All Forum Posts by: Mike Roy

@Erik Vik - Depending on commuting distance, the benefit of the house hack might get eaten up by the cost of transportation.  Mr Money Mustache has a great article about this.

Living for free within biking distance to work sounds tough to beat.  

@Thayer Hood - Interesting question.  If I were a renter, I'd want to know if the locks had been changed or rekeyed prior to moving in.

I would ask the property manager how they handle pests, rodents and bed bugs just to see if they replied with stories of recent experiences. 

I would also call the local police department to see if they've had recent calls to the building I'm considering renting in.

I would also make sure to walk the unit with the property manager the day of move-in and make sure they record a condition report so that I'm not unjustly fighting for my deposit later.  

@Jason Chambliss - Why not use the same lender you just used for your primary residence?  If you have a good relationship and financials, using the same lender is only going to make the process smoother.  

If you're going to buy another single family with conventional financing, any bank is an "investor-friendly" lender.  Conventional financing is a tight box, and all lenders follow the same script in terms of qualification.  

If you have the financial wherewithal, it won't matter that you just bought a house.  But just remember to do things in order:

1) Determine your personal investment philosophy

2) Identify a market with positive fundamental demand drivers

3) Build a team of experts (agent, lender, property manager, contractor, CPA, real estate attorney)

4) Identify a property to purchase

Good luck!

@Logan Splinter - Most new investors are out looking for the next deal, but only a few find them.  This is because most of the best deals aren't found, they're made.  From a seller's perspective, most are interested in selling their properties to the highest bidder, so if you're focused on finding that one seller who is willing to give it away, it could be a long, frustrating wait indeed.

So how do you create a deal?  You do it by learning to recognize opportunities to add value that most others don't see.  Seasoned investors will look for opportunities to increase rents, decrease expenses, add bedrooms or units, or perhaps even change the use.  Seasoned investors know that they can buy a 2 cap with the right upside and turn it into a 10.

So if I lost everything tomorrow, I'd do what I've always done: analyze a bunch properties and look for the ones with hidden potential.  

@Cassi Justiz - It's possible that the listing agent already had a buyer before the listing went live and is representing both parties.  6% of $200k is $12k, but 3% of $250k is just $7,500.  From the agent's point of view, you might as well take whatever makes the seller happy if you can bring a buyer to the table and earn 6% on it.

I'm not sure if the agent still had a legal obligation to list on the MLS, or maybe it's just good marketing.

@Ikaika Farmer - Add more value to the world than you extract.  The number of lives you improve and the extent to which you improve them will determine how fast you get there.

@Carl Hebert, @Elliot B. - I'm with @Ryan Murdock on this.  Discounted rent to pay by the 5th is effectively an illegal late fee assessed on the 6th.  However, there are other incentives you can provide that I think would mass legal muster.  If your original plan was to reduce rent by $25/month, then you're basically willing to give back $300 in annual value as a reward for this behavior.  So maybe these might be alternatives.

Provided that 12 months of rent are all paid no later than the 5th, you could:

*Guarantee a lower rent increase on lease renewals (1%-2%)

* Offer inexpensive but high perceived value items (i.e. big screen TV) for lease renewals

* Provide a Winter Fuel Credit in December if tenants pay for heating fuel

* Offer a choice of unit upgrades that you may have been planning to do anyway (repaint, new appliance, ceiling fans, etc.)

Basically, find ways to incentivize and reward your tenants with something other than a rent discount.  You achieve the same objective, but legally and perhaps even more effectively.

@Kirby Davis - Based on the tremendous value you added to the farm in a very short period of time, would you consider buying more farmland and building more farms?  Maybe lease the finished product to other farmers so your husband doesn't have to manage day-to-day operations?  You obviously have a special skill set and valuable expertise, and I would consider running with that as far as it can take you.     

Multifamily is an entirely different game, and an over-valued, over-saturated one at that.  It's a tough time in the cycle for a newcomer, and $800k would be a lot of money to put into your first deal.  Just know that you're on a site dominated by multifamily investors, so there's going to be a bias there.  The biggest factor in determining the best use of this money is YOU - your knowledge, your network and your unfair advantage.    

Your profile indicates that you bought a $2.9MM farm with $50k down with an annual cash on cash of 200%.  I think we'd all like to hear how you did that!  If you could pull this off a few more times, you could afford to replace your husband with hired help and would have more cash flow than you'd ever need.

@Thuy Pham-Satrappe - Conventional loans are for 1-4 unit properties on a single tax lot only.  "Blanket loans" exist for multiple properties and are sometimes a refi strategy that opens up conventional loans to those who are otherwise maxed out.  I would just keep in mind that there are potential disadvantages to a blanket loan.

1) Blanket loans generally do not offer the friendly terms you get with conventional financing.  Term might be shorter and rates might be higher.

2) The blanket loans essentially put all your eggs in one basket, so if one property goes south and hampers the ability to service your debt, all properties under that loan are at risk.

@Stephen Benson - If I'm not mistaken, that was Ben Kinney's recommended book on podcast episode #322.  If that book created that level of success, I'd say it's pretty damn good.

I just ordered it after hearing the podcast and will dig in shortly.