All Forum Posts by: Marc Izquierdo

Yup! I'm a chemical engineer. I've come across a lot of engineers in REI while networking and thought the same thing.

My theory is that we as engineers are naturally creative. When we were going through school, we were able to be relatively creative (i.e. projects, problem solving, etc). However, once we ended up getting jobs, all creativity stopped. At least for me, engineering is not at all what I thought it would be. I'm not building or creating anything. Now we just follow SOPs and really can't do anything without involving half the site for approvals and oversight. I think our creativity in the workplace is extremely limited and REI is our space to use the creativity we have naturally and cultivated in college.

Thanks a lot for all of the responses.  There's a ton of great information here.  If anything, I definitely have learned that the lender should absolutely be working with an attorney to prepare loan documents and it's not as simple as a promissory note.  Thanks @Steve Babiak and @Jeff S.for driving that home.

To clarify what I'm looking to do a bit more, this loan would be for the down payment and/or rehab on a future property.  So as of right now, there is no property and no real estate to secure it.  It's pretty much a personal loan like you would get from a bank.  The lender is a long time family friend and this would not be a prohibited transaction based on my research.  When I said unsecured, I meant no physical collateral but I do intend on providing a personal guarantee (maybe that technically makes it secured?).  

I intend to purchase my next property using conventional financing and historically, these lenders don't like unsecured funds to be used as down payments unless they've been seasoned in your account for 3+ months (i.e. they don't ask you for more than 3 months worth of bank statements during underwriting). The thought process is to have my private lender lend me the money now so that it can season in my account by the time I find something to purchase.   

Hi everyone,

I have a private lender lined up who will be lending (unsecured) to me from their SDIRA (checkbook controlled IRA). I'm just a bit confused about how to get the ball rolling. It is as simple as finding an attorney to put together a promissory note and then transferring the funds from the SDIRA to my account? I'm only a bit hesitant because it's an IRA and I do not want to make a wrong move and trigger a taxable event or a penalty. Does anyone have experience with this type of transaction or maybe even know an accountant and or lawyer in the Eastern PA area that would be a good resource to talk to?

Thanks in advance

Marc

Hey everyone,

Yesterday I finally signed a lease for a unit I had vacant for a few months.  Over those few months I had 5 applicants who paid the application fee, knowing the minimum qualifications to rent the property, and were denied for not meeting the minimum qualifications!  Why do people still apply and pay money knowing that they don’t meet the requirements?!?

I even created a questionnaire that filters people out if they don’t meet the requirements before they can even schedule an appointment.  People have literally lied on the questionnaire just to schedule an appointment, fill out an application, pay the fee, and get denied.  I’ve gotten a lot of sob stories after the denial so I’m assuming they go into the whole process assuming they can sweet talk me into approving them.  So much so that they are willing to risk $40 per applicant thinking I’ll fold.  I just think it’s crazy that people think like this.  

Who else experiences this?  If people do it, I’m assuming it works sometimes and the landlord caves.  Stay strong on those qualifications everyone!

@Marvin Meng

Thanks.  I'd appreciate that.  Since then I've learned a lot and recently denied 4 applicants for a recent vacancy I had before I found someone that I felt comfortable with and met all of my qualifications.  As hard as it is to do sometimes I think it's all about developing good qualifications and sticking to them at all costs and if you have to deviate, don't deviate a lot and make sure you grab extra security deposit.  If I had gotten a double security deposit from those first tenants I wouldn't have been out any money at the end of the day.  I had legitimate reason to ask for a double security deposit but didn't.  Live and learn I guess.

@Marvin Meng Great post.  Thanks for sharing that.  I was starting to get emotionally invested!  I had tenants (my first ones ever) who I had to threaten with eviction and fortunately left willingly the day before I filed (and left $1,000 worth of damage)!  

@Nathan Gesner Yea the whole "inheriting the storm" did cross my mind.  My strategy would be to underwrite them based on the market price of the property.  So if market price is $1250 per month, they would still need to make 3x $1250 per month (and show history of such) in order to qualify for the property. 

Now because of fear, uhaul and other moving services being closed, furniture stores being closed, etc people probably don't want to move even if they could afford to.  Therefore, I'd incentivize them to move with all of these services closed and during a difficult time by offering rent at say $500 per month for three months as $500 per month is better than nothing in my eyes .  Since I underwrote them based on the market price, they should have no problem paying market rent once the three months is over.  The only unknown I see in this strategy is what could happen to their job in those three months?  Sure they could show that they have made $100k per year over the last 3 years but with the way things are, could they lose their job?  It's interesting to think about.

@Max T. I currently have a virtual tour link on all of my listings.  Tenants seem to appreciate that even when we're not on lockdown.  However, I did not think of having the tenants enter on their own with a lockbox.  I kept the lockbox on the property after the rehab so it's already there ready to go.  I think that's a great idea!

@Matt Nico Sounds like you're in a good position.  I'm also in a similar position.  I have 3 other units that are occupied and if one other unit didn't pay rent I'd be at break even.  Calling the banks is always in my back pocket though.

@Abel Curiel Thanks.  Good luck to you as well!

Hi everyone,

Prior to the crisis of the pandemic really started to take effect, I had a 2 bedroom apartment up for rent.  It was listed at a competitive price and I was getting a good amount of interest.  I actually had to deny 3 applicants.  I wasn't worried that this was going to sit vacant too long.  However, once panic set in a bit more, I haven't had much interest (as expected).  I'm wondering if others are in this situation and what you plan to do?  Are you planning on dropping your price to aggressively pursue occupancy still or are you going to just wait it out (assuming it was and still is competitively priced).  There is a piece of me that thinks that even if I drop my price, people still won't show interest because of fear of coming to a showing or other interactions associated with getting a new apartment.

I was also kicking around the idea of an "adjustable rent" type of strategy where I offer rent at say $500 per month for three months to weather this storm, then it jumps back up to market price (defined in the lease).  I would still underwrite the tenant based on the market rent. 

Just looking to get others thoughts and idea on this whole situation!

Thanks for the input everyone!  I gave them the option of having it fixed or not.  So if they're ok with it, I'll leave it.

I appreciate the help