All Forum Posts by: Matt Liu

I found one mortgage broker who is willing to qualify me for a triplex BASED ON THE CASHFLOW ALONE. She said: All you need is the money for the downpayment since the DebtCoverageRatio is so high. Of course... that was for an 80k property in Rochester.

Then, when I was looking at a 250k triplex in NJ, I found a mortgage guy from Investors Bank who was MUCH stricter - he only used 75% of the rent for the computation, AND said I have to have plenty other income so that my "housing payment quotient" is 30-40% of all my income.

Is the trick to deal with an understanding mortgage brokers who take a nice fee, rather than bankers who work with more red tape?

I actually have two questions about wholesaling with a double close.

The first is - when I lock up my end buyer for a house, should I use a standard purchase contract with a contingency that the A>B transaction goes through?

And secondly, if my end buyer wants to use a mortgage to buy (and needs say 6 weeks for this) [b]while my A>B transaction is supposed to be cash (and must close in 2 weeks), how do I do the double close? If I close A>B with transactional hard money and then B>C backs out for some reason, I am stuck with the house! which may not be so bad if it's a nice rental. but it will be bad with 14% hard money!

Financing is not a problem. The thing is one house I'm looking at is a single family home I want to turn into two units. That means as soon as I put the door and wall around the stairs, the family is going to have to cram into the first floor. Can I really just come in one day and say, okay everyone has to move their stuff from the upstairs to the downstairs sorry! I hate to do it but it's the only way the investment will work.

I am looking at many deals where the condition is very sub-par and the rents are accordingly far below market. I know that I have to do improvements to the units to raise rents to market. At the same time... I have to raise the rents to get them to go so I can do work (if that even makes them go). So it'd a catch 22!

Should I just count on doing work in the units with them there? Are there any tenant protection laws I should know about that might get in the way of me bringing in painters, tilers, carpenters, etc.

Thanks!

I have at long last found a good deal through my marketing to absentee owners. We agreed on a price, however his communication over the phone is not the best and he lives a thousand miles away.
I'm wondering should I tell him I'll have my lawyer take it from here? I'm worried if I send him a contract I print or email things will get fussy.

Even if I do use a standard contract and do it myself, won't I want to have the earnest money AND soon coming deposit to go in my attorney deposit account? In other words I'm going to use an attorney anyway, might as well have him communicate the contract?

Thanks!!

What I find weird is that when I look at properties in low income areas that are currently RENTED, the agent typically doesn't seem too interested in making introductions and allowing me to get to know them a bit and see if they're normal.
There have been some tenants I've met who clearly were on drugs or inebriated in some form. Other times it's just not clear that they would even communicate effectively or cooperatively if an eviction should occur.

I know I can try to push bad existing tenants out by raising rents but that seems so risky - what if they are not just bad but crazy/non-cooperative. So much better to buy with good tenants.

I agree with the member above - good tenants could make everything.

It's a good point about location. Where I am looking it's patchy. It's blue collar neighborhood intermingled with shady activity. If I go to a better area the cashflow will be much tighter, and the minimum purchase price will be around 180-200k, instead of 100k.
I'm glad I asked though. I was starting to think my instinct was getting irrational/fearful by turning down all these deals in the hood.

Hi guys. I'm a 28 y/o beginning investor, and have been more than ready (intellectually, financially, etc) for almost a year now to buy my first property. I'm going to find and manage the deal, and my parents will help with half the purchase or even a little more.

The problem is I am looking at such a low price point in my area, that when I actually get up close to the house and meet the tenants, I get freaked out.
How am I going to deal with these people? especially some of the section 8 people I meet! Even if I outsource PM, who knows what repairs and other surprises are in store for me with some of these places.

Does anyone have experience with this? Would you say you have to approach slum-like investments as a semi-slumlord just because that's the reality?

Thanks for the advice!
So how about if I do a 4 year time frame. Plus I can say anyone can technically force dissolution at any time (since the Act I mentioned makes it so anyway) but I guess we will each just acknowledge the fact that such dissolution will cause some headache over appraisal and legal fees - and therefore we prefer to stick to the 4 year plan.

By the way, how do you get a fair appraisal in the case of dissolution?

I see. So how do you handle the exit issue in your partnerships? Do you make the rules such that the person who is managing the asset controls the deal and when it will be sold period? Or do you set dates for partners to have the option to get out, like "anytime after 3 years", or "every two years", something like that?