All Forum Posts by: John Leake

I currently have all tenants pay rent directly to the bank it has worked great for years!

Unless you plan to stay with the same bank seasoning isn't a true challenge. If you want to refinance it talk with multiple lenders you'll end up paying for an appraisal but 300-500 (in my area)+ origination fees is a small price to pay for additional capitol now! I try to have a couple of banks that I have good relationships with in case I need to bounce back and forth between them. Hope that helps.

I never had much luck in the beginning getting less than 25% down, now that I have been doing it for a few years I was advised if it cashflows and I have 20% down the answer is going to be yes. I'm not sure the dollar amount you are talking that 5% being but getting started is the hardest part. I would keep that amount, the 5% in mind when negotiating. On 500,000 *5% is 25,000 so I would ask for that off when you make an offer. The money ends up being the same out of pocket for you and hopefully that is a viable work around for you! Good Luck

I would probably not provide a microwave. They are pretty inexpensive and unless that's a common practice in your market most tenants wont expect it. (save yourself the expense of providing and replacing) I have had good luck going to my local lumber store and finding a mid priced appliance. It seems regardless of the brand you will likely be replacing items every 3-5 years so I would budget for that regardless of what you buy. Most tenants will not take care of the appliances like they were their own so I try to find something reasonable without all the extra features.

You should be able to serve to unknow occupants call an eviction attorney and explain the situation its going to cost a little bit of money but that's the only way to really get things moving. I feel for you in that situation best of luck to you!

I think the house hack is such a powerful tool so I would be tempted to keep that trend alive! If you are planning to move can you use the equity you've built and purchase a small multifamily? You could also purchase it solely as an investment property but the lending is much better for a personal purchase. That lending would stay in place in most cases, even if you move! If it was me I would look for a BRRR in a 3-4 unit. If you can afford to do it all in cash that's best, then you can refinance your down payment out. If you cant you may be able to get a rehab loan and accomplish getting an investment property with equity built in that was as well.

@Ben Leybovich I did have a couple of questions come to mind. When you find these deals are they typically owned by someone in a cash flowing state or are they being run poorly and need saving? If they do cashflow has the owner just fallen out of touch with their market or more likely just comfortable with existing cashflow? Do you have a fair amount of luck in converting existing tenants to upgraded units? In buildings this large do they have a stock supply of appliances? 

I think your second questions "If so what to do with the money?" is your path to the answer for all of it. If it was me I would be considering what would I be able to do with the money to generate a better return. I would be more interested in your shoes to consider refinancing. If you were to refinance the property you should be able to pull up to 80% out. 150,000*80%=120,000 less what your current debt is 50,000 leaves you with your original cash investment 70,000. At that point its an infinite cash on cash return. You could then take that money and look into a new deal! Hope that helps.

If they have been decent tenants, granted you are taking the word of the seller, I would prefer to keep a tenant in place especially if the will handle the rent raise. This keeps you from having to handle a turnover and wait on most of the renovations. If there is no formal lease they should be considered month to month and I believe they should be given 30 days notice to vacate/ non-renewal. So out by close isn't going to happen unless they leave on their own it will likely be the beginning of the next month depending on their lease. I would serve the eviction/ non-renewal in writing and verbally. I also keep a log of contact emails back and forth, texts or a phone call summary- date time and brief summary of conversation. That being said if they want to stay, I would vet them through your normal methods. I usually offer to pay for the check fee, for background to help make that a smooth process. Good luck and don't stress it too much it will be a short term challenge for your investing career!

I use the same criteria for a guarantor as I do for a tenant. I focus mostly on if they pay their bills on time i think that is the easiest way to vet a potential tenant. I use Smartmove which was featured here a few years ago but bigger pockets has a bunch of different option under the tools and property management section. https://www.biggerpockets.com/... Realistically they are also agreeing to the financial terms laid out in the lease so if their is a breach you would have to sue them to be made whole. Or file for eviction also asking naming the Guarantor as a responsible party. I would say 90% of bad tenant are weeded out by having them pay for the credit and background check, if 40 bucks is seen as too much to see if you qualify I'll wait for another applicant.