so tenants in the same property with the same rent amount have their deposits applied correctly when I do the accounting (I can look at scans of the deposit slips in the online banking portal).

Tenant's receive a receipt from the bank when they make their deposit which is extremely convenient since rent receipts are legally required in my state. I can also check the app on my phone to see who has paid rent in real time.

I've found this method to be particularly convenient, especially compared to the traditional alternatives. No fees for me or the tenants, no dealing with physical checks/cash, and no coordinating with tenants. I suppose some property management software options could be more convenient for the tenants, but you have to be ok with a lag (up to a week) from when the software company receives the cash and when it is deposited into your account (no thank you). I haven't had a single issue using this method, although I acknowledge the close proximity of all of my units to the bank does help.

Hope this helps you and anyone else looking for rent collection ideas!

Know the numbers and educate yourself with the market. Understand what rents are going for and where the value ad is. Do your due diligence on the tenants.

168 DAYS ON THE MARKET! DOESN'T QUALIFY FOR CONFORMING LOANS (VA OR FHA)! All cash is the only option. The price is clearly too high with the issues or it would have sold already. Your Realtor should be able to see things from your perspective and present your side of the offer. @Jacob Stokes  

Just felt weird and wrong for her to fight me on my way of thinking. I appreciate everybody here giving me more perspective.

You shouldn't have to fight your realtor.  They don't need to agree with you, it is your money.  I would find a new realtor. If you want to keep them, I would list all of the issues with the house and give them to your realtor (educate them).  Let them know why you came up with the price you did. The overprice, the deck, the roof, cosmetic updates, and being the general to manage all of the repairs.  See if they can get an acknowledgment from the seller that these repairs need to be done.  Once they acknowledge the repairs then it is a negotiation about the cost.  Get 3rd party estimates to justify.  This should get you a lot closer to an agreement.  

Find out more information about the seller's situation.  What are your intentions with the property?  Fix and flip, hold long term? Maybe the house is paid for and anything less than listed is unacceptable, maybe it is an inheritance thing.  If they don't like the low price then focus on terms.  Maybe a full price offer with owner carry and delayed payments. Less out of pocket for you and you can refinance after repairs.  The advantage to the seller with an all-cash offer is no loan contingency and a quicker close.  If you already know the repairs, did you wave the contingencies?  If you can't negotiate price, negotiate terms.

Hi Shaklon, 

That is increasingly getting difficult here in the PNW.  You will have a very hard time finding something for $200K unless you get into Kelso area.  You might be able to find a small condo or a manufactured home.  I would recommend doing a house hack.  I don't know your family/relationship situation but I would try and find a 3 bedroom where you can rent out the other bedrooms and live rent free.  Save your money from the rent free $1000k/mo rent out your bedroom and find another place to repeat.  The other option is to talk to your bank/broker and see about buying a duplex to 4-plex.  You should be able to use the income to offset the mortgage.  They will use a percentage of the income to qualify.  You have to check your ratios.  If you can find a duplex with 3Bedroom units on each side you might be able to get it to work.  A 200K loan will have payments around $1000 (Principle Interest).  A duplex around 400K will have payments around $2K but you can rent a 3 bedroom for around $1500-2000 depending on area.  The bank will usually use about 75% of rental income, so 75% of $1500 is $1125.  That will allow you to get a $420K loan for a duplex instead of a single family home.  Once you buy, House hack and rent out the other rooms as described above.  The problem is investors have been buying up most of the multifamily homes because of rents.  It may be hard to find but work with a good realtor that understands rental property and can look out for listings.  Good luck!

The original quote of 5% was probably for owner occupy.  If you have this option I would look at doing that.  You can move in with less money down.  Rent the other rooms to friends and live rent-free. I am assuming the 70K is not for a rental in CA so 80-15-5 (Owner Occupy) is best bet or find a group of 4 friends/family that can put 5K each and pay them back based on 3 year payback and own property with zero out of pocket and 20% paid off in 3 years.

Hi Dabvis,

20% is pretty standard for an investment property.  Fannie Mae guidelines:

Investment Purchase for single-family is 85% and 2-4 unit is 75% LTV. Depending on the relationship with the seller you can ask the seller to carry 10%-15% with a 3 year payback period (you mentioned you would have funds in 2 years). 5% down 15% owner Cary and 80% LTV for the bank (have to qualify with extra payment to owner). You can entice the owner by paying a higher interest rate because of the small balance The difference between paying the owner 5% and 10% is only $20/month (for 3 years). You mentioned this is your first rental so I assume you have a primary residence. This is where a HELOC (Home Equity Line Of Credit) is perfect for your situation. Consider getting a HELOC on your primary residence. They are very inexpensive to get and you don't have any payments unless you use the loan. It is a line of credit and a good safety net for unseen expenses until you build reserves back up (piece of mind). These are a few options. Be sure the numbers work for your situation. Good Luck!

Hi @Kyle Keller I responded in detail on this on another post:

Cash Vs. Leverage Refinance Options ??? (biggerpockets.com)

Hope this helps!

@Shiloh Lundahl had some great advice.  @Zachary Giles you want to be a real estate investor you will always have debt. How you manage that debt will determine if you are successful or not. If you had $100K in positive cash flow a month you wouldn't care about the debt. Debt is not the issue. Cash flow and reserves are the concern. I read through all the posts and was surprised no one suggested to look at this from a banks stand point. First off, CASH IS KING. You pay off debt the cash is gone. Most people explained, what happens if something needs to be fixed, that is why you keep your cash and leverage what you can (that is why we buy real estate). This gets to the bank scenario. Your best rates are going to be with a broker or bank and get a conforming loan. They have lending rules (new ones) for a reason. Rule of thumb, front in debt is 30-35%. How much is the investment property payment going to cost you? I don't know your market and the more numbers we have the better advice you will get. Back in debt is 40-50%. This takes into account student loans, credit cards and car payments. The most disqualifying factor for borrowers are car payments and minimum payments on debt. a $300 car payment can be $60K worth of a home loan. If you have 2 cars that is a lot of house. If you qualify with the car payments than keep the cash! You can always pay off the cars and increase cash flow. The most important thing for you is to know your numbers. If you can find a value ad property, the return can be incredible. You can buy a duplex or small multi family that is mismanaged with under valued rents and have a huge return. Most new investors underestimate CAPEX expenses. How much life is left on the roof, water heater, carpets. $15k expense in 5 years is $250 a month in reserves for the next 60 months. Be sure you have the reserves or access to capital. Focus on consumer debt after you have the reserves you need for the properties in your portfolio. With that said, If you have a balance on a credit card at 25% it is hard to get ahead and see those returns. Get rid of it. Cars and student loans are low interest that you can do better in real estate with, if your ratios are good. They just take away from your borrowing power. Good luck!