All Forum Posts by: Lucas A Davidson

Morning!
I have a fully remodeled home (was originally intended to be a flip) in my community. I decided since it's the dead of winter, it would be a bad idea to list it - it would likely sit 90-120 days on the market until the "spring thaw," leaving potential buyers thinking "Why has it sat so long? Must be something wrong" and also "120 days? It should be marked down!"

So, I decided what the heck...I'll try renting it for $1000 a mon, no utilities. 
For my area, that's very steep (most places are around $600).

I finally have a very promising tenant coming to visit (retired government worker here to help with a trust) and to check it out.
However, they want a 6 month lease.
A definite pro I see is that their lease would expire in June - during peak listing and selling season. A major con of it is that, well, who knows...maybe they aren't a good tenant.

My question - Are there any major things I need to be aware of with a 6 month lease vs a 1 year? I feel like I've read somewhere that 6 months is riskier.

Thanks!

Honestly, I put about 20-30% of my checks into 
1. ETFs - they are semi-diverse funds available on the stock market. Having them essentially be a "portfolio" of multiple stocks reduces the negative (and also positive) effects. Do a bit of reading! 
2. REITs - Real Estate Investment Trusts. My fave. Many of these pay monthly dividends. Specifically search for the ticker "O"

@Will Fraser great info thanks! It's a smaller, older home with mint color aluminum siding but a brand new roof.

My intention would be to repaint it white, clean up all the sporadically planted mish mash of random foliage.

I agree with you - I think tho these are affordable (I can do both of these tasks), I think it will add considerable value.

Regarding the $150 application fee - my contractor owns quite a few rentals in our community and that's how he keeps poor renters away. We do not have quality renters in our area - there are a notorious amount of people who destroy rentals.
The application fee is what he suggested to help reduce the applications from poor tenants...he said you can always refund it, depending on case.
I enjoy the feedback, though, and will absolutely consider removing this requirement in the future.

Hello there!

I'm eyeing a potential new brrrr. I have my full estimate from my contractor forthcoming, but am asking about landscaping and just how much equity can I really expect out of "minimalisation" of it.

The home is quaint and on a double corner lot. There is a full garden and the whole friggin house is wrapped in plants...then the double lot is grown over with random shrubs and little trees.

It's literally surrounded by a ragtag bunch of different plants haphazardly planted.

If in the spring I were to cut most of them out, freeing up the .3 acres into a nice big yard and to tidy up around the outside, would I expect to see some equity added when appraised?

Thanks!

Hey!

I fully renovated an entire 3/1 home in a prime location (walking distance of everything), and will be renting it at an estimated $400 a month profit.

But, I have everyone - I mean EVERYONE in my community telling me to NOT rent and to flip it.

After capital gains, closings, etc, I would stand to gain far less than holding it...especially with an economic downturn coming.

My intent is a very rigid application process, including full background checks, references, and a $150 application few.

Knowing my goal is to build a portfolio of rentals for passive income, I'm seeking advice of my fellow BP'ers on if this level of resistance to renting is normal?

Thanks!

@Greg Miller

So where are they getting a 55k HELOC from? I figured I would also get the rough 95k back.

I posted last week with woes regarding lending - lenders only were wanting to grant 20 years, in short.
Deets:

1. House was purchased for 62k. I had to put 0% down. In all, I'm about $3k out of pocket in this deal.
2. I did approximately $38k in remodeling. The house went from wildly outdated (hadn't had ANY updates since early 70s) to essentially a Pinterest home.
3. Estimate it will appraise 135k-160k.
4. 3 beds, 1 bath, around 7 blocks from one of community's biggest schools and best parks. Approx 10 blocks from downtown. Has decent yard, full unfinished basement, full "third level" of storage, huge 2 car garage, big shed. Awesome neighbors. Big, new deck.
5. Rent will be $1,100, $150 app fee, standard 3x income and checks (for reference, most rentals in my town are horribly run down and owned by slumlords and around $600-700 - this is part of my vision...changing the norm to modern and more beautiful, but stricter requirements)

So I had a local bank call yesterday. 
They want to use Freddie. 
Option 1: 30 year, 3.625% rate, approx 71% LTV, I'd have $2621 in fees (can be escrowed) and closings
Option 2: 30 year, 4.5%, approx 71% LTV, NO FEES.
In both deals, I am opting for lines of credit vs cash outs. They told me the cash outs would have considerably higher fees and I'd net about $17k. With a LOC, they told me I'd get approximately $55k.

My question:
Knowing I'm around 25-30% of my DTI (before any Realtor income! This is from my day job), and my overall goal is to BRRRR:
1. Does it seem low because I'm $0 in this deal?
2. If I use the $55k on another property, I would need it to ARV around $75k to get 100% of its value refi'd, correct?
3. Will I "hit a lending wall" if I continue to BRRRR? It feels like it.

Let me know your suggestions and questions! I hugely appreciate everyone's time and knowledge!

Bank number 5: "

Your information was passed along to me by XXXXX. I am the business banker in the area for Range Bank. Based on the information you provided below, I can pass along my insight and what we have to offer. The 30 year fixed rate, conventional financing you talk about does exist out there but is very limited in scope. There are very high, upfront fees associated with it, a person is limited to doing just a couple of properties this way, and the property cannot be in the name of an LLC. For these reasons, it generally does not make sense to finance rental properties this way. Once you get to very large, multi-million dollar properties, there are other programs out there as well.

I will tell you that I would fall in the same 20 year, 5.25%, 80% LTV category as the other bankers you have spoken to. I will also tell you that your are correct that it is very difficult to find a single family home that produces excess cash flow based on these parameters. Generally it takes a building with at least 3 or more units in it to find something that is cash flow positive. Single family homes are more of an investment where someone pays your mortgage and that's about it."

I very explicitly asked for a conventional loan, 30 years, 4-5% rate, 70% LTV. I said "I have a home bought for X, rehabbed to Y, I want a conventional loan and to refi it. I'm putting a renter in worth $1.1k/month"

 Below is the exact reply I got when I explicitly told them I want a conventional, NOT, commercial. This is bank number 4 to tell me this.