All Forum Posts by: Michael Stutelberg

The first question is how will you pay off the hard money lender? Are you going to Refi right away? Will the hard money lender fund the rehab? Also, look into the 203K HUD loan which can finance some rehab.

Another longer way to fund the rehab is to live in the house while working on it (if livable). 

Some things to investigate. Search FB/craigslist and see if people rent out homes in your area and how much they charge for rent. If the numbers make sense and there is a market for the 1 bedroom rental or the entire house, it may work great. In my opinion, without knowing your market, as the downtown is further renovated rent goes up and that causes people to look for more affordable areas away from downtown with a short commute like what you may be offering. 

As for selling the home, if you are the biggest most expensive house (e.g. 600k in a 300K) in the neighborhood it may be difficult to sell later.

What are the mortgage, taxes, insurance, cap ex, maintenance, vacancy cost for the property each month? Are you responsible for paying any utilities? Any HOA?

Congratulations and welcome to real estate investing!

@Drew Lied, great question. First thing you should check is if other small MF complexes have tenants pay utilities, if they don't you may find it difficult to get tenants. If other's do then great! It is possible to have the property metered to separate the units, but call the utilities company and get a quote. I am not familiar with OH laws, but you should not need to wait for new tenants, but should be able to implement the change when tenants renew their lease.

Welcome to BP and good luck getting started!

A few ideas of getting the cash necessary for you and your partner, Refi one or multiple SFR's, 1031 the SFR's, credit card cash advances, find a partner, or a combination of these to get $60k+closing+reserves for the property.

Briefly did an online search for drafts of pet addendum and found some good starters. Check with your insurance if they restrict specific breeds of animals. 

Some main topics I have in my pet addendum are name, breed, size, color and age of pet. Have tenants responsible for picking-up after their pet. Tenant is responsible if pet destroys parts of the house. Pet will not be a nuisance to neighbors. 

Are you going to charge a monthly fee and additional deposit for having a pet? I enjoy renting to tenants who have pets.

Once you have an addendum, I recommend having a lawyer look over both pet and maintenance forms.

Look for small local banks/credit unions and talk to their commercial brokers for financing options. Even better if you can find off market properties where the seller is open to seller financing.

How much is Water, Gas, electricity and garbage? You have $575 left (2850-1682-249-104-240) by my math to pay for these and set aside money for maintenance, cap ex, and vacancy. What ever is left will be your cash flow/month. If cap ex, maintenance, and vacancy are each at 5% that would be a total of $427.5. You will probably be negative cash flow or break even (at best) with this property. If you are able to get the tenants to pay for electricity, water and gas and/or get it at a significantly lower price, that will go along way to being a better deal with a positive cash flow.