All Forum Posts by: Nuhan Demirkan

Kimberly, to avoid calling a friend as if the landlord scam (happened to me twice but I caught it) first you can check the tax records of the address where they currently live to make sure the person you are calling is actually the owner. If not do a google search of the supposed landlord, check facebook and linked-in. So many times they give their colleagues from work as landlords...

Kimberly,

I have rentals and here are my criteria for accepting applicants:

1- Ability to pay: Do they earn enough money (rent x 3)? if yes continue...

2- What do the past landlords say? Positive? move to 3...

3- What does the recent credit history (past 12 mos) look like? 

4- Ask for a copy of recent utility/cell phone bill. Any past due balances?

if everything checks out accept the tenant

if the results are mixed and you are on the fence, you have options:

1- Ask for more deposit

2- Ask for payroll deduction/direct deposit for rent payments

3- Have a "Come to Jesus" meeting up front with them. Tell them this is a business and they have to remember three dates. Rent is due on the 1st, 5% late fee is added after the 5th and you will be filing for eviction after the 10th. They have to understand that the rent is the most important payment in their lives.

I just accepted a tenant who is working on credit issues with 2 mos of security deposit and bi-weekly payroll deduction for rent payment.

Good luck

Jack,

The only filtering I would do is to make sure they owned a house in the areas I want to invest in. And I would not assume that the spouse who is still living in the house would not want to sell and move in with family. Probate lists usually are not that big. I would send a letter to deceased who owned a home. Plus, I bought my last three houses from mailers that I sent months ago. People hang on to these types of mailers.

Tom, as I understand it he wants to deposit the money in a CD and use that as the collateral for a line of credit from the bank, correct? If that is the structure, the bank is going to arbitrage the money. I personally would not want the bank involved, why pay them if you don't have to. I have a similar situation with my father in law (which started my investing career). He lent me the money at 6% back in 2009. I make interest only payments to him every month. I use the money for purchase + rehab and either sell or refi the property to cash out. At that point I ask him if he wants all or portion of his money back or roll it back in. He likes the monthly income and has not asked for it back yet. I don't mind paying him 6% because I am able to deploy it for much higher returns. I signed a note for him back in 2009 securing it with personal assets. This structure cuts down on paperwork and cost at settlement.

Always pay him on time... good luck...

Don't forget the podcasts...

Boyd, most lenders have overlays that will exclude the potential rental income from your current home since you are not a seasoned landlord. It usually takes 2 years to have that income included. My suggestion would be to follow Ivory's advice on owner financing. Concentrate on tired landlords. It would be difficult to get owner financing from an equity seller. They probably need the money to buy their next home. However a tired landlord likes the idea of receiving monthly income without the hassles of tenants, termites and toilets. I have purchased 4 homes using this type of financing. You can negotiate everything from interest rate to frequency of payment to payment start date. On one of the deals the seller agreed to hold off on receiving payments until I rehabbed the property and put it on the rental market. Good luck in your investing...

Antonia, everything David said plus listen to podcasts on Real Estate Investing. There are a ton of FREE information on iTunes Podcasts for people just starting out. BiggerPockets has a very popular one. All of your questions are answered in those podcasts. Good luck!

Thanks, that is an option. I am putting together the base line thoughts to arrive at the formula. I wanted to see if anybody had developed the idea.

By the way I bought your books. I refer to them frequently. 

Thanks for writing them.

I do the P&L and the Balance sheet for the banks, that's given. But that doesn't account for ROI per hour worked. Plus those tools are for the properties I already own. I'm looking to apply this formula to future purchases.

What was your formula like