All Forum Posts by: Jesse Waters

I had been a land lord for about 10 minutes and the AC went out, I had a home warranty so I called them up.  The vendor showed fairly quickly, but after delays, delays and more delays we finally got an answer that it would take 2 weeks to get the parts.  I called the warranty company, I think it was 2-10, they said they could have the parts in 2 days.  Turns out that the vendor/AC company went through their own parts source rather than the warranty company like they are supposed to.  So, I called another vendor, he said he could have a new unit installed the next day.  So, 1 day & $3200 later, it was installed.  

Since it was such a run around, and even though I had been busting my hump trying to get this think taken care, my property manager said that we were on the long side of what a judge would consider "reasonable time" and would let them out of the lease.  Since they were threatening.  So, I gave them 2 weeks free lease for the two weeks that they had no AC.

Short version, don't bother with home warranty companies for a rental.  They seem to allow things to drag on to the point where you would rather pay full price to get it fixed your self.

Welcome to BP. You came to the right place to learn about REI. What area's are you specifically considering?

The first few years can be frustrating. I purchased 3 properties in a year and a half then ran out of DP money, since the banks were asking for 30% DP's. So, we started to get creative. Finally got to a point where I could afford 30% DP's then all my leg work on getting creative started to pay off. I found that one of my local banks would be willing to bundle all of my properties under one loan, allow me to purchase 3 more calling it all commercial lending & do it at 85% LTV, since I purchased my first 3 at 25-30% DP, its pretty much a nothing out of pocket deal.

So, hang in there, stick with it, get creative, just don't go over board or over leverage.  Make sure that what every you propose doing can carry the debt load & meet your investment goals.

It depends on what other management agencies in the area charge.  If they all charge a fee then I guess you go with it.  But, all things are negotiable.  However, it depends on how many properties you have & how many managers are available & how hungry a manager is for business.  

Welcome to BP & the rental property game.  Depending on what your house is worth, yes, you should be able to do a cash out re-fi from the 15 year to a 30 year mortgage.  Your interest rate will go up.  Depending on you exact situation, your payment could go down.

As far as I know there is no tax implication for taking money out of your house in a re-fi, it is your equity, you are just unlocking it with a mortgage & the bank is collecting the interest for providing that service.

I don't think I would pay down the rental, if it is making money the great, leave that one alone.  Remember, if you add money to it, with out changing what you get out of it, then you are driving down your rate of return.  Its like this, if you put $100 in and you are getting $10/month then you are making 10%/month, if you change that and put another $100 in, and still get the same $10/month you are now $200/10 or 5%/month.

Depending on how your DTI look will determine how willing a bank will be to talk. They look at both real estate & non real estate DTI. Also, talk to your local banks & credit unions, they tend to carry more loans in their portfolio so they are less bound by fannie/freddie rules and can be more flexible.

If they get too wrapped up about the equity, leave the equity as is based on cash put in & take a partnership management cut off the gross each month.

Welcome to BP, sounds like you are on the right track & you are in the right place.  Best of luck.

I'm not a realtor or lawyer, but it sounds like you are venturing into shaky ground.  If you are financing, generally, the bank has limits on how much seller assistance you as the buyer can get, which is a pain, but its the rules.  I think on investment properties its 2%.  Also, I'm assuming you will still have to come up with a down payment.

A better way to go, might be to have the seller agree to all those repairs in the contract & have them done before closing.  Pay the $210k and then the seller can pay off the contractors.

I have had a seller give me cash at closing for repairs and such, similar to what you are suggesting, to do it I put it on an addendum, had them put a check in the lawyers escrow account & release it at closing.  If they balked we would have turned the addendum over to the bank & that would have killed the deal, just some insurance.  I don't think it was the best way to do business, but I wasn't going to buy the property with out certain repairs being done & the seller didn't want to get the repairs done & risk not having the property close.

Just my $0.02 worth of thoughts,.

Welcome to BP, best of luck in your endeavors.

I would use the $92.  You are only paying management when the property is rented.  However, be sure to account for a placement fee if your manager charges it.

In my situation I figured that my units turn over every 2 years, so I turn half a year.  My manager charges me 8% for management and 1/2 month's rent for placement.  So, 1/2 months rent over 24 months per unit.  

At $500/mo rent - $250 placement fee/24 months or about $10/month per unit.

Its not exact, but it helps in my analysis.