All Forum Posts by: John Ching

Marissa, I'll second what Edward said. For your first deal out of the chute, an hour and a half away is going to get old fast. Nothing wrong with getting the property under contract and wholesaling it, though. 

You've painted some broad strokes here. Why has the current owner been unable to sell it? Are you sure about those rents? You say you don't know much about the town, I'd start with that. Is the town dying or stagnant? What is the main source of employment for the town? Things like that.

There's a lot of missing pieces to this puzzle. Don't be thrown by the beautiful, historic-ness of the property. Look at it from a business perspective. What will those units rent for and who's going to rent them?

MO has tons of these little podunk towns that can generate good cashflow, but you need to know what you are getting yourself into. Again, I think the distance is too great for a first-timer. 

But do your analysis and figure out for yourself whether or not the, "juice is worth the squeeze"?!?!

Jayson, I agree with your position on condos due to the HOA fees involved.

I think either state is a good choice for investment property. 

A couple things I am doing to maximize my rentals are looking at properties near colleges/universities to rent to students as well as properties near tourist attractions to rent on sites like VRBO or AirBnB. This way, the same property can generally rent for higher amounts than an average tenant.

How about your local county auction? i.e., the proverbial, "courthouse steps"? Print up some flyers with a home or property you have under contract and give one to every attendee.

Your local REIA group is also a good place to see who the buyers are.

Tracey,

Welcome to the BP family! I've always gotten a sense that the members here are really out to help one another. 

Another "trick" you can try is to write your leases so they provide a discount if paid before the 1st of each month. It's proven science that many of us are prone to do things which we perceive as saving us money. Of course, your tenants won't know that they are really paying what you want them to pay each month regardless.

For example, say your monthly rent is $500. Your lease says rent is $525/month, but you provide a $25 discount if paid before the 1st. You'd be surprised how many tenants you can turn into paying on time.

But the bottom line is, those tenants that have started off showing they cannot manage their finances are always going to give you the biggest headaches.

Thanks for the additional knowledge, Mark, but Adam and Wayne beat me to reply!

Adam's experience is pretty spot-on. Unfortunately, those places you see advertising on TV and radio are really filled with 'salesmen/women', who are geared more towards 'selling' you a mortgage product versus actually helping you accomplish your financial goals (like a true mortgage professional should).

He does have a wonderful suggestion which is to try your local, community lender. They might have a mortgage product available that's too exotic for the Wall Street crowd. But don't get your hopes up.

As Wayne B points out, you will not find lender financing on investment property (NOO) with only 10% down. Most private and even hard money lenders have a 75% ltv limit on investment refi's.

Mark, 

You didn't mention the price of the building or if you were going to occupy one of the units. These are important parts of the puzzle, but I'll try to answer as best I can.

First of all, from a conventional-lending standpoint, 4-unit properties are still considered residences. 5 and above units moves you into commercial lending territory. This should be beneficial to you, since it's usually easier (and cheaper) to qualify for conventional-lending (such as Quicken Loans).

Second, if you don't have any other mortgages in your name, it's going to be easier to qualify for owner-financing of this 4-unit property. You will need to sign an affidavit stating that you plan to occupy the property. I'm not familiar with Quicken Loans product lines, but they usually follow conventional (Fannie Mae) and FHA guidelines and lending programs. Therefore, they should have lending programs available to purchase a 4-unit, primary residence with 10% down.

BUT (thirdly), it also depends on the purchase price (and location) of the property (I'm assuming it's NY?). Check with the lending professional in your state to see what the loan limits are.

Good luck.

Sounds like the couple are fairly new tenants to your property. I would toss them out. 

Not necessarily evict them, but give'em the, "...Hey, I think this place is a little too expensive for you and your husband's budget right now. Let's get you moved into something cheaper that would give you a chance to get your finances in order...". Words to that effect. 

You want to get them out of your hair since they have already started down the path of, "let's see how much we can get away with". It only gets worse. It's best to stop things now before it does.

Most tenants follow a pattern - the legal system actually helps them (in my opinion). Once a tenant knows how to work, "the rental cycle", they get better at screwing you out of money. It could take months to get them out of your property using legal methods.

If this was an established tenant, with a solid on-time payment history, have a one-on-one chat with them and get to the root of their problem. It may just be temporary. Bad things happen to good people, but you have to get to the true cause of their issue.

Conor, sounds like you need to work on your marketing. Research here or even Google on how to market for RE deals. Plenty of wholesalers here in Springfield as well. Andrew and Aaron are good contacts (ask me how I know) if you are looking for wholesale properties to flip.

Seek out the local Springfield REIA, it's a very active group and we all try to support one another.

I'll tell you from personal experience that I've benefited tremendously from getting educated and attending seminars with others who have made big things happen in this industry.

Best of luck to you!

I haven't read this entire thread, so bear with me, Raeshelle...You need to take a look at the training Ron LeGrand provides his students. 

Ron has long been an advocate of 'buying' properties with NO cash and NO credit. It's simply a matter of buying with terms. This involves marketing on your part. You need to find FSBO sellers that are willing to "sell" their home to you on terms. As Ron proclaims, "No terms, no deal".

It's a great way to get property without investing your hard-earned money.

Will, everyone brings up excellent viewpoints with regards to renter's insurance. It's very cheap. I would simply make it part of the monthly rent. You really are looking at only $10-$25/month for a premium.