All Forum Posts by: Michael Farney

Exactly this.  Be very cautious of your ratios.  I did this little trick and my credit score dropped to 615.  Guess how many banks want to write a loan for investment property with a 615 score???  

The good news is, the score will recover within about a week of your statement posting 100% paid, but have a backup plan for paying the card off if you don't understand exactly what the impact will be on your score.  It is very easy to drop your score low enough you can't get a refinance to pull out the extra value to repay the credit card, so be very careful if you are playing this game.  

Watch your utilization.  If you go too high, your credit score will tank badly.  And if your credit score is too low, you can't refinance your property to pay the credit card off.  I did a $25k check and it dropped my score from 740 to 615. After I paid the balance in full, I was back up about a week after the statement posted.  

There's usually a 3% fee per check you write.  So for every $10,000 check you write, they will charge you $10,300 on the card itself.  So it's great for temporary lending at 3% rate....

***BUT***

Buyer beware, your credit will plummet as your balance/utilization goes up.  And if you butcher your credit score, your bank won't do the refinance, and now you can't pay off the balance.  So it's a very careful, fine line you must walk.  I did this with only $25k, and my credit score plummeted to 615. I paid the card in full right before thanksgiving, and now my scores are 775-805.  Be careful.

Per a 2006 HUD ruling, if a housing provider's insurance carrier would cancel, substantially increase the costs of the insurance policy, or adversely change the policy terms because of the presence of a certain breed of dog or a certain animal, HUD will find that this imposes an undue financial and administrative burden on the housing provider. I interpret this to mean they can be legally denied.

You can also require them to carry all the necessary insurance that is not covered because of the restricted breed.  However, it's best is to disqualify for some other reason, so raise your standard qualification criteria for that area so 90% of applicants aren't qualified.  You can still accept an "unqualified" applicant for your rental, but it makes it easier to weed out the bad ones. 

Thanks @Ben Leybovich,

I am currently interviewing agents...I will check with @Brie Schmidt if it might be a good fit.

Thanks for the lead!

Thanks @Chris T., @Jonna Weber, and @Daniel Hyman,

I have been doing research and joined some of the local groups. I think my target is narrowing down to south shore and south suburbs. There is so much to learn!

Michael

Thanks Chris T, Jonna Weber, and Daniel Hyman,

I have been doing research and joined some of the local groups.  I think my target is narrowing down to south shore and south suburbs.  There is so much to learn!

Michael

Hello everyone!

I am hitting the point of life to get my first place, and I was originally going to get a condo or something suitable for a primary residence.  I'm 32. However, I recently shifted my thinking towards investing instead of a primary residence. It just seems to make more sense.  Plus, I have 4 years of experience doing property management. (My mother owns 1.3 million dollars of commercial warehouse space, and I manage it for her.) I also see the financials behind it, and well, it got me thinking that this whole investing thing really makes sense!  

So....I'm learning all I can right now. I would love to find some folks in the Chicagoland area already doing BRRRR. Let's talk! I'm more a learner by doer, so I can't wait to get the ball rolling on my project soon.

For me, I think the weak point will be the rehab part. The whole rehab piece of it is a mystery to me because I'm not handy at all, so I have no fundamental understanding or concept of basic home repair. This is quite the scary and nebulous area! So, that's where I will be focusing my learning effort.  

However, I have many strong points. I am confident I can learn and adapt in the management part. Been there, done that. Check. The analysis, numbers, and financial planning are fun. I like numbers, calculations, statistics, and I do business analysis for my day job. Plus I'm a weirdo who thinks accounting can be quite fascinating. Check. And I already have the money....more than enough to pick up a BRRRR property or two. Check. How about rehab....ooops! This one is my stumbling block. It's just the rehab and buying properties in poorer condition that scares me to death. I'm sure it's fairly simple...just a numbers game really, and I'm already good at that. I guess life would be boring if there was never anything to learn and conquer. So...onward!

My goal is to be at least two properties in by October when my lease ends, and move into something I own. That would be freaking awesome! 

See you around and good luck out there!

Michael