All Forum Posts by: Michael Masterson

@Mitchell Litam owning several in Lakewood myself I would definitely go over with vinyl, especially if you still have the wood intact. It dramatically improves the look of the house, and you undoubtedly will get the money back if you sell. 

I mimic the above sentiment but I Would say don't hyper focus on crime as an initial qualifying factor. The reality of things is in a lot of these markets you can find highly desirable neighborhoods that may have high crime rates nearby-but no data will get that granular. 

Large cities it's a lot easier to identify "good" or "bad" neighborhoods. 

Cleveland for example there is a lot of "bad" crime data that would make you think Lakewood, Ohio City, Tremont would be BAD choices. But the reality is there's ample opportunity if you know the market. 

I'm basing my post off experience here. But I would safely assume its similar in other markets. 

@Zach Theberge and sorry i misread your post initially. I thought you said "fee" instead of FREE. You absolutely will gain experience in this. The reality is you're willing to do what most people won't to learn. I applaud you-and your grandfather likely won't take your services for free. 

Perhaps offer to do this for FREE with the option to buy later (if the property cashflows) and he will guarantee you some seller concessions or "gift equity" in the future. 

This way if he decides to sell say in 2 years, and you've worked for "free" he will be able to give you X# of months cash. Or if he can do the deal off-market with you he avoids listing fees AND you are getting some downpayment assistance?

Best of luck. 

@Zach Theberge you have a lot of flexibility with it being family or "arms length". My suggestion would be to create a great lease with reasonable terms and tell your grandfather you will handle finding a tenant from there. (once he tells you his desired rent)

The best approach you can take is adding your "fee" on top of that rent. Collecting the gross amount and distributing to him. 

It will be a good way to dip your toe in the water of being a PM-if you have success you can use the renovation progress pictures along with a higher rent point than the surrounding condos (at least I assume) to earn a little more business. 

@Domininc R Liva you can’t go wrong with a house hack in Lakewood if you can find a place where rents are in the $600-$800 range. If you’re willing to “rough it” for awhile and take the money you’re saving by eliminating your current rent payment and dumping it right back into the property you can create some great value.

A lot of the high priced properties are ones with absolutely everything done already and calling for $1000-$1300 monthly. It will be a little harder to find but absolutely worth it. Some restrictions may present themselves with FHA because inevitably you'll see the house has some cosmetic issues so perhaps look at a conventional loan with 5% down if you can get there down payment wise. It will go a lot smoother for you during the inspection process in my personal opinion.

You can eliminate a lot of properties by simply walking them too. If they have AC, New windows and driveway It likely means you’re going to find other nice interior finishes (not always but often)

Also don’t be afraid to go east of 117th-there’s some hidden gems there. You can drive up/down streets over there and know immediately if it’s ok or not.

Typically north of Detroit though.

Good luck!

@Kevin S. do you find it necessary for me to have a unit inspection just to cover myself documenting there is a dog? They are month to month now as well. 

I have a tenant who has been in my property for quite some time. Truth be told not exactly the best (typically late, noise complaints from my other units, parks in grass, etc) 

I've just found out that she had someone move in who is not on the lease, and also has a pet who claims to be a service dog with legitimate papers. 

That being said-am I within my rights in Ohio to provide this tenant with a 30 day notice since they 1) have someone living there without approval 2) have a pet when I have a strict no pet policy?

I'm planning to have a property inspection in the next week so I can document that there is in fact a dog, and also to assess the condition of the unit. 

From there I was planning to give 2 options. Sign a new lease, with a higher rent and provide a pet deposit or leave the property within 30 days. 

I'm aware of ADA guidelines, and don't have a problem with service animals.
I have a problem when people outright lie to me and I have a tendency to make things a little personal so I want to make sure I'm being fair since in the past I have been a little "lax" so to speak on this tenant/property in the past.

Just curious what some of you would do-or if you've had a similar situation. 

It should also be noted that I can likely fill this unit rather quickly for more money than I'm receiving now with very minimal turn costs.

@Tim Swierczek interesting. That must have changed since the last time I did lower down payment because I certainly had almost no money out of pocket (granted I still had to show it) and guidelines are ever changing as you are well aware seeing as you're a lender.... Perhaps it was a low down payment conventional @Jarod Blackowiak my apologies if so. 

However to Tims point you can still get concessions back which will help reduce the out of pocket in addition to the down payment. 

@Jarod Blackowiak when you say conventional financing, are you also considering FHA or USDA programs? Many times if you're owner occupant you can go for as low as 0% down. If its 3.5% you can also ask the seller to give you up to 3.5% cash back at close to use for down payment, if you can just simply show the reserves up front you'll be able to qualify.

If you have looked that route and are still having trouble with the cash down you may want to explore seller financing, or hang tight till you have a little more cash on hand. 

Rare but also totally do-able if you're diligent: I had a friend in college convince an owner in the town to do seller financing his sophomore year. After 2 years of on time payments he was able to refi out, pay the owner back in full and actually put a little cash in his pocket for some repairs to the home. Still owns the place today and rents it out to college students and makes a pretty good monthly return with vacancy through the summer months. 

Good luck!

@Phil T. I think you need to assess how long you intend to stay in the primary. Realistically in a market downturn you won't lose anything until you actually sell the property. If you see this place as your forever home, you may as well use the equity and keep your cash. 

Alternatively if you are doing a true BRRRR even in a market downturn you should only be up to 75% LTV at the cash out refi so you "should" be protected to at least get out without having to put cash up (barring any super hot markets which could see major swings)

I think newer younger investors (myself included) are conditioned to think a downturn is going to be exactly like the last one. Keep in mind there was loads of bad debt, I/O products, people were suuuuuper leveraged, and so on.

I just did a 65% on a BRRRR because I was uncertain on the area holding value, and wasn't positive how long I intend to hold and didn't want to force myself to do so.

You're being smart, and conservative which is A+. If you do go the route of cash I'd just suggest tapping that HELOC so you do have access to emergency funds if you do need it. We treat ours like a low interest credit card on funding projects still today, even though we have the cash available.

@Mike Nuss response is stellar as well.