All Forum Posts by: Mike Porter

Thank you all for your responses. Looks like I am in the minority here with my thinking.

Great community here and a wealth of knowledge.

much appreciated!

Mike

Hi all,

I am renting a house next month to a current tenant at a different property who wants a bigger place and also wants to move in together with her boyfriend. Both currently have their own places and each have a child that would be moving in with them. I was originally going to write the lease between myself and each adult roommate (my current tenant and her boyfriend). After looking over the applications, I realized that my current tenant qualifies for the property on her own where as her boyfriend does not. My thinking is to put her name on the lease as the exclusive Lessee and her boyfriend as an approved occupant along with the names of the two children. 

I prefer to just have one responsible party in the case of a future breakup. This makes it clearer who the responsible party is for the terms of the lease. I understand that the boyfriend is still called out in the lease as an occupant and could have legal grounds to stay but thinking it just makes the financial obligation pretty clear. Maybe having them both responsible gives me more to go after should there be a collection problem in the future. I just feel like having both of them as the responsible party potentially sets me up for one saying I paid my portion and the rest is the other parties obligation.

Please let me know how you all handle roommate leases or non married couples in your leases.

Thanks,

Mike

Dylon,

HELOC's are a great way to finance short term deals like flips and BRRR's. This has been my strategy since I got my snowball moving down hill. Make sure that you do not over extend yourself, keep enough in the account for the unknowns. If you get a HELOC linked to your checking account it is very convenient to transfer money as needed. I always have a date in mind to pay my HELOC back to a zero balance when I make a purchase. Stay disciplined and don't access this money for anything but this strategy or a true emergency. The HELOC can support the purchase and renovation. Once you sell the flip and pay off the HELOC you have more money to put down on your next investment or current properties. The more you pay off on your current properties the more equity you will have available to use for this strategy. I am a pretty conservative investor and prefer to pay off my properties and use the equity in them when I need to fund short term deals.

I have done very well with this strategy. You save a lot of money and time with cash purchases (using your HELOC) by avoiding the expense of financing and frustration with underwriters. Not to mention you will get an edge over the competition when you dont have finance contingencies.

Good luck!

Mike

Hi Robert,

 If the first house has a current market value of $40k and the 2nd house's after repair value is $90k to $100K, you are at $130K-$140 after you sink $30k into it. That puts it at the asking price averaged out. I am of the belief that the "Profit" is made at the front end (when you buy), therefore I would not be interested to pay market value. With the driveway stigma you may have more room to negotiate it down.

I think most investors would offer something closer to $70-$80K. 

As for a buy and hold, the numbers on the first house seem really good but is that realistic? Have you done your homework on like properties in the area/neighborhood? What can you rent the more expensive property for?

I would try and negotiate it down and if you can't get the seller to consider the  $70-80K number then try and negotiate some of the larger repair items to be handled by the seller or seller financing (since you mentioned some concern about financing).

As for the driveway issue, owning both properties makes it alot easier for you to  obtain a "right of way" easement that will allow both property owners in the future to access their respective homes.

All in all, if you are able to confirm that the properties in this area do generate a comprable rent to what you are getting on the first house and you are thinking about applying the BRRR method you should be in good shape weather you get them for $70k or $105k.

Hope that helps!

Mike

As long as the property managers know where to send the checks you should be fine. One of the reasons to enlist the services of a property manager is to insulate you from the tenants. So in this case, as long as the property management is the same you should be fine.