All Forum Posts by: Lucas Miles

@Adam Franco If this would be your first deal (especially something of this size) partnering with someone with more experience could definitely be a good plan. "You don't know what you don't know" comes to mind. Not having additional funds when (not if) something doesn't go exactly as planned is something to consider. Getting financing approved from a bank will also be a challenge if you don't have much experience as well. Few creative financing options if you get over the first couple hurdles: 1. Bank provides 75%-80% (depending on what their LTV is) of purchase price in first position, seller holds 10%-20% is second position, you need to provide limited capital at closing. 2. Seller finances 90+% of the property to you for a few years, only stabilized refinance through a lender. 3. Bank gives 80%, bring in a partner to provide the additional 20%.

I would start talking to lenders if you haven't already to see if they would approve you for a loan or not. Continue talking to your local contacts to see how might be interested in partnering. 

@Stetson T. Stallworth if seller is motivated seller financing is an option. Contract for deed, seller holds 90% you come up with the remaining 10%. Seller holds a loan in second position, bank gives you 80%, seller holds 10%, you come up with 10% (ask you lender if they are okay with this setup). With both options refinance with bank lending down the road. For this to work it has to be an awesome deal! Will be hard to make the numbers work on a marginal deal. 

@Michael West endless ways to do this for sure. Easiest way is probably bank gives you 80% (or whatever LTV they go up to) in 1st position, then the seller gives you 20% in second position. Other than fees, inspection, etc you don't have to bring much to the closing table. Can utilize your funds to cover the rehab. Depending on your state there may be different ways to handle this, but the closing/title company should handle all of this at closing.

You will then to make monthly payment to 1. Your bank loan in first position and 2. To the seller for the seller's loan. Structure of the seller loan is fully negotiable, but often interest only payments for 3-5 years loan amortized over 20+ years at interest rate of 2-6%, again all negotiable. 

@Jacob Wietholder a couple must reads if you are self managing: Landlording on Autopilot by Mike Butler and The Book on Managing Rental Properties by Brandon/Heater Turner. Both books also come with extra form and documents that will help you get started. 

There are a handful of property management software available to use, some free some fairly inexpensive. I would recommend starting with something right away. These programs allow to you easily collect online rent from your tenants along with tons of other features. If you have plans to continue to grow and eventually manage more than ~20 units, I would recommend starting out with the more robust solution, Buildium, Appfolio, Yardi Breeze, etc, these are more expensive but will allow to you grow and scale easier. Lot of cheaper (often free) options if you don't intent on self managing your portfolio forever, Apartments.com (use to be Cozi), TurboTenant, etc. 

@DongHui Patel A more efficient, but more expensive way would be direct mail. Lot of different ways to streamline this process. For the cold calling route if you can't find a phone number through your states SOS website here is a couple other options. 1. Google the person's name along with the city. Sometimes scrolling through google you'll be able to find a #. 2. FB - See if you can find them on FB and send a FB message. 3. Look for the property as a prospective tenant, call the property manager, and ask for the owners phone number. 

@Brandon Knight If you have a interest rate locked in at 2.6%, I would definitely not refinance. A HELOC seems like they way to go in your situation, banks often do HELOCs different. But very common is to open a "line" of credit based on your equity. To determine how much equity you have you might need to have a new appraisal done to confirm this equity (bank specific and situation dependent). Often banks will let you keep this "line" open until you need to use it. After this line established, once you find a property to purchase you can transfer the money over and use it for a down-payment for example.

COC return is highly dependent on your area, type of investing, goals, etc. Many SFR investors with do the BRRRR strategy to pull out their initial investment, at this point your return is effectively infinite.

@Eric La Pratt I will usually just hire a local and reputable plumber to do a project like this. They should have the experience and expertise to pick the best product for you. Talking to plumbers in my area, they all tell me water heaters, faucets, etc that you can buy from a box store have all internal components removed and replaced with cheaper components (so box stores can make money) that don't last as long. Licensed plumbers buy directly from the manufacture/distributor so in theory the water heater should last longer. 

@Toni Conway a way to potentially avoid the court/eviction proceedings is to do a "cash for keys". Offer the tenants some amount of money, $500, $1000, whatever to move out of the residence by end of the month or whatever time period you want. If you explain this to the tenant that, you have 2 options. 1. Court proceeding/eviction, eviction will be on your permanent record making it very difficult for you to find a new place to live, you will be charged for our attorney/court fees (depending on your local laws), and any money you owe will be sent to collection agency to collect. or 2. You get paid $500 and move out, we just move on from the situation. Nothing goes on your permanent records, and you get some money to help in finding a new place to live.

This doesn't always work, but it is an option to get them to move out without having to deal with the court systems. We will often do cash for keys in parallel with eviction so they know we are serious about eviction.   

@Zach Alms congrats! Lake Crystal is a nice little market being close to Mankato. What are your plans for the property? Does it need much for rehab? 

@Kosh Vokter I find it hard to believe that the seller doesn't have $500 for dealing with the sheet rock, rather they just don't want to deal with it. I would have a contractor/plumber take a look at the issue, and give a bid for worse case scenario to fix this. This sounds like just a pluming fix, little demo/mold work, and some finish work, doesn't sound very expensive in the grand scheme of things. I'd ask the seller to either fix the issue prior to closing, or ask them for a repair credit at closing based on the quote your contractor/plumber provided.