All Forum Posts by: Mark Koontz

I am currently under contract on a primary residence that is in disrepair. Due to the closing deadline/home condition, I am looking to use a private lender for the purchase instead of conventional from the start. The private lender wants to be repaid in ~3 months. That would give me enough time to repair the house to meet conventional standards and force equity for the cash out LTV %. I know Fannie/Freddie changed the guidelines for a cash-out refi to 12 months, but I'm seeing something called a no cash-out refi/limited cash-out refi. If the only cash being pulled out of the house is to pay off the first lien (private lender), is there still a seasoning period? Rehab will be paid with my cash.

Also I have the option of recording a lien, or not recording a lien for the private lender. Not sure which would be better. 

PP: 400K

Rehab: 50K

ARV: 600K

Here is where I'm seeing the information -

https://selling-guide.fanniemae.com/sel/b2-1.3-02/limited-ca...

https://guide.freddiemac.com/app/guide/section/4301.4

I am currently under contract on a fixer-upper Farmette (Maryland). Purchase price is 400k with at least 50k rehab needed. I have 100k liquid to put down. The property needs a new roof, windows, drywall, electrical, bathroom, etc. That being said, it's not going to conventional financing. That leads me to where I am now - a conventional rehab loan. Are there any other options aside from the rehab loan other than cash? 

The issues:

-I wanted to put 50k down on the purchase, (lender will waive PMI with 10% down), and pay cash for the rehab and do part of it myself. The conventional rehab loan doesn't allow you to do any of the work yourself.

-The conventional rehab loan requires a general contractor to give one quote, with all of the subcontractors included. So I am paying a premium to the GC for the extra facilitation of the SC's. 

-I am quoted a higher interest rate and more fees since its a rehab loan. 

Appraisal Issues: 

-A separate issue is that there are two block garages on the property. One of them was struck by some heavy machinery and created about a one inch wide crack along the entire height of the wall. Will this create any issues when they do the appraisal? I am not worried about the integrity of the structure, but will the bank require this to be fixed? I added a photo of the crack. 

-There is a large amount of debris on the property including two 53' semi trailers that are in disrepair. Will the bank or insurance company require them to be removed? 

-The house and garages have wood siding with peeling paint. Any issues here? 

-The garages have broken windows. 

@Sam Yin @Andrew Reyes @Jacob Sherman

Thank you guys for the input! I am definitely going to deploy this on the next deal. This was super helpful. 

Good Morning, 

I have heard of people using their deferred comp. retirement accounts as temporary loans to fund rehabs, buy properties, etc. The terms are listed below: 

-9.5% Annual Interest; but you pay yourself the interest. 

-1-5 year terms

-Up to 50% of your account balance can be loaned (50k max)

One of the issues I see is that the account is funded with pre-tax dollars. So I would be paying it back with after tax dollars to only pay tax on them again when I retire. Also, the account grows at half of the rate while the money is out. If I can get a 15-20% ROI (appreciation, depreciation, cash flow, mortgage paydown, write offs), and 9.5% on the funds I take out, would that be worth getting double taxed? I have averaged an 8.3% return over the last 6 years.

I am wondering if anyone has personally taken advantage of this.
I have a W2 with 19 years until retirement. I do REI on the side.

Hello all!

I am currently building a property management company. I have several rentals of my own and have self managed for 2 years. I decided to offer this service to others since a lot of the systems and processes are built out already. I am looking for advice from other PM Companies experience on what customers like/don't like, do's and don'ts, etc. A few specific questions I have are listed below:

1. SHOWINGS - I currently do showings in person, but would not be able to do this if I scaled. Through my research, it seems that most other PM companies do self-showings. Does anyone have recommendations on self-showing programs/lock boxes? Ideally one with insurance to cover any issues. 

2. PAYMENT DISBURSEMENTS - Incoming rents would come into a general rent account, replenish the maintenance fund for any expenses incurred through the month, take the PM fee, and then disburse the rest into the owners account. Does anyone recommend doing this a different way? I use Innago as a management program which allows different taxable entities for the rents, which would assist when it comes tax season. I would then issue a 1099 to each owner for the amount of rent payed to them. 

3. MARKETING - Not too worried about this one yet. Most of my marketing will start as word of mouth. Reviews would be my main priority in growth. What are the best forms of marketing for a PMC? 

4. VIRTUAL ASSISTANCE - I will have to onboard a virtual assistant and train them to handle a lot of the aspects (posting properties, signing leases, managing maintenance tickets, etc). Does anyone recommend a certain website to look for real estate VA's? I have used Upwork in the past and had a good experience.

5. MANAGEMENT CONTRACT - Are there any must-have clauses in a PM contract? I have one that I have been adding to periodically when I think of something. 

If anyone has any general advice they would like to add or would like to hop on a phone call, I would really appreciate it. 

Thanks!

Thanks for everyone's input!

I come across and have bought several early 1900's homes which typically have plaster walls - sometimes not in great shape. 

With my main focus being LTR, it doesn't raise the rent significantly by drywalling the entire house. I'm more thinking about the resale. 

What does everyone do with old plaster walls? Just touch up where needed and paint? 1/4" drywall over top? Tear out and drywall? 

There should be a maximum spend limit listed in your contract that states any repairs over "X" need to be approved by you. Typically this is around $300 or so. Take a look at your contract and verify the PM company is abiding. 

A couple of options to locate reputable PM companies. 

1. Get in local real estate investor groups on Facebook and ask who other investors are using. Ask who NOT to use. You will get plenty of good advice. 

2. NARPM. National Association of Residential Property Managers. Under NARPM's website you can search local property managers to Dayton and see who has taken the time to become associated with NARPM. Often times, PM companies who take the time to get certified and complete training under NARPM are more reputable. 

3. Google reviews can be helpful, but can also feature a bunch of nonsense. 

4. Call around to different companies. Draft a list of questions to ask them. See if they are knowledgeable and experienced in the area. Ask them how they deal with maintenance issues. Do they have on-board maintenance staff? Or do they call a third party contractor for simple stuff (i.e. door knob replacement, light bulb replacement).

If a PM company charged $180 to change a lightbulb, I would fire them yesterday. Good luck on your search!

Charlie, 

I will preface this by saying I do not own any manufactured homes.

In general, it seems that manufactured homes aren't a largely appreciating asset, but there is plenty of money to be made. One thing that I would look into is doing a wrap type deal. Turn around and seller finance the manufactured home to an end buyer. Take a down payment and make them responsible for all maintenance and lot rent. If they stop making payments, reclaim it and do it again. 

 Shawn, 

I do not have any potential buyers. I've never thought of doing that, but will definitely keep that in mind. Thanks for your input.