All Forum Posts by: Fred Ramos

@Account Closed  If a tenant can't afford the deposit, they most likely can't afford the rent. Move on!

@Mark Shaffar We started out with "D"s since we didn't know any better and were just floored by the numbers.

Turns out, those D properties pretty much sucked up their cash flow between vacancies, repairs and evictions. So far, we've managed to sell most (All duplexes) but we still have a couple SFR's (listing one this coming weekend).

We now have been moving toward high C and low B and we enjoy this much more. These houses rent quickly, we have an abundance of qualified applicants and these tenants never call and pay on time. Life is good! No more D for me!

@Kennedy Williams IMHO Cap rates are more a concern on true multi-family properties (5+ Units). I've had 4-plexes and ran the financials quite similar to a single family. The exceptions being that on anything over a single family, you may have the added expenses of providing water, electric and or gas. Personally I try to stay away from providing any utilities but have in past had to provide water. Try to look for a property that has separately metered units (Tenants responsible for their own utilities). You will also have to take into account that you may have an electric bill regardless just due to the fact that you will need to provide for some security lighting. And keep in mind that the grass does grow and occasionally we do get ice so plan on these expenses as well. The simple answer is Cash Flow = Gross rents - carry costs (PITI) - Utilities - Capex (Cost to replace worn or broken down items...eg..Roof/AC unit)- vacancies. With all that said, keep in mind that you may be able to purchase a 4-plex on one block significantly cheaper than another 4-plex a block over but that doesn't (Won't) make it a better deal if you have to pay all the utilities on the cheaper building. The building is cheaper for a reason! Not to say that money can't be made but personally I believe that people are more considerate of their utility usage when they have to pay for it. Best of Luck!

@Tony Hernandez PM me. I have a spreadsheet I use that I massaged for exactly this purpose. It allows you to "Play" with the numbers a little.

@Kennedy Williams First, Fix whatever ails your credit. No matter what, you will need good credit going forward. As you buy and more properties, the credit score requirements go up.

From my dealings with lenders recently, they will require at least a 720 FICO score for lending on an investment property. If you are just starting out and plan on living in the property for a least a year or two, you would probably be better off seeking a conventional loan. this may qualify you for a smaller down payment (definitely lower rate too) and I think the credit score requirements drop way down to about a 620 (?).

Check your credit before you act and call around to various lenders to see what their requirements are. most lenders will try to help or at least point you in the right direction to attain the credit scores they desire.

Best of luck and hope this helps.

@Andy H. I would love to try to get mortgages in my wife's name as well, right now we are both joint on everything but like anybody else I'd like to go well beyond the 10 limit before actually switching over to a commercial loan (Higher rates, Shorter terms). With that, How do you distribute the rental income so that it appears like it's her income so that she too may qualify on her own? Just not sure how this works.

@Skylar Dejesus I'm finding there are a couple of options after reaching the magical "10".

Some Investor friendly banks will roll several (I've found 4 to be the minimum) properties into a commercial loan. by doing this, It frees up some the conventional loans. Also, like some have already stated, check with local smaller banks and ask about "Portfolio" loans. These are loans which are generally kept in house at your local banks. Credit Unions may be a prime place to start for these.

@James Reyes Have you ever noticed that Guru's are usually advertised during the wee morning hours. Do you know who watches TV at the wee morning hours?

Mostly people who can't sleep because they are financially overwhelmed and a therefore desperate to try anything to right their situation.

It's somewhat entertaining to me as to how these guru's have the "secrets" to real estate investing. just send them the money and the "secret" is revealed. To me, the secret is that there is no secret (I should have asked for money for that revelation). Actually, you are at the right place (Bigger Pockets) to uncover the truths to all the late night secrets. 

We've been investing for almost 10 years now and have found no better place to gather information than right here at this site (Not affiliated!). The biggest and most revealing thing about this site is that it's absolutely free, you can learn at your own pace and the community is so welcoming (and forgiving) that you can ask any question you might have and someone will have an answer for you. 

I'm by no means a know all and certainly invest in topic focused books but cannot bring myself to believe in self proclaimed guru's. What for? I can communicate with 1000's of non professed gurus right here :)  FOR FREE!!

Like I always say, If it's for free, it's for me :)

@Jeff L. Like everyone else has stated, Yes this is completely normal. Whenever I run the numbers, I always figure between 1-1.5% higher rate for the investment loan versus the personal loan.

@Account Closed Another very important point I neglected to mention on my previous post is that should you decide to go with an owner occupied 2-4 family, it is financed as a personal residence. With that I mean that your down payment requirement would be significantly lower than the 20-25% down payment required for an investment loan. Some first time home buyers qualify for 3.5% down as long as owner occupied (Just make sure the numbers work). Just a thought.