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All Forum Posts by: Anthony Gayden

Anthony Gayden has started 77 posts and replied 1981 times.

Post: Transunion (MySmartMove) Tenant Screening Nightmare.

Anthony Gayden
Pro Member
Posted
  • Rental Property Investor
  • Omaha, NE
  • Posts 2,030
  • Votes 3,308

@CJ B.

I have experienced this issue. This happened in particular when I rented to someone with no credit history. Transunion is a credit based service so someone without credit is impossible for them to screen.

Post: Average Cost of Cash Out Refianance

Anthony Gayden
Pro Member
Posted
  • Rental Property Investor
  • Omaha, NE
  • Posts 2,030
  • Votes 3,308
Originally posted by @Cel Arrington:

Update: 

Just the little bit of pushback revealed two things: 

  • The cost to close included an escrow to cover taxes.  Of course, this is an expense I already accounted for in my numbers every year/month, so I do not consider this a closing cost, just taxes to be paid. 
  • This also included $980 in points paid.  Apparently it's a default for an investment property, but it sounds like I'll be able to remove that.  

Original perceived cost to close was $5,200, minus points I won't pay and the tax escrow, we're down to ~$3200.  

Thanks for the insight, and hopefully my partial blunder and partial reasonable catch will help someone else in the future :)

Don’t forget that the bank should send you a refund of the tax money you already paid into escrow after the closing.

Post: Average Cost of Cash Out Refianance

Anthony Gayden
Pro Member
Posted
  • Rental Property Investor
  • Omaha, NE
  • Posts 2,030
  • Votes 3,308
Originally posted by @Sudhanshu Singha:

@Cel Arrington what is the breakdown of the 6.5K in closing costs? What I am thinking is that the lender is probably charging you a combination of high origination fees and points and enticing you with a low interest rate. Here is a sample breakdown of what fees might/should look like so you can maybe compare it to the breakdown to see what is causing the high fees. I am assuming you are pulling out 80% of the 90k property so a loan amount of 72K.

Potential Closings Costs: $2715-$6230

Origination Fee -(1%-2%) =$720-$1440

Points (.75-4 Points)= $540-$2880

Appraisal=$400-$500

Title Search=$175-$250

Title Insurance=$275-$350

Wire Fee= $25-$40

Recording Fee=$50-$70

Transfer Tax= $180-$200

Miscellaneous Fees=$350-$500

Ideally you would want to be on the lower range of the closings costs and I don't recommend you refinance with this lender unless absolutely necessary. I think they might be trying to take advantage of the Covid-19 situation since a lot of lenders are temporarily halting investment property cash out refinancing. 

I would say in your situation 3k or lower in closing costs would be reasonable for a 67-72k cash out refinance. Ideally you would not want to spend more than 1% on origination fees and also not pay more than 1 point for the best interest rate. Someone who is mortgage broker in Virginia or ideally the Roanoke area would probably be the best person for advice especially on what is a reasonable amount of origination fees and points during this Covid-19 period. 

I hope the breakdown of costs helps! 

 You forget the prepaid insurance and taxes. That can add thousands to the amount.

The last four cash out refinances I have done, the total closing costs averaged $5000.

Post: Good Time For Multifamily

Anthony Gayden
Pro Member
Posted
  • Rental Property Investor
  • Omaha, NE
  • Posts 2,030
  • Votes 3,308
Originally posted by @Kreig Jarnagin:

Calling on experienced multifamily investors.

I recently had a meeting with an individual in the CRE field as a broker who advised the multifamily game has no value anymore unless you own the property outright. He advised its time has come and gone. He went on to say the better play right now is the residential side (single family and duplex).

Thoughts?

Multifamily has no value unless you own the property outright?!?!?

That is a very odd statement and makes no sense at face value. 
So this broker is saying that unless you own multifamily without a mortgage and have 100% equity, it has no value?

He says it’s time has come and gone?!? What does that mean? Are there thousands of empty apartment complexes that nobody wants sitting on the market? 

Post: Nebraska and Iowa Real Estate Investing

Anthony Gayden
Pro Member
Posted
  • Rental Property Investor
  • Omaha, NE
  • Posts 2,030
  • Votes 3,308
Originally posted by @Garrett Hepperly:

Good Morning Everyone!  My wife and I are in the starting process of getting into RE investing. We live in Omaha, NE and have family in Des Moines and Mason City, IA. We are looking to make connection with people in these area and learn from their experience.  

Hello Garrett, I’m a smaller investor here in Omaha as well.

Feel free to reach out.

Post: Why hiring a PM is CRAZY!

Anthony Gayden
Pro Member
Posted
  • Rental Property Investor
  • Omaha, NE
  • Posts 2,030
  • Votes 3,308
Originally posted by @Marian Smith:

I don’t view property management as extreme diy.  I clean and do a little painting between tenants.  I plan on hiring a cleaning service next move out and adding a requirement for professional cleaning on exit to the lease for the next turnover....already do for carpet.  But thanks for the complement.

I always have a cleaning service clean after move out. It costs a bit more, but saves a ton of time. My wife also appreciates not having to help me clean dirty toilets.

Post: Why hiring a PM is CRAZY!

Anthony Gayden
Pro Member
Posted
  • Rental Property Investor
  • Omaha, NE
  • Posts 2,030
  • Votes 3,308

@Darrien James

I use Transunion Smartmove for tenant credit/criminal background screening. I ask my tenants for info regarding their current landlord and place of employment so I can verify. I also get a copy of their latest paycheck stub and drivers license.

I list my rentals on Zillow, Facebook marketplace, and Craigslist. I have a Rentometer Pro membership to know my rental rates.

In terms of how much time I spend a month self managing three single family rentals, very little. Probably a couple of hours at most. The time consuming part is getting a unit rent ready and leased. I spend the majority of my time paying mortgages, insurance, and handling accounting.

Just as an example the city recently sent me a notice of road construction on the street where my property is located. They wanted to pay me for a temporary easement on a 35 square foot section of my property. I had to drive over there and take measurements to make sure they wouldn’t block my driveway. I also had to explain the situation to my tenants, and meet with the person from the city offices to fill out the paperwork. It took a couple of hours total.

Another example is that my tenants in another house complained that it was warm in the upstairs bedrooms, so I agreed to buy window a/c units for them and have them installed. I will of course do the work myself.


Post: Why hiring a PM is CRAZY!

Anthony Gayden
Pro Member
Posted
  • Rental Property Investor
  • Omaha, NE
  • Posts 2,030
  • Votes 3,308
Originally posted by @Marian Smith:

Just thought I’d write a few words as a counterpoint to the trending post.

I own and self-manage 5 properties. I have had rent collection issues but never had to evict anyone, nor have I lost even a month’s rent. But I have sent out notices.

I keep the properties well maintained so do not have many maintenance calls. But it happens.

I have two hvac and two plumbing contractors that I use. The solo guys are my go to and the others have a 5-8 guy crew that are 24-7...and the plumbing crew has rooter equipment, etc.

A PM would cost me about $500 a month. I guess if I made $100 an hour every waking moment I would feel more than justified hiring a property manager. But I don’t, so I consider it paying myself $100 an hour when I manage routine issues, probably much more if I actually recorded time spent but probably quite a bit less when I have a vacancy. However, I prefer to be immersed in the reletting of my properties because I like the properties to rent out very clean and my new tenants to seem nice and organized...as well as financially qualified. After all, it costs me, not a PM if my place gets let to a less than optimal tenant. (Slob, non-compliant type, constant complainer, bad vibe.)

Lastly, I can rent a tad under market. My tenants have no reason to move because my rents are less than comparable properties that have to cash flow after paying PM fees as well as the initial cost to fill the unit.

PMs provide a service. Undoubtably a valued service to their customers. I probably could list a few positives for using a PM, but the PM who started the opposing thread did not offer a balanced view, so neither will I.

 Sounds like you are doing a good job. 

I am a supporter of both self managing and using property management. I do both. It would be impossible for me to manage my multifamily properties out of state. At the same time I self manage my single family rentals located here in Omaha. Since I only own three SFRs in Omaha and SFRs in general are easier to manage than multifamily, it isn't a huge burden on me.

Overall I feel that I am a more well-rounded investor for having experienced both sides of the management issue. I will likely move to having all of my properties under a property manager at some point because I simply do not have the time to dedicate to managing a large number of properties, working in my demanding full-time career, and being a good husband/father. 

Post: FHA VS Conventional VS Commercial financing

Anthony Gayden
Pro Member
Posted
  • Rental Property Investor
  • Omaha, NE
  • Posts 2,030
  • Votes 3,308
Originally posted by @George Samios:

Hello everyone,

I am looking to invest in my first property but I need some advice on which way to go for the loan. The property will be probably bea multi-family 2 to 3 units and it won't be in my home state. Would I be able to get a commercial loan on the property given I put down 20%? Should I have the property in the LLC? or should take the FHA or conventional route and have good insurance? If I can put less then 20% down with an FHA loan would this make sense? Do I have to make it my primary residence?

Any advice will be greatly appreciated. 

Thanks

Yes, you could get a commercial loan on the property. You may need to put at least 25% down. Commercial mortgages work a little different than residential mortgages. The debt coverage service ratio (DCSR) will be a factor and you will need to have a net worth equal to the amount that you want to borrow. Also commercial mortgages generally have balloons after 5-10 years. Many commercial loans amortize over 15, 20, or 25 years instead of the 30 years which is standard in a conventional residential mortgage. The commercial loans generally have lower interest rates and you might even be able to get an interest-only period. You also will be able to purchase your property with your LLC.

You could also purchase using a conventional residential mortgage. For a non-owner occupied loan most places will require 25% down for 2-4 units. The good news is that you will be able to get a fixed interest rate for 30 years. You probably will not be able to purchase the property with an LLC, however you can transfer ownership to your LLC later using a quit claim deed.

You stated that the property won't be in your home state so I am assuming that you won't live there, so an FHA mortgage is off the table.

It is not necessary to purchase the property with an LLC and a good umbrellas insurance policy will work in many cases. I personally own many rental properties and they are all in my personal name. I do have a commercial umbrella insurance policy and regardless of whether you have an LLC or not, I recommend one for your rentals.

Post: And another landlord feeds the Cancel Rent fire! Brooklyn

Anthony Gayden
Pro Member
Posted
  • Rental Property Investor
  • Omaha, NE
  • Posts 2,030
  • Votes 3,308
Originally posted by @Patrick M.:

I am curious to see some follow ups. I don't know how these "cancel rent" landlords can justify collecting June rents.

And then there is the fall! Winter is coming.

 I have rentals in Nebraska and Arizona. I have collected 100% of my rents in April and May. 

I think this is less of an issue in landlord friendly states.