All Forum Posts by: Kevin Siedlecki

@Brian Christian - I would say rent might be a little lower than a SFR, but not significantly. When I market a unit in a duplex, I use SFRs in my comps.

@Mida T. - They want $10,000? Never heard of them, but I just can't image they have anything to offer you can't learn by reading a few books and asking questions here. 

@KATHLEEN DEEGAN -

I run major expenses through a HELOC, so I'm not quite structured the same way, but if I had to keep cash on hand, I wouldn't do it as a straight cash per property equation. I would probably keep 2 months regular expenses plus $5k for the first property, maybe the same for the second, but then you don't need to add a ton to that as you get to properties 3, 4, and so on. Two reasons for that:

1) You are unlikely to have a $5k+ surprise on multiple properties in the same month.

2) As you get up to more properties, you have more cash every month to cover surprises, so you don't necessarily need cash sitting in an account doing nothing. 

Hope that helps! 

@Wade Garrett - Your consolation is getting this place turned around from a huge headache and a liability to a performing asset. To look at it any other way is to pinch pennies at the cost of dollars.

@Delmas Edwards - Yeah - very small if anything. The best I've seen is 89.9% LTV. If you only put 3.5% down for an FHA, you probably can't get anything out.

@Delmas Edwards - refinancing and getting a HELOC are different things. You get a HELOC in order to borrow against the equity in your house - that's different than refinancing the current balance. Did you buy cash? If so, you can get a HELOC on it. If not, you might not have enough equity to take out a HELOC, or it would be very small.

@Wade Garrett - How has filing for eviction not changed anything? If you're serious, follow through with the evictions! Doing anything else only sends the opposite message. As a side note, this is exactly why I add eviction costs to my acquisition costs of any occupied property.

You don't want to keep it occupied; you want to replace these tenants with paying tenants. This comes down to the difference between physical vacancy and economic vacancy. Having physical bodies in the unit does not end vacancy; getting the rent check does. You have 3 vacant or partially vacant units right now. You're better off getting them out, even if it means a month of physical vacancy, for the good of the long-term well-being of the asset, and your mental well-being as an investor.

@Ryan Canale - The 2% rule is basically nonsense in most markets. It is a bad guideline that if anything gets people in trouble by pushing them towards terrible neighborhoods, which are the only places you can come close to a rent ratio of 2. Rent ratio should only be used as a quick way to compare properties in the same area. 

To better understand how to do initial analysis of a property, check out my blog post on the subject:

https://www.biggerpockets.com/blogs/6815/45137-my-...

@TJ P. - I would look into your second option: looking for owner financing. The lending idea isn't bad, either, but you'll probably have to get some licensing in order to lend to anyone outside your family/friend circle.

I would avoid the C/D cash idea - too risky for a first investment. 

Another idea would be to parter up with someone who can get a loan. You bring cash and desire to the table, someone with clean credit can get the loan, and you come up with some kind of partnership agreement to split the proceeds. 

@Jim Sestito - Especially if it's your first deal, I would recommend using only your own money. Maybe partner up with someone with experience if you are afraid of the risk. When you don't have experience, taking someone else's money is riskier than paying someone with experience for advice. If you screw up you lose money and a friend. If you just give up a little of your cashflow to someone with some know-how to help you through it, you are much more likely to succeed, plus you retain 100% of the tax benefits and equity growth. Then you can be confident in yourself when you bring in someone else's money on your next deal.