All Forum Posts by: Justin Sheley

Do you have a definite reason you are paying with all cash? I am also a newbie investor with only 4 units, but if you can qualify for conventional loans you may be able to purchase 2 or 3 homes with your 26k and grow your cash flow faster. 20% down on a 40k property is only $8,000. You could get 3 property which may actually be nicer at 40k depending on what type of deals are in your area.

As far as refinancing a property that costs 26k I think it's going to depend on what is wrong with the property and if a bank feels comfortable financing it. However, I have yet to refinance a property so I would also love to hear from a more experienced investor what a bank may be looking for in this scenario.

Well I ended up accepting tenant #1 today on a one year lease. I appreciate all the input here, you guys are awesome. In the end I felt like each tenant had some small cons against them but I couldn't really go wrong. After doing my due diligence on both and talking to their employers I went with my guy, so we'll see if that turns out to be trustworthy or not.

I have only had the apartment listed for 4 days. Update to the situation though. Candidate #1 (married with 2 kids) called me yesterday evening and told me that he has a 3 year plan to buy a home and would be willing to sign a 2 year lease. How do you guys feel about 2 year leases? I have a mentor who says he has actually avoided them because the protection of a lease goes both ways. If he has a bad experience with a tenant he's stuck with them for two years.

Great point Marcus. I supposed using a comparison of gross income compared to rent can be very subjective due to each person unique financial situation. It does makes sense that even in the income to rent ratio looks good there may be student loan debts, car payments, ect...that could really hurt ones ability to pay the rent.

Thank you for the feedback. I'm going to do some calling to employers and then see if I have a good candidate or if I should keep looking.

Thank you for the quick replies. I am running background checks and have disqualified about 6 candidates already based on felonys and prior evictions. The children being present don't bother me, I am more concerned with the turnover. I am under the impression that as long as I do not discriminate and qualify each candidate through the same process in am free to chose my preference. Is this correct? Or do I have some sort of obligation based on the order in which the candidates apply?

Thanks for your response Craig. It seems that your a great resource for real estate in Rockford so I would love to meet and talk to you sometime. I don't think I will be able to come tonight because of work. But if I can move some things around I may be able to make it. I would love to come and be apart of the meetup, so I will let you know if something changes and I'm able to make it.

Justin

My wife and I are currently in the process of finding our first tenant to fill a vacant apartment. We own two multi-family but have been fortunate enough in two years not to have to find a new tenant since we purchased properties with existing tenants. 

I have had some good candidates, but have narrowed it down to two.

The first is a married couple with two children that have a gross monthly income of $6,250. My concerns is that they are going to be looking for a home in the Rockford area during the year they rent the apartment. Also, they have two children and it is a 2 bedroom apartment. They are used to living in the setup out in LA, but I am concerned that realistically the apartment is too small and will cause them to be even more inclined to move out after their first year. However, their income far surpasses the 25% rule that I am trying to follow in the income to rent ratio.

The second candidate is a young single girl with a stable job at a manufacturing plant in Rockford. I believe she truly loves the apartment and could be a long term tenant. My concern with her is that her cross monthly income is $2400, meaning the rent is 33.3% of her income. 

I would feel comfortable with both individuals, and they actually both are willing to pay rent in May to hold the apartment although they cannot move in until June. Would anyone here have any opinions on which one may be a better fit, and why?

Hi my name is Justin Sheley, I'm 27 and have a beautiful wife Hallie and a baby on the way:) Within the last few months I have been dedicated to educating myself on real estate, I truly believe it is the path to financial freedom and the career that I can be passionate about. I have been listening to the bigger pockets podcast for awhile, but am just now posting on the forums. I live in Rockford, IL and own two multifamily homes and live in one of the units. I am looking to purchase my first single family investment this summer. I would love to hear from anyone else investing in the Rockford area and even meet you in person if it works out. I am in the stage of trying to learn as much as I possibly can by listening to those who have gone before me and found success. I'm excited to be on the forum and thank you bigger pockets for your podcasts and this great resource for real estate education.

Listening to the Bigger Pockets podcast I heard about the pay near me service. I only have two multi families currently for a total of 4 units, but I would love to get started with using direct deposit payments instead of collecting rent checks. However, when I visited the pay near me website it says individuals and sole proprietorship cannot use the service. Does this mean I have to establish an LLC in order to do this? Are there other direct deposit methods that anyone would recommend?