All Forum Posts by: Joe P.

@Sangam Baligar welcome and good luck to you. Before your read any further, I would not consider myself an expert, but I do think based upon your post you and I are probably in the same boat.

I assume if your budget is 400k, you probably have 80k-100k liquid cash for deal 1? Here's my advice - lower your budget. The first property you get will have closing costs and need probably several thousand dollars in a "general fund" to fund your advertising, maintenance, unexpected CAPEX, initial vacancy, etc. Don't spend every dollar you have in property one, if you can help it.

As @Michael Lee indicated, if you have 400k sitting around, your options drastically change. You should be investing perhaps in a small community of properties or maybe several triplexes. And speaking to an investment consultant of some kind. 400k liquid cash makes you a pretty big fish, I would think.

As far LLC/personal, I've seen a few people comment that its up to the buyer. Sure, but an LLC has different rules and may qualify you for a commercial loan, which might raise the rate. To me, on property 1 (and every property thereafter), I want the best possible terms. You might want to start with a personal loan and then slide it under a LLC. I have a great mortgage guy I just used who might be able to better explain the rules to you.

As far as FHA/conventional, I have a VERY strong opinion about this. if you're only holding for 5 years, go conventional. Why? Because your cash flows with a conventional will be better (no PMI, lower monthly payment) and you will gain equity in the property faster, which will net you out money when you sell. The only way I would do FHA is house-hacking where I didn't have much money to begin with. FHA sounds wonderful in the beginning until you're paying 100 a month or more in PMI (that's -$1200+ to your cash flow for an investor where your chances of default are low) and you have no equity in your property and you want to jettison after 5 years. Those FHA loans are front-loaded with interest and nobody thinks about that.

Regarding the Philly area, @Jason D. makes great points as always. I think that a lot of the areas are saturated right now, so look for low-tax, outlier areas with close proximity to Philly. I just purchased my first property in Gloucester City, NJ, and time will tell if it is a good investment.

Good luck and let us know if you have more questions.

@Neel Patel my lender indicated that they would do a personal loan for someone in the LLC and slide it after closing into LLC wing. This way you get the best rate and I believe you're allowed one slide without incurring transfer fees. It sounds like with a LLC you will be in a commercial loan slot which is always a higher rate with a 5-year bullet.

If going personal and then sliding sounds like something you would like, I'll be happy to PM you my mortgage guy's information.

How long has this been going on? Did you know about the roommate?

While I'm not a lawyer, and I know that's the focus of your questions, but I have other concerns about this situation:

• How long it's been going on? And did you know about it?
• The tenant lied to you about the locks change - he/she should not be initiating this because there is a probably an alteration clause in your lease.
• He/she did not follow the appropriate steps to sublet, again, lying/misleading you.
• What is the situation between these two? In most states you cannot place someone's belongings on the porch even if they aren't on the lease. My very limited knowledge comes from TV - I've seen cases on LivePD where someone was living in a residence -- "making a home" and someone tried to kick them out. Even though they weren't officially on the lease, in that particular state/county, they couldn't be shut out. If this is Philadelphia, I would imagine that similar rules apply.

There may not be any apparent legal issues, other than the need to evict your non-compliant tenant for creating a seemingly large issue. But as always, you should consult an eviction lawyer and pay them for the 15-30 minute phone call this might be if the legality question even enters your mind. Most will give a free consultation.

If I'm a judge and I hear this case, I'm starting to point the finger at the landlord for not being aware, or being aware and not doing anything about it.

I think proximity is the name of the game, and there are still some low-priced areas of Philadelphia like Kensington (which is block-to-block) and West Washington Avenue.

I am also interested in some proximity areas like Gloucester City, which are so close to Philly, nice neighborhood, and have room to grow in terms of value. Wonder what others think?

Hey all - I am getting a loan with a bank that requires a minimum amount of flood coverage ($250,000)

If after 1 year, I want to adjust this down to say, loan value only, is that a possibility? Does that trigger issues with the lender, or does it generally go unnoticed/without incident?

Hi @Lauren C. thanks for responding. Do you know where/how I can apply for section 8? I think that's my only outstanding item.

The property I am under contract on is at Third Street/Jersey Avenue. It looks to be a blue collar neighborhood, and I see some nice restaurants/bars nearby, as well as a park overlooking the river.

Seems like folks are high on Gloucester City, and I can see why. You can't beat the proximity to Philadelphia and it seems to be a more affordable option than living in the city.

Hi all - I'm very close to closing on my rental property in Gloucester City, NJ. I am preparing my property specific operations, e.g. pulling together checklists, documentation, procedures, etc.

I am wondering if there are any folks with county knowledge of specific information, forms, etc., that might be helpful to share.

I'm aware of the following:

• Township certificate of occupancy/inspection
• Housing unit registration

I'm specifically looking for the following items; I tried searching but came up a little short:

• Landlord-Tenant laws I should be aware of
• Section 8 application/rules
• County-specific lease (or your recommendation to a lease, or a lawyer who can draw one up)

Thanks all for your help and knowledge in advance!

Just some advice - I did this with my first property, also on a 4.5% FHA loan and I lived in it for 7 years before moving out and making it a rental. Make sure the numbers make sense in order to rent this property out.

I wanted to start as an investor 4 years ago, and used my primary residence (after we moved out) to make it work. I wish I knew then what I knew now - I didn't properly run the numbers, overestimated the tenant market/rents for my property, and didn't manage my tenants well. 

Long story short, the property was severely underperforming (losing money) and the numbers didn't add up; I sold the property for a bit of proceeds I'm using to buy the next property which should perform appropriately.

I'm sure because you are a BP member (and hopefully more studious than I was when I started) you've already run your numbers and things look good. :)

@Chris K. right you are, and the next lease I write I plan to either gin something up on my own and have an attorney review it, or ask them to create one from scratch with things I am concerned with as a landlord. Every landlord has different pain points -- I don't want to spend my days wondering where my money is or waiting to take tenants to court. They pay, or they don't and there are stiff/immediate penalties, and then they're out just as quickly. Within the bounds of the law and being as far as possible, that's how I want my next lease to be written.

I did not consult with an attorney and my next lease will not be in Philadelphia/Pennsylvania. However I'm happy to pass along the attorney's name when the next lease is constructed.