All Forum Posts by: Michael Oliver

@Michael Oliver I started investing in Saint Louis a few years ago with the same excitement tempered by fear of the unknown.  I can say without a doubt that I would have totally taken the wrong deals if I hadn't physically visited the area to get a feel and built a team of professional boots on the ground who weren't afraid to be blunt with me.  You really need a realtor, PM, and GC who are all willing to tell you when you're on the wrong street.  Like Detroit, Saint Louis is incredibly "block by block" where one area is experiencing gentrification or at least just a stable middle class feel and that might only be 100 yards away from a street that will be un rentable, un managemeable, and honestly a bad place to get out of your car.  

I only have 6 properties in STL now but I can also tell you that the huge cash flow numbers ARE indeed a bit too good to be true (but that doesn't stop me from continuing to buy there).  What I mean is that properties with extremely high cash flow on paper will TEND to have more costly capex issues, more maintenance issues, and higher rates of turnover and delinquency. (You just need to be really good at spotting the big capex stuff up front and accounting for it in your purchase price.)  I mitigate some of this risk by relying on section 8 exclusively going forward.  I love section 8 because it guarantees a certain % of rent, the tenants really value that housing voucher and won't do things to risk losing it, and section 8 has strict criteria for condition of the unit which adds a layer of accountability on my property manager.  I had the same apprehension about section 8 that many people might have but my experience has been the opposite of any negative stereotypes.  My section 8 tenants were the first tenants I had which possessed linkedin accounts and also had among the best FICOs compared to my tenants who were not on housing assistance.  

@Michael Oliver You are signing personally as the landlord, and the LLC Manager is signing as the tenant. Which happens to be you.

@Michael Oliver creating a fake lease is mortgage fraud.  DO NOT do that.

But, here's the workaround. Create a LLC, and a separate bank account for the LLC. Rent the property to your LLC using a 1 year lease and an appropriate monthly rent amount. Then your LLC can "sublet" it to STR tenants. The STR tenants will pay your LLC into that bank account. Then just make sure you actually have the LLC pay you monthly rent from that account to match the lease amount. Do not skip any steps, and this solves your STR income issue.

Also, in order to use rental income to qualify for a VA loan, you need to document prior landlord experience. OR, you can hire a property manager prior to closing and that satisfies the landlord experience.

TYFYS and best of luck!

@Michael Oliver creating a fake lease is mortgage fraud.  DO NOT do that.

But, here's the workaround. Create a LLC, and a separate bank account for the LLC. Rent the property to your LLC using a 1 year lease and an appropriate monthly rent amount. Then your LLC can "sublet" it to STR tenants. The STR tenants will pay your LLC into that bank account. Then just make sure you actually have the LLC pay you monthly rent from that account to match the lease amount. Do not skip any steps, and this solves your STR income issue.

Also, in order to use rental income to qualify for a VA loan, you need to document prior landlord experience. OR, you can hire a property manager prior to closing and that satisfies the landlord experience.

TYFYS and best of luck!

You are going to want to look at "DSCR Loans" - these will qualify based on the STR income and do not take into account DTI/personal income/W-2