All Forum Posts by: John Alosio

@Patnaree Conrad

Definitely check your local laws and read their current leases. For my long-term tenants, I open a conversation about rent increases around 60 days before lease expires. I present them with a "rental comp report" from apartments.com. This gives them ample time to decide if they would like to move, they are welcome to look around.

I can suggest a few different scenarios depending on your situation and comfort with confrontation.

Scenario #1 Softball approach: If both tenants have active leases, you'll have to wait until they expire. This could work to your advantage by giving you time to build some rapport. If you can show that you're a genuine good person and that you're improving the property, it'll make it a bit easier to swallow a rent hike. listen to their concerns, try to have them corrected in a reasonable time frame. Offer minor improvements to their unit. Hit them with the increase upon renewal.

Scenario #2 The hardball approach: Both units on Month-to-Month. If you have some capital to throw at the house, end one lease immediately(30 day notice). Let them know that you intend to rehab and bring it up to fair market standards. If they push back, offer a "rent comp report"  and suggest the new rent amount. Then move to the next tenant and do the same. If both are content with their homes and want to stay, you just dodged a vacancy and still got your increase. This will not make you very popular. But it is business...

Of course, you could fall somewhere in between these two extremes.

Good luck with your first property!

@Benita Matheson

Bingo!

You got this.

:D

@Benita Matheson

There really is no right or wrong way go about it. No one size fits all. It all comes down to your personal situation and preferred level of Risk Aversion.

I'll share my personal journey so you can compare my story to others'
I just closed on my 3rd property in 4 years (1 purchase every 2 years).  It blows my mind that I "control" almost a million dollars worth of real estate!(not equity, rather FMV of everything combined). My W-2 salary is below the "median area income" but that's not holding me back from an upward trajectory. Delay gratification, Bob n Weave.

Here's my snowball:

2018- Purchased a duplex house hack with FHA financing. Added value through some moderate remodeling and updating. Tenant was paying mortgage. I paid myself "rent" in the form of sweaty equity value-add projects.

2019- Refinanced into a conventional loan. Appraisal came back with 30% equity (no more PMI/MIP!!!)

2020 - Purchased my second duplex house hack with FHA financing. Live-in-rahabbed the unit that needed the most attention. I plan to sell within the next 5 years to avoid paying cap gains on the half that i lived in. Looking to flip it up into a Quad-plex

2021 - Took out a HELOC on my first property to have funds available when needed for REI.

2022 - Earlier this month I Closed on my Primary SFH at 5% conventional loan. I promised my wife a legit "starter home". We reached the end of our comfortability for living in a construction zone & sharing walls. It was time to level up!

Hope this gives you some ideas for your next move.

Best of luck!

@Benita Matheson Congratulations on taking your first step!

I'd recommend using the house-hack as many times as you can. Take advantage of the primary residence low(er) interest rate. That rate will never change unless you move out and refi.
You could wait 12 months + 1 day. Buy another 2-4 unit Multi Family property with 5% down Conventional loan as a primary residence.
The only caveat will be that the lender will most likely want you to justify your intent to live there. I.E. More living space, closer to work, +garage etc. Typically lenders will not view your rental income as actual income until you can show it claimed on 2 years tax filing. As long as your W-2 can support the new debt without rent factored in, should be all good to go.

It sounds like you're in a rush to make moves. My recommendation would be: take some time to get to know this property first. See if there is any value you can add. Stabilize the property by making some improvements. Make sure everything is running smooth while you are living there. When you Do move out, there should be less urgent maintenance issues (or fewer surprises).

Then, when you're comfortable that the plane is up to cruising altitude, move on and set it to autopilot.

Now is the time to build a solid foundation for your business. Don't stretch yourself out too thin, too fast. Good luck!

@Cory Melious

I just leased up one of my units. In the past I used craigslist and Cozy(now apts.com). Between the 2 of those, I never had an issue finding a suitable tenant.

last week I opened my listing, decided to try FB marketplace in addition to CL & apts.com(formerly Cozy)

Craigslist got about the same, maybe slightly less than before.

apts.com got almost no interest. I believe this was due to the fact that it would not let me edit the description, so i couldn't add any flare. just pictures and a bunch of cookie cutter information. No good, apartments.com, fix your system. However I do love their management tools. Works great for my small portfolio (4 doors). Screening, applications, leases & Payments are all incredibly helpful tools for my business.

FB Marketplace blew up my phone with dozens of clicks. I copy and past a generic message, telling everyone to reach back out to me in a few days if they were still looking to schedule an appointment (first screening). about 10 of them actually got back to me but some of them decided not to ask me the address (second screening). I set up 5 showings. Only ONE made it. They applied, then immediately withdrew their application due to personal circumstances (roommate drama).

Sooooo my experience with FB was a big wast of time. Tire kickers and time suckers.

I ended up signing someone off of craigslist! Thank you my old friend.

@Wayne Brooks  thank you for that clarification. Its so frustrating not being able to speak with the underwriter. It's always a game of telephone between the Processor and the UW. I was going off an assumption, I guess I should have asked that question specifically. But either way, I'm having trouble at the last stretch.

@David Wild Thank you taking the time to share your personal experience. The only issue I would have with your solution is that I do not have 20% for DP. I have 5% for a conventional... along with hopes and dreams for my family.

My last ditch "Hail Mary" would be to ask a family member to Co-Sign the mortgage. Which will most likely be shot down. I was really hoping for an alternative.

Greetings BP

I'm here today looking for advice regarding a property that i have under contract right now.

Currently I own 2 rental properties (both duplexes). Both with conventional mortgages... I am now ready to purchase a SFH as our primary residence.

This is a big step; after house hacking for the past 4 years, we're finally ready to branch out into our "starter home"

The situation:

Here we are, 3 weeks after getting an offer accepted on amazing property. Inspections & Appraisal completed. All looks wonderful.... NOW the underwriter is giving us hell about our DTI.

We're currently living in one unit that will be rented when we move. However the lender will not view that as income.

They are only viewing my "taxable income" based on my tax returns. Which looks like almost nothing after depreciation. A lot of MACRS  carried over from previous years.

Now I'm stuck worrying that I may lose this property. 

Can anyone advise a way to dodge lenders strict parameters? I'm looking into Non-QM loans, but they appear to have similar DTI requirement.

Need Help! Don't want this house to slip away!

Thank you all in advance!

@Justin Phillips Thank you!
I'm curious exactly how one of your "life changer loans" is set up. Would i just see a total loan balance that grows and shrinks as money comes in and out? Would you happen to have a sample screenshot of an active account so i can get an idea of how one of these beasts operates.

Thanks

-John

@Jeff S.

From what i understand, you would have access to 80~90% of the equity already in place from the beginning of the loan.

Thank you for attempting to shed some light on my question. Unfortunately sounds like "it depends"

If anyone else has some first-hand experience with one of these type of loans please feel free to chime in.

I'm starting to second guess myself on If I'm spending too much time thinking about creative strategies to accelerate my own money - not enough time finding deals and bringing OPM into the mix. I keep hearing "Just find a deal, the money will come."

@Jeff S.

I'm not quite sure we are talking about the same thing. It sounds like you are speaking of a traditional HELOC. Are you familiar with this new(ish?) strategy that is gaining popularity. Its commonly referred to as an "all-in-one mortgage"

Allow me to go into more details:

i currently have a mortgage on my primary, with a decent chunk of equity built in. Instead of taking a HELOC out for the equity, there is a strategy that allows me to replace my mortgage with a 1st position HELOC, starting at a balance of my mortgage payoff.

This HELOC works as a pass through banking account. My W-2 paycheck gets direct-deposited into this account and I use the it to pay for things as needed. Effectively, this lowers the daily balance, lowering this interest burden. So over time, if used properly, you accelerate the pay down of the loan balance.

This is similar to using a traditional HELOC to systematically pay down mortgage, but the "all-in-one" it's a much more streamline product. And I intend to use the growing equity to reinvest short term (fix n flip, BRRRR)

I hope this makes sense.