All Forum Posts by: Seth B.

How did you barrow the money? Where they bank loans? Owner finance? Hard money loans?

Great advise, why didn't I think of that…. The bank I got the loan from told me that it was a universal rule for lending institutions from Fannie Mae Freddie Mac. But maybe they were incorrect, I will definitely shop around (maybe some smaller credit unions). I have a credit score in the 800's, no debt except my mortgage payment of $585/month including tax's and insurance. Total rent on the duplex is $1550/month and I have signed leases from both tenants. I have income from my job and from an internet business (which I have had for 12 years and have the last 2 years tax returns from from it).

It is my first rental property, which is why the banks told me 2 years. But after the 2 years, I could buy as many as the bank would allow and the rental income could even be used prior to the loan for new purchases.

Are you saying find a partner with available credit and split the down payment on 2 properties? I assume there would be a way to write that in some type of contract which would state that I had 50% ownership even though the banks would be giving the loan to him? Or would the banks give the loan to both of us just from his credit?

Hi, on 9/20/2013 I bought my first rental duplex through a bank loan with 25% down. Now I have to wait 2 years for the banks to accept my rental income towards my debt to income ratio. I have no debt besides the mortgage, but I need to be able to have the rental income from the duplex go toward my debt to income numbers to qualify for another quality rental property. I have the money for another down payment of 25% and reserves. Should I wait the 2 years or find some owner finance rentals in the mean time?

if you are looking for a buy and hold rental, Portland and Eugene are not good options. Mainly because the cost of real estate is so high.

Example:

Fort Worth TX---2007 duplex, 2100 sqft, 3 bedroom 2 bath each side costs $85,000 and total rent is $1,550/month

Portland/Eugene OR--2007 duplex 2100 sqft, 3 bedroom 2 bath each side costs $380,000 (maybe closer to $430,000) and total rent is $2,400/month.

So for $380,000 you could buy 4.5 duplexes in Fort Worth with total rents of $6,929.00/month vs $380,000 in this are with total rents of $2,400/month.

This is a difference of $54,348/year in rent. So if you tried to argue Eugene real estate might appreciate faster than an area like Fort Worth TX (which it might) it would have to appreciate more than the TX property by $54,380 each year for the length of time you own the property. Which is just not going to happen.

Fort Worth is just one of many cities where the numbers for real estate buy and holds work. But in the Pacific North West, not so much.

But if your goal is to flip real estate or wholesale, Eugene OR could be a good option.

WOW.... This is definitely a horror story. I really feel for you. I am new to being a rental property owner so hearing these kind of stories is very scary.

I may have gotten a little bit lucky with my investment since it is in Texas. From what I hear it is pretty easy to evict in TX, and not very expensive. Hope this is true...

I wonder if you would have better luck with your new tenants if they were section 8? If you can get section 8 tenants in there the state will being paying you most if not all of the rents collected. This will make it so tenants can't stop paying rent. Also I heard that if they trash the place they will lose their section 8 voucher for the next place they want to live.

Even though I have very little experience, I would not "pay off" a tenant. Maybe $500 or less, but $3,500.00, NO WAY! I would rather pay that amount to a lawyer or court to have them evicted.... Then if they trashed the place I would take them to court for the damages, even if I didn't I didn't think I would ever see the money from them...

Thanks for the link to the article. Looks like my first year purchase fits the numbers/strategy outlined in the article except the fact it's a duplex and not a fourplex.... so I have 2 less doors bringing in $200/each for the first purchase.

After reading the article maybe I should change my strategy, which was to put $300/month from the cash flow each month towards the principle of the loan. If I did that I would have the 30 year loan paid off in 10 years. But that would also make it more difficult to save for the down payment on my next rental property.

The strategy in the article does seem to come with some risk of becoming over leveraged. But how many people become a millionaire without being heavily leveraged at some point....

It is a motivating article and gives me something to think about.

Thanks.

In your profile you stated:

"Buy and hold properties. Partners for buy and hold properties. My business has exploded since I started to work with partners."

Can you please elaborate on this?

One tenant lived there for 6.5 years and the other one for 4 years. So I assume the rents are lower than current market rents. The property manager managed the same property for the prior owner and said the rents have never been raised on the tenants that were in place when I purchased it.

Yes, $150/month is $1,800 a year. But I was talking more about how an investor would view the value of a rental when thinking about buying it. I would think a rental that grossed $16,800/year (my old gross rent) would be worth less to an investor than a rental that grossed $18,600/year (my new gross rents). Seems like when a potential investor looking for a rental property decides how much they would pay for a property the gross rent would be a major factor. So I assume as the gross rent increases so does the value. I would think if the gross rent increased $150.00/month it would increase the purchase price value more that $1,800.00 in an investors eyes.