All Forum Posts by: Melissa Hartvigsen

I recommend reaching out to realtors in your local area and setting up informational interviews. They can provide real insight to what it is like getting into the market in your area, and can talk to you about the licensing requirements for your state.

You should search for someone who specializes in your areas of interest, and see if they would agree to mentor you.

If you do decide to move forward, in addition to your state required education, I found the videos from Prep Agent on YouTube helpful. They mostly do test preparation, and have some videos on how to get started as well.
For books try:

Your First Year in Real Estate, 2nd Ed.: Making the Transition From Total Novice to Successful Professional

The Book of YES

Work by Referral Live the Good Life: Proven Strategies for Success and Happiness in the Real Estate Business

Quote from @Francisco Avitia Jr:

Hello this might be a dumb question but I have no idea about real estate and I am just starting out I am 31 years old and would really love to invest in real estate I live in the San Fernando valley and my question is if I can use my FHA loan for a 40 unit apartment worth 4 million

Hello Francisco,

Great question! FHA loans have a maximum of 4 units. Conventional loans also max out at 4 units. Anything five units or larger is considered commercial for the purposes of financing. Commercial loans generally have shorter terms, higher interest rates, and substantially higher down payment requirements than FHA and conventional loans.

You should start with getting a loan pre-approval so you can see what financing options you have available and what your out-of-pocket costs will look like.  After that, you should start identifying properties.

I recommend looking for local pros in your area. They can give you advice that is specific to your market.

Good luck! 

Quote from @Sandra Hughes:

Hi - I'm looking to purchase a property to use as a Housing Voucher rental. Do you have any advice as to how the process works when I'm purchasing the property? I heard there is a wait period for getting an inspection with Harris County. I don't want to waste time while in the transaction period. How do I work with HC simultaneously so that closing and county program approval are near the same time line? Thanks 

Hello Sandra,

Your local Housing Authority manages the Section 8 program. It is not possible for you to start the approval process until you are officially the owner. 

Tenants who receive Section 8 vouchers are allowed to select any rental unit on the market. Once they have submitted an application to you, and it is approved, only then will the authority schedule an inspection. The inspection is to verify habitability of the home.

Most housing authorities have a long wait lists of tenants who are struggling to find housing. I recommend that you reach out to the Housing Authority as soon as you are the owner, and tell them you would like to be on their preferred landlords list. This may help you secure a tenant faster, and in turn get the process for your property being approved.

Quote from @Cali Skier:

 You are welcome! It's your property, so you should do what you are most comfortable with. :)

Depending on the loan product you choose, the lender may be able to count rental income towards your income to help in qualifying.

Using a FHA loan, you can put as little down as 3.5%. However, there is an underwriting guideline that requires self sufficiency on 3 units and 4 units properties. That means in the four plex, the three units that you are not occupying must cover 100% of the mortgage. FHA underwriting typically does not accept short term rental income, unless you have two years of history from the seller using it as a short term rental, and can provide their tax returns to document their profits. If any of the units are vacant, then the appraiser will determine market rent on the vacant units in their rent calculation.

Private money lenders, and commercial loans may give you the flexibility to count the short term rental income. However, they typically come with shorter loan terms, higher down payment requirements, and higher interest rates.

It would be best for you to consult with a lender to make sure that the deal would work. Then after closing, you have the option to do your short term rental experiments.

Make sure you do your due diligence regarding running a short term rental. It may not be permitted with your local city code, or they may only restrict you to a single unit.

Be wary of looking at profits from short term rentals. Many people who run STR's only state their gross income and don't share what they actually are taking home. In my area the vacancy is substantially higher with str than long-term rentals and it ranges between 30 and 50%. The operating costs are also much higher.

Quote from @Max Lichtenstein:

Quote from @Melissa Hartvigsen:

You need to know what the tenant is paying. When you are buying a property with a tenant in place, you have the right to review the lease agreement, and verify the payment history. You can also require the tenant to sign and Estopple Certificate (which says the tenant agrees with the stated lease amount that the landlord provided).

If no one else is offering on the property, why not try to re-negotiate the price to a point where your payment (including what you receive from the tenant) works? The worst thing that can happen is they say no and you don't have a deal.

 Agreed Melissa, but the market price is the market price if I ask way over then they leave. Then I have no stream of income.

Hi Max,

I meant renegotiate the price with the seller (not the tenant).

 Also, if a tenant’s rent is below market and someone else would pay more, then secure a new tenant. 

You need to know what the tenant is paying. When you are buying a property with a tenant in place, you have the right to review the lease agreement, and verify the payment history. You can also require the tenant to sign and Estopple Certificate (which says the tenant agrees with the stated lease amount that the landlord provided).

If no one else is offering on the property, why not try to re-negotiate the price to a point where your payment (including what you receive from the tenant) works? The worst thing that can happen is they say no and you don't have a deal.

Hi Georgia,

The travel sector as a whole has slowed down.  Many Airbnb hosts are switching to MTM to fill their bookings, so you have more competition. 

I have been doing MTM for three years and notice that I get more serious booking inquiries at different times of the month. In my area a lot of the travel nurse contracts start mid-month so I see an influx of request between the 1st and 15th. The leads that I get the rest of the month also try to negotiate to a price so cheap I would not consider it. Knowing how your leads fluctuate in your area my help. 

Typically I change my price after two weeks of vacancy. If a price adjustment does not get you booked, try being pro-active. I am not talking about "cross platform listings". Reach out the the local grad schools, hospital HR department for incoming doctor residencies, relocation service companies, and see if they will cross market for you.  Your one-bedroom condo may not be a great fit for insurance company relocations (for families displaced by fires), but if your other rentals have two-three bedrooms this may be another way to fill your rentals.

I haven't done this, but follow a MTM guy on YouTube that suggests driving by the local "Extended Stay" hotel and looking for company vans in the parking lot. Then he reaches out to that company to get them to book his MTM.

Would a long term rental cover your costs until travel recovers in a year or two?

Good luck!

Cali,

They are contacting you because there would be a substantial savings for them by booking directly with you instead of Airbnb. Plus, if he secure a long term lease with you, he won't have to managing re-booking his staff at different locations.

The lease and deposit should be fine to be in the company name as long as you can verify he is the owner. Check with the business registry, and make sure there are no open complaints against his company. Then, suggest a compromise and require that the staff have to complete the criminal background check (no credit check since the company owner is financially responsible).

If they are asking you to furnish the house, then you should absolutely increase the rent charged. Run comps off of other furnished properties in your area and negotiate your lease price based on that.

Make sure to reach out to your insurance company and ask why changes they may recommend to your policy as well.

Good luck!

Hi Geoff,

Using so many different systems sounds tedious! I self manage my rentals, but used to be a professional property manager for 300+ units.

If you are going to continue managing for yourself, I recommend sticking with Apartments.com. It has maintenance tracking, accounting (expense tracking), screening (credit/criminal/eviction), advertising.  Why not simplify and switch to using only that? The accounting portion is great, and has reports that you can download to excel. Plus, I use the phone app and I can add photos of my receipts as soon as I purchase something. For advertising, you should always use multiple platform to get you as much exposure as possible, so I post on Zillow as well.

When you start managing property for other people, you should invest a paid software subscription in Appfolio or Buildium. Their systems are geared toward property management of medium to large scales, and integrate everything you need in one place. The maintenance interface allows you to delegate work orders from tenants directly to a vendor, and makes tracking easy. Both of the advertising platforms push to syndicate sites automatically for additional exposure which minimizes the duplication effort you are using now. I would say Appfolio has the edge on tenant interface and advertising, and Buildium has the edge on the accounting side. 

Outside of those items, I would advise you to make sure the leases you use are compliant with your state. I would never use the built-in leases. Check with your local landlord association for their recommendations.

Cheers,
Melissa