All Forum Posts by: Obed Calixte

It's a range and depends on the property type, location, end condition and rental strategy. 

For quick math I have a range of each between: 700/yr to 3% of gross income

For C to B

-Larger developments announced nearby

-Increased activity in new construction

-Building of commercial retail in or near the neighborhood.  (Starbucks / yoga studio / craft brewery /boutique cookie,coffe or ice cream shop  are the easiest targets)

-Activation of dormant retail sites

-Increased foot traffic 

For B to A
Above also apply

-Home valuations (are homes in the increasing at rates above nearby or similar neighborhoods)

-Is it walkable or are projects in place to make it highly walkable for residents

-Is it near highly desirable activity centers 

-is it unique (for example - Can it get historic designation)

This is interesting. You will want to consult with a lawyer.

In regards to your last two questions here's some background on what makes a contract valid and enforceable:

Offer: A promise to do or not do something within a certain time period 

Acceptance: A clear and direct statement that all terms and responsibilities are accepted

Consideration: A legal and adequate inducement given in exchange for the promise

Capacity: The parties to the contract must have the legal capacity and competency to contract

Awareness: A party must be aware of the contract

Legality: The contract must be legal in the jurisdiction it will be operating in

***Not legal advice*** Steps I would take: 

-Review contract in detail to understand each counterparties responsibilities (if you are not aware)

- Email a copy of the lease to each of the tenants listed on the lease and reiterate lease expectations for termination notice, rent payment etc. 

- If the lease was signed via Docusign (other esign may have same ability) - you can go to the envelope, go to history and view the IP addresses for each action taken. If the IP addresses are the same for each signee, then there is a chance that the same person signed. If the IP addresses are different then it is likely that it was signed by separate individuals. This is not solid proof in either direction, however it will give additional context when discussing with the lawyer. 

Separately from all of that - I recommend reviewing your lease up procedures to improve verification of signing tenants and their agreement and aware of terms and conditions. 

The 50% rule - in my opinion- is used solely as a quick back of napkin calculation to determine if it is worthwhile to do more investigating of a property. 

Though DSCR gives you a better picture of how the property is projected to perform vs debt service, you can't rely solely on one measure to make a purchase decision.

With the numbers you provided above, you will have to ensure you have healthy reserves. Though at 1525/mth it is projected to cashflow a little less than 100/mth  -- the numbers do not include what I like to call reality numbers (vacancy loss, maintenance, capex reserves). Just one month of vacancy a year takes away any cashflow you would have. 

I would be beneficial to determine if they are other aspects of the property that make it a worthwhile investment (tax, appreciation etc).  This goes back to the aspect that you can't rely solely on one metric. 

There's no step by step guide but there are key things : 

Learn: RE strategies, what interests you, what do people in your area need.

Connect: find a mentor, accountability group and be around those doing what you want to do.

Help: solve problems- do people need dealflow, property mgmt, construction expertise, etc.  Identify the need that you can deliver on.

Grow: you, your income and opportunities will increase as you continue to do the above.

Biggerpocket podcast is a good launch point. Brandon Turner does a great job going over different strategies in his book "Invest in Real Estate with No (or little) Money Down". There are plenty other resources but the first is to educate

There are mortgage recast calculators online or you can reach out to your lender.

P+I payment will go from 2155 to ~1800 given the numbers you provided.

There are plenty of varying job opportunities in the real estate industry.

Ask yourself: What skills do you have? What interests you? What type of work will get you up everyday? Where do you want to be in life in 3-5 years?

Sure, being a RE agent is an option. To survive, you have to know that is a business however, not a job. 

There are plenty of entry roles from cold calling, scrubbing data and find deals for investors, leasing assistant, work on construction sites, office admin, project coordinator, Title assistant, RE photographer, transaction coordinator.. on and on. 

Find what aligns with your goals, skills and also is available within your area.

Are you tapped into your local REI groups?

HUD.GOV is originating source for FHA loan info. HUD 4000.1 (I believe) is the latest HUD handbook and it goes over all requirements for originating the loan, including but not limited to occupancy requirements and exemptions.

FHA occupancy : "At least one Borrower must occupy the Property within 60 Days of signing the security instrument and intend to continue occupancy for at least one year."

The first question you need an answer for is: If you do not intend to occupy for at least one year, where do you intend to live?  

Exemptions to getting a 2nd FHA loan per HUD handbook are:

-Job relocation 100 miles away or in another state

-Increase in family size

-Vacating a jointly owned home (ie - divorce or the like)

Have you contacted the Zoning Department to review the survey and ask what your subdivide options are with the existing improvements? (ie, lot size, variances, easements etc)

They've been very helpful to me over the years.