All Forum Posts by: Luciano A.

@Victor Delgado Velez

I have done one of our recent 5plex with tenants in 4 of the units. Let's say it is not fun and takes a lot more effort. The property was run down. Tenants were excited to see changes were coming that were going to make living there a better experience. We put them up in a hotel with the thought it was only going to take 2 weeks. With COVID most were working from home. It took us 4 weeks over $5k in hotel fees but I see you are in Houston also. What I would do is fix all the exterior items: roof, siding, new windows (which will require going into units but if you get the same size won't cause too much of a hassle to tenants. Paint exterior. Fix up the empty unit. If the property needs new electrical wiring, plumbing then that is when you need to make a more detailed plan with your contractors so that you can relay this to the two tenants and plan accordingly. If tenants will not be there for say two days while your team is working on their unit then you will want to make sure you are there or a representative as you are responsible for their belongings. 

Another thing to look into if you can put the funds into escrow for items that need to be fixed in the other units. Thus use it when the tenant moves out.

Best of luck 

@Andrew W.

In regards to doing the plumbing and electrical yourself....if it is minor like changing out the ceiling fan or light fixture it is ok. But if you are re-wiring a house or changing out the main water line then you will need a permit. If you don't have one and the city inspector drives by and sees you working it will be red-tagged. With all the new builds and rehabs going on there are more inspectors driving around. Cheaper to just pull permits than to cut corners. 

@Zach Strickland

Thank you for hosting a great meetup. I didn't have a chance to make my way to you to talk but looking forward to your next one. 

@Grant Doyle

You can still do owner finance but it would be a WRAP Mortgage. If you google can find more info but basically, the first loan stays in place and the owner will have his difference from the amount he owes minus the price he sold to you in a second position loan. However, find out if the bank holding the first will be okay with that as some smaller banks can trigger the due on sale clause if you change the name on the deed. 

Another option would be to first get it appraised to ensure you are not paying more than it is worth. Then you can refi and have the first loan paid off and possibly the seller's note if you bought right. 

Best of Luck 

@Mark Cruse

I don't disagree with you as I too have financing for deals but having paid off properties has its benefits. You can never get foreclosed on by a bank on a paid-off property. But as you pointed out it depends on the deal and the returns. So I am not advocating buy-in all-cash is the only way to reduce risk but putting 5% down is much risker than putting 20-30%. 

I hear people talking about buying a property with a $150 positive cash flow. I think that is riskier than buying a $30k cash property. If the market has a correction and you are over-leveraged then those 20 properties you bought can be more of a liability in the bank's eye than the person who bought 5 in all cash. I feel we are near the top but I don't have a crystal ball so I just think buying more conservatively will allow investors to ride the wave a lot easier. I know residential loans are structured differently but commercial loans can be called in before their maturity if the bank feels your property is a risk on their books. @Kiel Martin

@Kiel Martin original post was not asking if he should buy in cash or get financing. People jumped on him saying he is buying in the ghetto and giving their opinion because most of us don't see $30k deals in our current market. They advised him to use that money to put on a house in a better area. But I feel if you can perfect D class management of properties you can be very successful.

I am not saying buying all cash is the only way to go. We each have our own risk tolerance. When I was first starting out I was willing to do 100% financing if I could get it but now I prefer a 60-65% LTV. I get better terms from banks because they see me as being less of a risk. If the market turns and prices do come down I have enough equity to ride the wave. I said earlier I prefer 60-65% but I am doing a deal worth $11M and I'm trying to leverage a loan so that I can bring just 25%. Using leverage is a great tool but many don't use it correctly. The good times won't always be rolling in the good times.

@Kiel Martin

Buying all-cash reduces risk tremendously especially if we have a correction in the near future. I have been in RE for over 15 years. Many of my properties are paid for or have very little debt. When you close on such a low-priced property you will have little cost versus those taking on a loan. Most of the expense is because of lender and their fees, attorney fees, etc. I would call a local title company and just ask them. 

The beautiful thing about real estate is there are riches to be made in all different asset classes. If you buy in low income and can be hands-on you can be successful. 

But one word on caution. Being successful in one business does not guarantee you will be in another. And what looks good on paper and the returns that's possible is not always the cause in the real world. 

Best of luck 

@Jayden Hamilton

Congrats on the success at such young age. You can make money from RE in different ways. You don't have to own rentals to make money. You should find what interests you and what you are good at and items you are not good at then sub out. I understand where you are coming from. I was 21 years old in college and had a very successful business that grew to over 70 employees but age is nothing but a number. It's about mindset and how you carry yourself. 

Don't beat yourself up and think you lost because you hate to manage or do the rehab/repairs yourself. But dont fool yourself into thinking bigger is better or easier. So many people talk about Multi-Family but by the time they get to pay off bills, investors out they are left with less money than the risk/headaches are worth. 

If you DM me can share how to overcome being only 23 and trying to do rental business. 

Best of luck 

@Ben S.

I agree with others. You are the landlord and should have control in this situation. The amount of times I hear broke people talking about suing is laughable. If the tenant has a lawyer on speed dial then why are they renting. I'm just saying. 
It sounds like you got new tenants that need to know you are not like their old landlord and that you will not be bullied. Put a letter together that states there is no reason for having property tested. However, if they want to pay out of their own pocket you can arrange for a third party company after they pay that company's fee so that you can again control the narrative and not have them use some shady company. 

Send this certified so that they see you mean business. Just make copies and hold onto that certification receipt for your record.

IF you give in then be prepared to get a laundry list of stuff in the months to come. They will feel you are easy to control and they will start asking for crazy stuff. Maybe a new fridge because the fridge they have doesn't look pretty. Maybe repaint their interior in their favorite color. I know these are extremes but those of us that have been in the business for some time all have our own stories to tell.

Best of luck 

@Auryana Faramarzi

If you are still in search can send me a PM and I'll send over both contacts that are cost effective.

@Jim Stanley

As others have said...RUN if that is his offer. However, if he is willing to be a good mentor have him let you tag along on a deal from A to Z. This way you can see if he knows what he is doing and can see him perform. Many think they can flip because they watched HGTV but dont really know how to flip.

Best of Luck