All Forum Posts by: Maggie L.

Adam,

a lot of good advice - I would reiterate the call to run the numbers on each scenario.  It sounds like you've talked to the gas company, have you spoken to the electric company?  You should be able to get the numbers for the past year on your property, and a similar property (equivalent square footage) for both scenarios.  I know where I used to live (in Wisconsin)  I could see utility use by searching the address, but you may not be able to do that there to compare.  Also, talk to the electric company about rebates to stick with what you have.

From a resale perspective, I suspect it would be considered a plus to have forced air and would lead to lower days on market at the very least, but an expert in your local market would be able to answer that question.  Even if the neighborhood is a 50-50 mix the room-by-room heat may reduce resale or lengthen DOM.  I live in St Louis, so the desire for central air means ductwork is really an expectation.

Disclosure: I'm a Realtor that helps out of state investors find investments.

I'd echo a lot of what has been said here: it's cheaper to invest locally because you can manage yourself (that's what I do), and regardless of where you invest the people you hire will be crucial.  Also, if you think you will invest somewhere and are geographically flexible it can be a great deal to live in a multi-family and fix it up.

One thing I would add is to talk to real estate agents anywhere you are considering.  Look for someone who is investor friendly, ask them to explain the local market and what their strategy would be.  Do this multiple times, and you should get some good insights into the market, and potentially find an agent or two that you like.  This should be in addition to all of the research you are doing on that market. I'm in Missouri, and use a non-exclusive agency agreement when appropriate - that means I only get a commission when I find the deal. For repeat clients who are looking at many ways to find deals (e.g. wholesalers, Realtors, direct mailing), I consider non-exclusive agreements the most fair way to do business.  

I'm a Realtor, so in a lot of ways I basically wholesale.  I'm working on developing my Realtor business, but this is specifically because I would like to expand my rentals.  

My IRA is mostly stocks and would be too small to do something like purchase a property. Also, because I would be doing physical work myself (I manage my own properties, mostly landscaping but also other repairs and maintenance) self-directed retirement accounts wouldn't be an option.

I may be willing to consider hard money, but I'm definitely hesitant.  I know enough about the changes that just occurred because of CFPB to be really worried about that approach.

My problem is more that I tend to focus 5-10 years out, and even as a child I was good at not pulling the trigger when I wanted something.  It's not that I'm a procrastinator, it's that I'm a researcher (I was in academia until medical issues forced me to withdraw) and want to have as much information as possible beforehand.  Then, even if I know what I want I wait for it to go on sale ;)
One property I was watching went under contract this week, and I'm going to view another today.   Even if I don't pull the trigger on anything this year I'd like to have a better idea of what my options would be.

Welcome!

My grandparents lived in Overland Park, KS until very recently and I'm over in St Louis.

@Austin Wark always happy to help.  Read up as much as possible now, then when you think you've found some possibilities share on BP for some perspective.  Your investment should be one you're comfortable making (especially since you're living there) but someone may notice a detail or offer some useful insight.

@Austin Wark turnkey means a property that doesn't need work done.  You often pay a bit more for them, but have a better idea of costs and SHOULD take less time. Unfortunately, something that looks turnkey may actually require work - make sure your offers are contingent on inspection and get it thoroughly inspected whether or not it's supposed to be turnkey.  There will invariably be something on the home inspection, but hopefully it's not expensive, or something that you can live with.

Personally, I find better value in fixing up a rental - my first rental needed more than a dozen new windows (some were in rough shape, and there were even taped storms) and I added central air (removed radiators).  These would be examples of capital expenses rather than maintenance so there's more invested, but I also increased my rents by about 1/3.

Hi all,

I was looking for advice/perspective on financing a new rental investment.  I'm close to done with my current rehab, and there are a few duplexes in the area that look really appealing (I'm a Realtor so I see a lot) but I can't purchase the way I did before- cash.

I got help on my first two purchases from family but these are family members who would not be comfortable with something like cosigning on a loan.  I know there are some recent changes to lending practices, but I am still mostly self-employed (small income from rentals as employee, as well as starting commissions aka SMALL as investor-friendly real estate agent) so the income part of the equation is tricky for me.

If I could actually put all of my income as taxable income I would probably qualify for a traditional mortgage of the size I need, but because a lot of my income is not considered consistent (1099, stock sales, free rent) I've been told my monthly income doesn't quality.

I know my business partner would not be comfortable using equity from the current homes to finance a new purchase, so I'm trying to do this on my own.  Is there a reasonable way to get a loan or should I just be patient and hope there are good deals next year?

Basically, I have a bit under 2 years of experience managing rentals, and commercial lenders have told me that the houses I pick out make sense for a loan...if I personally had the monthly income they want aka I pick a good cash flow, but I'm too capital rich and income poor to qualify.

Advice/resources to check out?

Thanks
Maggie

Welcome to world of multi families! 

One thing I would emphasize is to SCREEN your tenant - if you wait a little longer to make sure that you have a good tenant with landlords who liked them (not just a positive review from their current landlord) and solid financials (credit score, monthly income) you're likely to be much happier in the long run.

The type of tenant will have a big impact on your land lording experience: are you replacing the occasional smoke detector battery, or do you have to repair gouges in walls, fix water damage, and repair flooring at move out.  Look for screening services in your area; they may also have free/low cost classes on landlord tenant law.  Also, pay attention to the terms of your lease - notice required to enter unit, how you handle renewals, subletting, distribution of utilities.  Local/state law will be an important guide here, and a lot of it is online.

If you're living on the property, it really makes financial sense to manage it yourself.  Even with a turnkey it will probably involve some basics like cutting grass, shoveling snow, maintaining landscaping, removing clogs in plumbing, fixing doors that stick or blinds that stop working.  It really depends on what you're comfortable taking on yourself, and where a handyman/contractor comes in.

There are A LOT of great resources out there - join a local group so you can talk to investors near you to learn some of the idiosyncrasies of your market in addition to books and places like BP.