All Forum Posts by: Mark Fitzpatrick

Thanks Chris! I've talked with Keystone in the past, but it seemed like all they wanted to do was sell me a $3500 consulting package. I just need a reliable guy I can sit down with to do our returns, legally minimize our tax expenses, and be a valuable power team resource on tax issues. I'm open to exploring them again if you've had a good experience, so I'll email you separately for some contact info. Thanks for the referral!

Hey guys, can anybody recommend a great accountant in Southern California Orange County area? We haven't had the best luck with accountants over the past few years and need somebody that knows investment real estate well. My preference is that they're a real estate investor themselves. Thanks in advance! :D

I am by no means as advanced an investor as many of the guys in this forum, but we do own a small apartment that we rehabbed. Trust me, you're far better off starting small and working your way up. We made plenty of mistakes, and I'm glad they were made on a small and relatively cheap building than on a big expensive one. I think the best strategy is to start out rehabbing a single-family house or two, then move up to a triplex or fourplex. Once you've done a few of those and have learned the ins and outs of managing apartments, then consider taking on a bigger project.

ODesk and Elance. I've used them both and they've been great. Both have ratings systems so you can see how the VAs are rated by the people that have hired them.

I'm not sure it's that credit is loosening up or that lenders are more desperate for clients. Now that rates have been down for a while, I think a lot of people that want to refinance have already done it, so there might not be quite as much business available out there.

Hey, at least he did his part to support the local economy, right? :wink:

Hi cs78, doing what you're thinking about can be a great strategy for acquiring rental properties because you'll be able to take advantage of owner-occupied financing for your deals, which usually has a lower rate than investment property financing.

The one thing to keep in mind, however, is that Fannie Mae guidelines have some tricky nuances with this that are related to equity. You'll want to make sure that you're not loaded up on debt as you do this, because depending on how much equity you have in the house you're converting to a rental property, you may or may not be able to use the new rental income as qualifying income. If not, your debt-to-income ratio will be hit for the mortgage payments on both the house you're moving out of and converting to rental property and the house you're purchasing.

If you're converting a 1-unit property to a rental, you'll need to have 30% equity to be able to use the new rental income as qualifying income. If you're converting a multi-unit and have at least a 30% equity position, Fannie guidelines potentially allow for using a portion of the new rental income.

As you begin shopping for a new property, make sure to get with your loan officer for the latest guidelines related to your particular scenario. I've described the standard Fannie guidelines, but different lenders that sell mortgages to Fannie could also add their own more stringent guidelines as well.

I've also read that many people burned in the housing crash are now completely done with homeownership and will be renters for the rest of their lives. Young people coming out of college often are burdened with debt and have damaged credit and/or little cash, so they have to rent as well. Seems to be there are a lot of factors pointing to more rent demand in the future.

Where I'm invested, my prop mgr has been able to keep us fully leased, even in advance, but there's been a lot more competition from "reluctant landlord" homeowners who have had trouble selling because of the tough financing conditions. Where a 2-bedroom apartment might rent for $600 to $700, some luxury homes are renting for $1200 because the homeowner is desperate to move and just wants somebody to at cover at least part of the mortgage.

If you're planning to invest out of state, I would absolutely advise getting a property manager. I've met investors who manage their properties remotely, but I would never advise doing so. There's no substitute for somebody on the ground who can see what's going on on a daily basis.

With that said, it's absolutely critical that you get a good property manager. I've had good and bad, and I can tell you from personal experience that bad managers can very quickly turn a good real estate investment into a very bad one.

Once you've done your homework on some areas to invest in, I would recommend traveling there, attending real estate investment clubs, and networking with local investors as much as possible. Get property manager references from the local investors. I would not advise picking somebody out of the phone book. I'm embarrassed to say that's how I found my first property manager and it didn't work out too well! At least I learned and fixed the problem :).

As far as buying a rental without being a homeowner first? Not a problem as long as you meet the usual qualifications, ie, credit, income, reserves, etc.

Hi N Modi, based on the unit count alone, you won't be able to get traditional bank financing on this property. A residential mortgage lender only lends on residential properties up to 4 units.

A bank or credit union might be willing to lend on it, but it's going to be commercial financing, not residential. I'm far from an expert on commercial financing, but I do know it's a completely different animal than residential. You're probably not going to be able to get a commercial loan until you've got it rehabbed and rented, so you're probably going to need to find hard money or private capital to do the acquisition and rehab.

If you're planning to hold the property long-term, I would definitely advise finding out about the commercial lending side of things ahead of time so there aren't any surprises come time to get permanent financing.