All Forum Posts by: Matt Anderson

@Tracy Minick thanks for the feedback! That’s a great idea about the vacuum, I will definitely consider including that!

Hi all,

In search of some guidelines for what is appropriate to ask in a prospective tenant pre-screen questionnaire (what amount of information do folks use for their own criteria, and where can I read about what is unlawful to ask in a rental application?).

I am moving out of my house hack and a bit apprehensive about getting quality tenants in place when I won’t be living in the home, so I want to make sure I am doing my due diligence with tenant screening (I also will be using a background/credit check service as part of the application).

I am also finding that with the marketing channels that seem successful in my market (craigslist and FB marketplace), I get a huge number of inquiries but it is extremely challenging to determine who is serious and who is not. I figure this pre-screen questionnaire will help with that and ease my concerns.

Any and all feedback would be greatly appreciated!

Joe, it sounds a bit like you are partially answering your own question: "...if you are not familiar with the area..."

Based on listening to many folks more experienced than myself (not very!) on the podcast and in various books, gaining familiarity with the area seems key to finding a PM you can trust. Part of your boots-on-the-ground team would be this PM, and maybe the other members of your core team can help steer you in the right direction for your search.

Just today I started listening to the audiobook version of David Greene's book Long-Distance Real Estate Investing, and have been really enjoying it so far. Check it out, you may find some good tips for finding a PM you are comfortable with!

Hey BP, I recently started a discussion called "Looking for feedback on my next move", and have since been giving more thought to obtaining a HELOC or Home Equity Loan as my "no or low money strategy".

Here is the scenario: I had my realtor run an analysis of some local comps, and she believes my primary would appraise at $272K, and my loan balance is about $226K, so equity = 272-226 = $46K (approximately). That's only ~17% equity, which in most cases seems to be not enough to obtain either of these products. I have, however, done some casual searching online for local credit unions, and have found at least a small handful that will lend higher than 85% LTV (with less favorable terms, obviously). So I am confident that this is an option (but am open to feedback confirming or rebutting).

First question: Is this something I really want to do (from a risk/exposure perspective)? Most conventional wisdom/lessons learned are to the tune of not over leveraging, and any discussion involving >80% LTV seems to create a sense of nervousness (I am making a generalization here). What I am not sure I am clear on is, if I believe that my W-2 income can support the payback of a HELOC or home equity loan, and I use the funds from that loan to buy a cash-flowing property below market value, what are the risks of going this route? There are certain answers I expect to hear, but want to leave the question open-ended to see what else comes up that I may not be thinking about. At the end of the day, my big question here is: why would I care that my LTV is 90-100%?

Second question: Most of what I am reading in the forums (again, a bit of a generalization) seems to favor HELOCs over Home Equity Loans, mostly for the flexibility that a HELOC offers since you can tap into the money whenever you want. However, if my intention is to use the equity from said HELOC/Home Equity Loan as a down payment on a rental, doesn't it make more sense to take a fixed rate Home Equity Loan so I am not subject to the adjustable rates of a HELOC? Or is there an inference made that with the HELOC, once you tap into it in a situation like this, it is assumed that you refinance it into a fixed rate loan so you know exactly what you're dealing with month-to-month? I believe that HELOCs can be interest only for a period of time, which can help with cash flow for sure, but can home equity loans ever be interest only?

What other details of the strategy I have outlined here am I overlooking?

 Good advice on just starting out and finding these deals. I appreciate it, Robbie!

@Ray Lai Thanks for your feedback. I agree, I think I need to do a little more research to hone in on some other realistic options that will let me build a little more equity at a lower upfront cost as opposed to simply buying something off of the MLS.

 I actually have a copy of it that I read a while back, I will have to go back and give it another (closer) read. Thank you for the feedback!

@Robbie Reutzel,

Thanks for the feedback! Have you had success with any particular strategies for finding distressed properties in your areas? Are you driving for dollars, sending out mailers, other networking to connect you with distressed sellers?

May I ask more specifically what MA/NH markets you are in? I grew up near the NH Seacoast and would be interested in investing there, but can definitely see what you are saying about competition and over pricing.

Hey BP,

Long time podcast listener and forum reader, but first time poster. I have learned so much through BP already, and look forward to learning more through engaging with the community here.

I am seeking some guidance on my next move. I currently own my primary (SFH) and my short term goal is to acquire a second buy-and-hold property in my current market (I am in CT). I am looking for a single family or small multi (though most multis in my market seem to be selling all-cash, over asking, according to my realtor, and I cannot compete with that).

I purchased my SFH through a state offered first-time homebuyers program with 5% down, and have experienced some appreciation that should allow me to get to ~15-20% equity if I were to refinance. Current mortgage rate is 3.375% (with PMI on top of that), but my broker tells me (and research is supporting) that refinance rates are up near 4%. My broker has also told me that I would be able to qualify for FHA, despite the fact that I used another first-time homebuyer program already, which I view as a great opportunity for acquisition. The catch is that my current mortgage does not let me move out of the home and use it as a rental.

So, the way I see it, I have two realistic options in pursuing my next property.

1. Stay put and continue to save until I have enough cash for a 20% down payment for a second property with conventional financing.
2. Refinance out of my current mortgage, absorb the higher rate, obtain an FHA financed property and move into the new property to satisfy occupancy requirement. (With the higher refinance rate on my current primary, I should still be cash flow positive after expenses including vacancy, cap ex, etc.)

I feel like I would be missing an opportunity to not take advantage of the FHA program, but part of me also thinks I would be foolish to give up such a low interest rate on my current primary.

I think it would take me at least another couple of years to save up the cash for a conventional 20% down payment, but the impatient side of me does not want to lose that investing time while I still have the lifestyle flexibility to easily move to a new place.

Am I making too big a deal of the higher interest rate, if my rents can support it? Are there conventional mortgages out there with lower down payments (5%-10%) and no occupancy requirements that I should be searching harder to find? 

Any feedback on other things I should consider in my next step would be greatly appreciated!