All Forum Posts by: Natalie Schanne

Dan Miles - make sure your loan products are apples to apples, that you're not trading a 30 year fixed for a 30 year ARM that might start with lower payments but go up higher. I've noticed some friends spending windfall $$ for unique kitchen/bath upgrades that I guess make them happy but are adding less than 50 cents per dollar spent to the home value and little if anything to the rental rate.

Rick Alvi - how private of a person are you? Can you share your house with people you interview and screen? I bought a 5 br 3 ba sfr for 255 when 3 br 2 ba were $200-$210 and 1 br 1 ba were about $150. I furnished the common area (sofa, tv, dining table for less than $1k) and rented out all the spare bedrooms - each brought in $500-700 + utilities. I furnished some with craigslisted twin beds and dressers (roughly $300), so my walls wouldn't get banged up on move in/out. I've had 98%+ occupancy and my mortgage and utilities are paid. The extra $1000-1400/mo I got from a bigger house was totally worth the extra $45k investment. I tended to screen tenants / roommates who were busy people and they weren't at home much anyway. So I didn't feel like I had a lot of roommates - I just had a lot of income.

Leland Smith - if the work is shoddy, the buyers will probably notice it and you won't be able to get top dollar ARV. Sorry you've had a bad experience. Hope you don't lose money on the overall deal. Never pay for work you are not satisfied with. If they messed it up, they need to fix it with FREE labor. In the future, get a fixed price contract. Write out a specific list of deficiencies that you want them to correct for free. Tell them they need to fix these things before you pay them again. Start interviewing other GC / contractors who can fix the problems or can finish the job. See what they tell you about his work. Don't tell them you're upset with him, take them through when he's not there and ask them to give you a bid on what it would take to fix THE LIST. Ask also for cost for finishing the rest of the job. If you file a PayPal chargeback claim, you can probably get your $$ in the near term (while it awaits investigation). the contractor will hate you, may file mechanics lien against the house, and his payments to his employees might bounce. Contractor's general strategy is to keep your money and work extra 'for free' to fix anything. Maintain a strict quality. Over 5 months he's heard Yes, That's OK, here's my money ... as he's done various parts. You're not aggressive enough with saying - I'm happy to pay the $3000 for the cabinets AFTER they close properly. Good luck. Let us know how it goes.

Dustin Montaie - Read everything about landlording now so you know how act professional so your tenants will treat you professionally. Get the inherited tenants to sign new leases with you (if initially possible, or when theirs expires). Always have leases expiring during the peak rental season so you don't have to find tenants in January at 20% below peak rent. Write in automatic 3-5% rent escalation clauses that kick in every 12 mo. Train your tenants to behave how you want. Rent is due X (1st or 1st with free grace period to 5th, etc.). Rent has a late fee of $20-50 immediately then $10-20 per day late. (So they should pay on time.) Any Fees are paid first before rent out of any following payments. Rent is due by depositing into X local bank account or by sending PayPal/Venmo (if you want to offer it). It's better if they're not dropping off checks / cash to your unit. If they miss payments, SEND late notices immediately. File for eviction. Ask them when they are moving out and when you can re rent their unit. Maintenance requests can be sent by email to x address and you will respond asap. Urgent maintenance like floods they will call and or text you at x number. Fix stuff quickly when requested - either yourself or calling a pro. Decide if you're planning to encourage them to move out then upgrade their units to get more rent, or you're just going to keep them there until they decide to leave (then upgrade). Ask them if there's anything reasonable you can do to make their apartments better, especially if you may be asking for more rent in the near future. When getting new tenants, SCREEN!!!!! Ensure a good source of income (3x rent) and good prior landlord relationships. You are a landlord, not a friend. Good luck. Let us know how it goes.

Brendon Botelho - ASK YOUR NEIGHBORS - it's not weird. Maybe they have friends who would want to buy or rent your house or can tell you the websites where sailors look. 1. Post your house for sale on Craigslist with pictures. Maybe you can find an off market deal with a military person. 2. Post your house for rent on Craigslist with pictures. Look at craigslist for nearby rental prices. Price a little above that. 3. Find local military base housing boards and post your house FOR SALE and for rent. Give your cell on craigslist posts. Renew every 48 hours. If someone is acting weird or roomster, ignore them. There are some scam bots scraping cell numbers on craigslist. If people offer to rent your house at a good price, you can decide to say yes. You can even offer it furnished. You don't have to rent or sell it if someone is interested, but you can gauge demand. There's no need to hire a realtor to rent your home. You can do it yourself. If you get military people, they've already passed background checks. However, they are legally allowed to break a lease without penalty if they get orders to another base. So, be aware. If you don't hire a realtor to sell your home (as in you can find a buyer at a good price yourself), at a minimum hire an attorney for a fixed fee (in Jersey it's $850-1400). Good luck. Let us know how it goes.

@Account Closed - You can get notary services from various places such as UPS store, essentially evidence that the right person signed the document. But you'd need that person to be with you.

I'm not sure how you 'cloud' the title by having a notarized sales contract ?? - (Thanks for explaining Andy!)

This person has agreed to sell to you for X price on/by Y date and you both have legal remedies if one or the other party doesn't follow through. 

@Jordan Grimstad - You may still be within the window. People who shop for loans tend to get better prices and terms than those who don't. Will 5-10 credit points affect you? If you're above 720, you still should be considered excellent. 

NYT article says:

With FICO (the scoring model required by Fannie Mae and Freddie Mac), credit inquiries for mortgage loans that are less than 30 days old are ignored and have no impact. Inquiries older than 30 days are looked at, but multiple inquiries from mortgage lenders made within 45 days of one another are treated as one inquiry. With VantageScore, the window is 14 days.

@Account Closed - Great story! Thanks for sharing your successes. High Five. We all want to be you.

The questionable assumption in your $171k spreadsheet is only $6000/year in repairs for 13 units. Maybe that's true for the first few years. 

In your market, 1 week of vacancy is like $1000. I'm amazed if you can get a tenant moved out, the unit repainted, and another tenant moved in with no rent-free downtime. I've only repainted while a unit was 'being rented' when someone broke a lease or gave 30 days notice and moved out early. 

Capex and Modernization should be 1-3% of the asset value. At 1%, that's an estimated $70,000/year over your $7m portfolio for deterioration of your furnaces, roofs, floors, appliances, plumbing, etc.

@Andrew Martin - Welcome to the Bigger Pockets community! Keep reading and asking questions.

I really like house hacking, especially with a highly levered FHA loan. House hacking is defined as renting out part of your home to tenants or buying a 2-4 unit multifamily (duplex/triplex/quad) and renting out every unit you don't occupy.

The most successful real estate investors are GREAT at budgeting and saving. Make sure you're continuously building your gratification-deferral skills. (Are you willing to put off that vacation or going out to eat every Friday in order to save up a bigger down payment?)

Talk to a mortgage lender to see where you're at in terms of loans they can pre-qualify you for.

How's your W2 income?

Credit score?

After that, think about where you want to buy and for how much. 

Then spend 30 days minimum just looking at potential deals. What's a fair price for the neighborhood? If I rented out a spare bedroom or an apartment, how much rent would someone reasonably pay? 

Then, you'll know a good deal when you see one. Get on a real estate agent's database email list and get first notification of foreclosures / REOs and multi-family units hitting the market in your price range and in the areas where you want to buy.

Then, tour properties and make an offer via your agent. Negotiate the best price you can. Settle. Then rehab and rent out the other bedrooms for cash flow. 

When you have less than 4 units in most states, you don't fall under codified landlord-tenant law, so if you're really cash strapped you can put the $1000-3000 in security deposits in your bank account and fix up your house with this money in the beginning. Make sure to pay it back / set aside the $$ for the security deposits asap, since you will owe the full security deposit - any home damages to the tenant within 14-30 days of move-out, whatever your lease says.

Good luck and let us know how it goes.

Keenan Smith - taking out a loan is not a taxable event. Selling is. So it makes sense to refi and get your equity/cash out for the next deal without paying taxes. You keep the property and continue to rent and depreciate it. You can deduct your interest off your taxes. If you hold a property for a long time, upon your death, the IRS basis of the property could be 0. Your heirs will inherit it at full market value and not have to pay any taxes (besides estate/inheritance).