All Forum Posts by: Josiah Kay

Hey BP -

Does anyone have recommendations for a solid real estate attorney in the Milwaukee area? 

@Malcolm Dillon Thanks! That's awesome of you.

Come join a group of fellow real estate investors who are looking to change our lives through real estate. As a bonus, Big Head Brewery offers some great options for craft beers.

Hi, Heath - 

A few questions/thoughts:

1) What are your ROI and cashflow minimums? I would base my offer price based on the price that is going to achieve these minimums (while obviously attempting to maximize them). Personally, when looking at properties, I shoot for at least $200 per door and a 12% ROI.

2) Who will be paying water/sewer?

3) I would recommend budgeting for property management even if you plan on managing yourself since there will probably come a time when you don't want to be managing the property. 

As a side note - extending the amortization of the loan to 30 years would help your cashflow, but we all have our own preferences when it comes to a 15 or 30 year loan.

Hey, Mike!

1) How confident are you on those rents? That's edging in on the 2% rule and those tend to be in less desirable areas. 

2) Would the tenants be paying water/sewer? 

3) I would suggest factoring in property management since there will probably come a time when you don't want to be managing anymore.

BiggerPocket's "The Book on Managing Rental Properties" goes into significant detail on the screening process. Otherwise, you can check out "Tenant Screening: The Ultimate Guide" at https://www.biggerpockets.com/renewsblog/2013/01/2...

I use TransUnion SmartMove to perform the credit and background checks. 

Hi, Kevin! Welcome to BP! Whether it is good or bad really depends on your comfortability with risk. Tapping into your home equity for the downpayment can be an excellent way to maximize your ROI, however, being over leveraged can have it's risks. Personally, if I had sufficient reserves and there was enough cushion in the deal to allow for a rent drop, I'd feel comfortable using my home equity as a downpayment.

If it were me, I would go for a HELOC. With a HE Loan, the lender will likely disburse the entire loan amount to you which means you start paying interest on all of the funds right away. With a HELOC, you can maintain a zero loan balance until you find the right deal and then draw from your HELOC (at which point you will start accruing interest). Plus, on a HE Loan you will be paying principal and interest, while with a HELOC you'd probably only be making interest payments during the draw period.

There are really two different values for the properties. The properties have market value which can be determined by reviewing recent comparable sales. The properties also have value that is specific to you as an investor. This value is going to be determined by running the numbers and identifying the price point that allows you to meet your investment criteria (i.e. minimum cashflow, minimum ROI, etc.). Your offer should be driven by the latter, however, it would also be good to know the former as that allows you to better understand how the seller will respond to your offer.

Typically, hazard insurance is billed annually. Depending on your area, tax payments could vary. For example, in WI they are typically due annually, however, in FL I've seen taxes due in two separate installments. Also, you may be able to setup a payment plan with the county to pay in installments. 

I know you said you are looking to do seller financing, however, with conventional financing your lender may escrow for taxes and/or insurance in which case you would pay your lender a portion of the taxes and/or insurance on a monthly basis. Then, when an insurance or tax payment is due, your lender would either cut a check directly to the payee or send you a check to pay the bill. 

In addition to the above, a Home Summary document including photos and details of the features, lease terms, and application process. If you aren't using the Cozy applications, paper applications would also be good.