All Forum Posts by: Mike Palmer

@Fred Pineda:

True, but understand that he didn't use 'traditional' financing like you are asking about, and therefore didn't have a traditional down payment. He technically didn't even pay a 'down payment'--his out of pocket cost was 15% of the total investment, which included not only the purchase price of the property, but also holding costs, closing costs, improvements/renovation costs, etc.

Also keep in mind the way he structured this deal and the type you are asking about are TOTALLY different, so you can't really compare what you are asking about to the figures he listed because it doesn't work the same way. That may be what is leading to some of the confusion. 

@Fred Pineda:

You are still confusing/combining closing costs and down payment. All the items you listed EXCEPT the last item (the 20% amount of the property) are closing costs. The 20% amount of the property is the down payment required by the lender. These are different, and both with vary based on the deal and the lender you use. If you need more clarification you should contact your lender and ask them to walk you through it and explain the difference, but really all there is to it is the list you referenced are all closing costs except the 20%, which is the down payment and is separate/in addition to any closing costs. You can usually negotiate with the seller to pay or contribute to closing costs, but not to the down payment. 

Caleb did not use a traditional lender like you are referring to, so he did not have many of the costs you listed, and/or they were different for his particular deal. In his case it sounds like they totaled $1,706 (the closing costs) and you could consider the 15% as down payment.

In this case it looks like the $1,706 was part of the 15% he needed to come up with, but the $1,706 was just the buyers closing costs to purchase the property. That is different (and not related) to down payment amount, but he did not use traditional financing so there was not really a typical 'down payment' in this case--he just needed to come up with the difference between the funds he was able to borrow (85%) and the total funds needed (the other 15%). 

 I think you are confusing closing costs with down payment

Like you said you can manage remotely if you chose to invest in Utah or whatever other market, but if you are going to be an agent you will make more $$$ in California (higher prices = higher commissions), and you already know the area...

@Sam Shueh: Your market is completely different. How would the vacancy rate in your market have anything to do with vacancy rate in our market? I have not had a vacancy in about 5 years...

@Caleb Rigby did you move forward with it? 

Hello:

You need to review the lease agreement and see what options it provides and/or prohibits. 

I would ask yourself what your plan was when you bought it? Any investment purchase should be done with a plan, and unless your plan was to live there in 1/2 of it until you die then I would just continue on with your original plan (just maybe accelerating the dates it sounds like). 

If this change of circumstance changes your plan as well then just re-evaluate based on your new situation. For example, do you enjoy real estate? Will you be coming back to the area after an assignment in Japan, or would you end up in an entirely different area? What are your numbers on the property? Are you making money on it (or would you, after moving out and hiring a property manager)? Would you consider selling on a lease option or seller financing so you could still receive some monthly income but not need to deal with the property itself, or would you just want to sell outright and move on? 

Bottom line is that only you can decide what works best for you. If you do decide to sell, I think there are several people here (myself included) that would consider buying it and/or that could help you sell. And if you decide to keep, I think there are several people here that could give you recommendations for good property managers in the area. 

Figure out what is best for your situation and then put the word out and we can assist. 

I have seen it both ways. I typically have only charged first months rent and deposit unless I have a reason to ask for last month as well. For example, I had someone that had just started a new business and had no income history for the business, so I got last month's up front. I also had some students without much previous rental history, so I asked for last month's up front. 

I think in all other cases I have only done first month, and in all cases I have screened thoroughly and everything has been fine. So I think it is up to you to negotiate. If their reason for not having or wanting to pay last month up front is a red flag based on your criteria they may not be the right tenants in the first place. In my opinion if you have the right tenants there is usually no reason to ask for last month up front. Otherwise you may want to evaluate why you are asking for last month and then determine if their reason for not wanting to pay it up front is justified. Nothing wrong with asking for it up front, and nothing wrong with them not wanting to pay it up front, so you just need to determine based on the situation what works for you.