All Forum Posts by: Nathan Hall

 Sorry, I meant the 2% rule, this particular deal just works out to 2.4%.

Covid-19 has been a kick in the nuts for everyone, I think it's safe to say. How are folks doing? Rents are being paid, not paid, etc? Any new opportunities for expansion? Is now a good time to expand?

I realize there are probably 100,000 discussions on here right now about these same topics, but I'm asking again because A) (knock on wood) we haven't lost a single rent, and B) we have a chance at a 2.4% rule expansion on 4 more units out of the blue. So after not being on here for many months, this is a pinch myself moment. What am I missing? Help me see the blind spots.

@Gordon Starr we currently have 13 units rented across 9 properties, with an additional two being renovated that we hope come online soon. We grew our holding substantially last year, and have only been at this since October 2017, for context.

I would say that the mixture of tenants is roughly 33/33/33%, across B/C/D class, as far as I understand how that is defined.

In my limited experience, I think that class can be applied to the tenant as much as the property, and it's not all negative. It's more about what to expect, the good and the bad.

Our C/D class tenants are "needier," but we're very upfront with everyone about what is expected and we have a stringent screening process, to the point that when they do get the place, they are thankful for it. In April we had a couple of folks hit us up about maybe being late, and we had a blanket statement ready that was basically "we fully get that this pandemic is impacting everyone, so for the month of April we are waiving late fees for those who are experiencing difficulties as long as you are able to pay by the end of the month." We didn't experience any problems in March, that I recall, and we have had no one late in May so far.

We also offer our tenants the ability to pay half on the 1rst and half on the 15th, which is very appreciated.

I'll be entirely honest: knock on wood but we've had no missed payments from any, yet. They've all been very communicative, know what is expected, etc. And for our part, we fulfill the other side of that contract: when they have issues, we get specialists out to address them. We'll do unlocks, etc., and if the old appliances we inherited go out, or they're having plumbing issues and I see that the toilet is older than Adam, I'll offer to put a new one in. It sounds silly but things like that go a long way.

@Jeff Alwine I'm a former resident of Manassas, so I know your struggle.

I also now live 1.5 hours away from there, probably in one of the locations you have been looking at, so please feel free to hit me up if you have any questions. We've been in the buy and hold game for a little under three years, now, and currently have 9 properties/15 units.

@Josh V. I'm not the most experienced lad on these forums but that sounds like a total ripoff. That being said, I don't know the details on the units, tenants, etc. I assume you part them ~8% every month to manage. I also assume they need permission for anything over ~$500 repairs. Given the price for the service provided, that seems suspect.

I replaced my own kitchen faucet a couple of months back for something top of the line though, shelled out ~$200 for the best faucet at Home Depot that would look good in their kitchen, and spent 3 hours on what I originally anticipated a 30 minute fix, until I finally had to fire up the angle grinder to just cut off the old faucet due to a stuck retaining nut in the tight spaces under the sink.

I still wouldn't have charged close to $500 for that, had I signed up to do it for someone else. Also what is plumber's grease, and why are you being charged for it? If I'm an accountant, should I charge clients for "money guy ink"?

@Ben Roberts if it's a deal I'd imagine the refi would pay back the HELOC as well as the HML, right? In any case I agree with the original poster, buy and hold is the way to go with this property. I don't know your living situation or anything but duplexes are prime for house-hacking as well.

We closed on the purchase of five single family homes, mixture of 2-3 bedroom, 1.5-2 bathroom homes today with a commercial/portfolio loan. At the time of contract, all were occupied. Before closing, one tenant left. When fully tenanted, rents are $3750 a month and low in our estimation. Looking to bump them by $50 a month in the next couple of months. Here are the details:

Asking price: 315,000 as a lot; 360,000 as individual sales

Settled price: 300,000

Down payment: 20%

Fully inspected the vacant unit after walkthroughs of the other four, found that the refrigerator wasn't, a handrail on the stairs was loose, needed new carpets, no legal egress window on second floor... Sale was as-is but went back to seller with these issues, extrapolated like issues across 5 properties, asked for 15,000 off. Settled at 7500 since it was an as-is portfolio sale.

Amount due at closing: 53,134

Private funding loan for down payment at 3%: 60,000 (projected repayment over 10 years; after year one the percentage goes to prime minus 6%)

Commercial loan (20 years, 5.25%/5 year treasury index+3%)

I think this was a good deal but I'm always a second-guesser, especially of myself. For me, if I'm 100% honest, it was an opportunity to lock up properties that wouldn't have stuck around on the market as a portfolio, at this price, for very long. My area is already drying up, and there seemed to be enough there to make the play. I was comfortable doing the deal at 12% on the private loan just to get it done and paying out of pocket if needed, but the lending party wanted to be a part of what we're doing and refused. I'm one of those people that will ALWAYS pay their bills no matter what it costs me personally, because I try very hard to be honest with everyone. We're hoping to have all the units renting around $800 each by the new year. All the tenants that stuck around said that they were happy and wanted to stay, and one confessed that she was worried she'd need to find a new place. She was so happy when we explained we weren't flippers, and wanted her to stick around but that rents would go up gradually.

These are C+/D properties, I think, for context. I'm still not sure on how that works.

@Shawn Coverdell what?

@Matthew Olszak I understand what you're saying, and the logic, and I'm still a bit taken aback.

That's on me.

@Sean Tippens I can't speak for others but we conduct background checks on prospective tenants; I'm sure it's possible but I imagine that the vast majority of times their need to provide SSNs to establish credit and criminal history might weed illegal immigrants/undocumented immigrants out. It's never been a question we've ever asked directly, though. I don't think it is a protected status in most locales but it is definitely an invitation to awkward, unnecessary conversation that would likely otherwise sort itself out.