All Forum Posts by: Pat Lulewicz

Lot of new-co that gets grabbed by investors which adds supply. One of the "hottest" apartment building cities in the country which FLOODS supply and many young renters tend to go for class-A apartments and their amenities, which are seeing concessions in lease-up. So your competition is getting larger as a landlord.

Traffic and infrastructure are starting to have issues keeping up with all of the building. On the flip side, more building does mean more inventory so if you can be part of the above point, you can get a pretty new home that tenants want. Granite vs formica is starting to matter to picky renters...since they have so many options.

Our ACs get stressed faster than cities with moderate climates year round so keep your CapEx handy.

@Adam Walker check to see if they have other properties they do this for and ask for those landlords' contact info like you would with other tenants. If they haven't done it before, the risk is definitely higher. If they have references and those landlords are generally "happy" with the experience, then its a good operator. Your home IS in a location that could make it a good STR/MTR given proximity to attractions and it's in beautiful shape so I don't think the operator is pulling the interest/opportunity out of their a**.

Attorneys would probably argue with me, but if their LLC is going to rent it, I would still get the individual on the lease or at least a co-signor guarantor agreement so that you have the EIN and SSN for purposes of evictions and collections.

I'd say the biggest qualifier (assuming they can operate it well) is their credit score. If they have a 500 credit score and are trying to make a buck a popular investment strategy, they could just as easy shut down the LLC, stop paying you rent and jump ship since their credit is already bad, whats another hit. Low risk, high reward for them.I would also consider getting a 2x security deposit + 1st months' rent + last months' rent. Don't go more than 12m lease, and even consider a 6m to test the waters, though they will push back because it doesn't given them enough runway to buy the furniture and get runway.

If your PM is going to be managing them, make sure that they are just VERY diligent on collecting timely rent and get agreement to do quarterly (or so) walkthroughs/inspections to make sure the home truly is being maintained. In addition, get GRANULAR on which expenses/costs are tenant responsibility vs which stay with you. Who does HVAC maintenance? What happens if shower pressure deteriorates dramatically - are you on the hook for the plumber or them? Water heater? Appliances? Etc....everything should be very detailed/itemized and hyper documented.

What do you mean when you say "investor-friendly" GC? How would you differentiate a GC that works on someone's personal residence from that of an "investor-friendly" one?

Based on an appraised value of $255k and rent of $1,600, you're running VERY tight on a 1.0 DSCR at these interest rates. Assuming 7.5% int (and I haven't seen a DSCR lower than this) at 75%, your Principal&Interest is already $1,337, not including property taxes and insurance. Did you get that feedback at all - that your DSCR was too tight or below 1.0? Otherwise, I have experienced a number of DSCR lenders try and bait&switch at the closing table or right before getting to closing because they thing they have you in a choke hold...good on your for walking if that was the case. I think more investors need to have the confidence to do this.

Wait until something (unfortunately) happens. It could be fine for years or a T could pop tomorrow. When you have your first issue, I'd have a trusted plumber (reach out if you want a good one) that can come same day to make the repair and can quote the replacement in its entirety; that person will usually give you the best pricing given that they're already there. To Julie's point, very different process/pricing when slab v crawl. 

@Vlad Krokhmal I would go work for another PM firm to see how they operate, SOPs, professionalism, and be able to show experience to prospective clients when you go live in 2 years. Otherwise, they'll ask you for your experience and you'll only be able to say you've held an RE license for 2 years and took some tests. Take this time to work on additional accreditation as well.

For anyone unfamiliar, she is with New Western which is one of the nation's largest wholesaler, if not the largest. Their line of "30-40 deals a month" is NW's standard motto and all of their agents use it. They point to the company doing 30-40, which is directionally consistent, deals a month so you wont necessarily find it in any database.

@Tara Montgomery learn from my previous, unfortunate experience in this manner:

Make sure you ask upfront and multiple times whether they use the highest of the credit scores or lowest of the credit scores. This situation came up with me and a partner, and we came to find out they use the LESSOR of both scores. You can imagine this can swing interest rates on refinances significantly dependent on the extent of that score discrepancy. Would hate for you to get to the same situation as we did where we paid hundreds for appraisal, let our bridge loan tick away for weeks leading up to refinance, and only find out this info at the end of the process where we get our rates switched on us. Fortunately we had the financial position to be able to "leave them at the alter" and go a different direction, however most consumers may not be as fortunate or prepared.

@Luis Salas - careful with this strategy. In NC, when you speak to a potential seller, you are legally required to share with them that you're an agent even if you're there to buy their property or wholesale it off-market. If you don't and the seller feels "ripped off" after you assign it and make a profit, they will come after your license and have a good shot at it.

This also makes it more challenging to be fair, honest and ethical with a seller. Your responsibility is to act in their best interest and provide them the most accurate information possible about their home. "low balling" doesn't necessary meet those standards.

The way that realtor's generally have to work is provide the seller the true and accurate comps (market value) as well as expressing to them that you could also buy it at a discount but buy it fast, no repairs, etc (all the other stuff wholesalers say/provide). You just walk a very fine line when you're a licensed agent that wholesalers and a lot of brokerages will not look fondly at this type of activity.

Message me privately to chat more on potential workarounds and how to operate in the space doing/being "both".

Hi Linda - your services make a lot of sense for someone who is trying to go the MTR route, however if they are just now buying a house in today's dollars and rates, and setting it up as a MTR, it may be hard to substantiate a few thousand dollars to pay a third party to do the set-up after they just spend tens of thousands, or potentially hundreds of thousands on a house DP in Raleigh + furniture.

I think the fundamentals work for someone who's owned it a while, has made great cash flow, and who has been thinking about converting from LTR to MTR, and just doesn't want the hassle of set-up and marketing but wants the returns. You're more likely to find LTR owners who want to convert to MTR because they are effectively the same rental experience and management for an owner, just with (potentially) more frequent turnovers. Going from LTR to STR though is an entirely different management experience for the owner/client and its rare someone wants to ADD work to their rental portfolio by making it actively managed.

I figure your 107 units is at a single moment in time, right? So rentals get leased and other rentals come on-market? Would be useful if you tracked that daily/weekly to see how it moves if it does. DOM (if that figure is available) is probably more important to your Q. But if those are already active MTR-able units then your set-up model isn't really relevant to that group, right?