All Forum Posts by: Kat Rathell

Anyone use Zelle? Any comments?

We have ran into some of our C-class property tenants not having conventional bank accounts, and Cozy attempting to charge them ~$20 per rent payment. 

Any advice on the subject would be much appreciated.

Thank you!

I believe buying with cash is superior when you are buying a wholesale deal and time is of the essence. Wholesalers don’t do financing ;). 

I just got a quote from an insurance broker for exactly what you are describing. But it is in WI, so, I am not sure if there’s a difference.

Also, it is not cheaper compared to a regular policy.

After reading posts on BP I also assumed that you can not charge for landlord time, but it appears that at least in WI where we are you actually can!

I am equally interested in the correct answer. But here are a few things to consider:

1) like you said, if the house burns down, the loan is paid, but how much will it cost you to remedy the burnt building? Debris removal, clearing the site, excavating the basement and filling it, etc. You will have possession of a burnt building and still owe taxes and fines and fees. Will you be in a position to shoulder the related expenses?

2) is if you are going to want to grow equity/rehab and then cash out refinance at a higher dollar amount out of this home, your new lender will want the entire higher amount insured.

I agree that some of those - garage, storage, are definite bonuses. However, depending on your target audience, of course, providing a washer and a dryer is potentially more attractive to tenants who do not have their own, and therefore may be more transitional and less long-term. 

Something to consider is what if you have tenants who have their own washer and dryer. Do you have extra space in the basement for those items? If you do, there goes your extra storage space :). 

@Antione Jones, we’re in Milwaukee as well. Not sure if you tried or considered this, but the local credit unions actually do lend for investment properties, minus the UWCU. It costs a bit up front in closing fees, but you can cash out refinance up to 70% if the appraisal comes in at what you want. And they seem to be able to do lower loan amounts in the 30K range.

Does it ever make sense to have available low-interest credit lines in place of actual cash reserves for CapEx? It appears to make sense to reinvest in real estate whatever you may be holding in a reserve for an emergency repair of a big ticket item.

We had a prospective tenant offer to pay 3 months in advance in exchange for immediate move in. A huge red flag. An immediate: ‘No, thank you, please submit an application. Landlord will be performing a background and credit check.’

What is their job? Do you know what it is exactly that they do? The source of cash matters. 

Also - look at it from the other side - what if you want them gone before the year is up? There would not be much you can do...

Now, full disclosure is that this definitely applies in Wisconsin, I am not sure if the other states function the same way, I assume they do, but you just never know :).

The role of the title company is to make sure the title to the property is free and clear, as in that there are no mortgages, liens, loans, taxes and fees against it. 

So, they research all of that, and when they find something against it, they compile a list. Say, your seller has a $40K mortgage against the house, $10K home equity loan, $3K in unpaid taxes, $2K in unpaid water and electric bills and $1K in fees to the local municipality for not cutting the grass for 2 years. This would mean a total of $56K you would be on the hook for if you just bought the house without knowing this (if it’s even possible to buy a house without a titling company, honestly, I do not know).

A title company will discover this information, and at the closing table they will subtract the $56K from the proceeds the seller will receive, put this money in an escrow account and order payoffs for all of the seller’s debts against the property. You will pay the agreed upon $99K. The seller will then get 99K-$56K=$43K. The 56K will go to cover the debts of the seller.

The closing company will then issue you a title insurance that protects against somebody unknown having an interest in your property, anything they could have missed. Say, another home equity loan they did not find for $20K. If after you take possession of the property somebody comes after you for the money owed against the property, the title insurance will cover the debt. 

There appears to be a ‘gap’ between when a property is purchased and when the sale is recorded. Now, I am a little fuzzy on this, but it appears that theoretically it is possible possible for a lien or another sale to occur during this ‘gap’ time frame. This is what gap insurance protects you against.

I assume some people may decide to do all the research and payoffs and hope they did not miss anything without a title company, but I do not know if it is even possible to do on your own. But - regardless - for the few hundred dollars it costs I’d take my peace of mind (I think our closings cost under $300, and our title insurance in the neighborhood of $400-500 for a ~$30K property - a % of the sale price). Also, the seller usually pays the closing and title insurance fees, at least here in WI. There are some fees the buyer pays, but they are minor in comparison. 

Hope this helps!