All Forum Posts by: Patricia Newman

Since they are such great tenants (and they can be very hard to find), I would help them set up an automatic payment system bi-weekly, as follows:

$1850 X 12 = $22,200

$22,200 / 26 weeks = $853.85 per payday.

That way both you and your tenants can sleep at night.

I'm sure you will be a hero in their eyes if you do this.

This would enable you to increase the rent in August by $50 with a month-to-month tenancy.

$1900 X 12 = $22,800

$22,800 / 26 weeks = $876.93 per payday

Your tenants would be happy the rent is going up "only" by $23.08 per payday. 

It's a Win-Win for everyone!!!

Location!  Location!  Location! ....every time!

Check with your local Apartment Association.  They will have all the necessary forms and renting criteria for you to use.  Yes, it's important to present your criteria for not renting upfront.  This will protect you from possible discrimination.

I think I'm moving to Jackson - great house!  Lots of potential for curb appeal!

You can always make an offer "subject to inspection".  That way you can tie up the property with very little risk.  As you walk around the property with the inspector, he will point out things to you that maybe you have missed and also give you a ballpark as to the cost to fix it.  Gosh, as far as the roof is concerned you definitely want an inspector for that.  No lender will lend without a good roof.  Even if you pay cash with flipping in mind, the cost to do the roof as well as the other remodeling (kitchen, baths) might put you over the top.  Would this be a good fixer and keep to rent out and start building your road to wealth?  Would it add value to convert the carport into a garage?  It definitely needs landscaping - fencing would attract families.  Go to Home Depot to have them help you redesign the kitchen.  They do it on the computer and I believe it's free?  Or at least get a designer for a couple of hours - it will save a lot of heart ache.

Good Luck!

Glad I can help! 

This would be the perfect time to start your Personal Plan (Business Plan):

1)  Where do you and your wife want to be in 1-2 years, 3-4 years, 5 years etc. to grow your personal wealth? It's important to write it out.  To visualize it.  Have it come from the heart. 

2)  Once you and your wife know where you are going, then you can do a step-by-step approach on how to get there.  But first you need to know what "where" is.

3)  A legacy for your children.

For me - In the 1980's living in the beach areas of Los Angeles was extremely expensive. Back then, SFH were selling for $225,000 - I was making $30,000 and single.

It took me 5 years of reading everything related to real estate - no money down, rent out SFR room-by-room, going to numerous seminars. I started studying real estate and didn't even know what equity was. Deep down I knew that I could buy a home to live in (I had been renting for 10 years). What was the magic formula for me?

One book was the magic bullet for me. I could qualify for a FHA loan buying a multi-family property. A duplex was not enough income, but a triplex or 4-plex was. I hunted, I searched, I cried - the property was just not out there...until one morning I opened up the newspaper and there it was. I called the agent for the address - it was in an "A" neighborhood - a triplex - asking $135,000? What? It must be a misprint! I called the agent back and said I wanted to make an offer and I would be at her office at 2:00 p.m. This gave me enough time to drive by the property and the neighborhood.

It definitely was in an "A" neighborhood.  This was an older neighborhood with beautiful tree lined streets.  Homes had been remodeled and I knew they were worth $225,000 easy.

I made an offer for $133,500 and it was accepted.  Wow!  All those years of reading had really paid off.  I knew what I was talking about.  I knew what I wanted and how to get it.

Now with multi-family properties, the offer is always made "subject to interior inspection". So if you don't like what you see you can simply state property not accepted.  I knew by the condition that it would be gutted down to the studs, new plumbing, new wiring, new everything.  It was BBBAAAADDD!  My kinda property.

This was a gold mine! In an "A" neighborhood. The realtor simply made a HUGE mistake on the listing and I found it! This made a perfect FHA 203(k) rehab loan - based on the appraised value after remodeling, the bank gives you so much money to remodel. This was perfect. An owner-occupied loan was perfect for me and the bank.

The deal closed.  With the help of a contractor, I started remodeling the unit I was going to live in.  Then after I moved in, one of the other tenants moved, so I renovated that.  And, a couple years after that, the last original tenant moved out and I remodel that one.  I also put in beautiful landscaping.

My real estate philosophy has been to get it for the right price - sweat equity - so I can rewire, replumb, new roof, etc. depending on the age of the home and what has been done.  It's all about the price and cash flow.  Forget about future appreciation.  It might not be there when you are ready to sell!  Note:  2008-2009

I decided to move to Redmond to be closer to my brother.  So 3-1/2 years after buying my first property, I sold it for $365,000.  Taking the equity from that property, I did a 1031 tax free exchange into my current 4-plex which I currently live in with my husband.  It has allowed us to live comfortably with the tenants paying all the bills and then some.

Selling the triplex for $365,000 after buying it for $133,500 - over the 3-1/2 years, I put approximately $70,000 into remodeling all 3 units.  Interest rates were coming down - property values going up; properties appreciated 25% just by doing nothing.  My appreciation was 79.4% (365,000 / $203,500) in 3-1/2 years.

Soooo - Be careful of the traps that prevent you from building your wealth - big houses, cars, vacations, toys....credit cards!

Also, you stated you want to buy several investment properties.  Don't get hung up on the fact that a lot of people on BP are going crazy buying investment properties at warp speed...with the housing market so hot right now, I hope they don't crash & burn.  It's easy to get caught up in this.  It's okay to play it safe and steady. Time is on your side.  I bet 5 years from now you will look back and be amazed (and so very thankful) how far you have come.

Good Luck!

Be patient! Right now, for your wife, it's all about the baby, you and the family. Give her time. At some point, she will be receptive. Continue to save, save, save.

As time goes by, you can drip, drip, drip your suggestions:

1) Because of our family - we want to build wealth

2) Because of our family - we are ready to make sacrifices

2) Because of our family - we live in a triplex or fourplex to create that wealth

Have you read the Rich Dad, Poor Dad series? I found most copies at Half Price Books.These were written in the 1990’s, so keep that in mind.  Read the Rich Dad, Poor Dad book first. This is a fabulous book that starts right at the beginning/basics of what it takes to “create wealth”.  It's all about a particular mind-set.

Continue on your path to look for multi-family properties.  Get practice knowing what makes a good purchase.  Becoming a Pro member on BP is $29/month (cheaper by the year) and gives you all the tools you need to analyze the property.  That way, when the time comes, you will know if the property is a good deal and be able to pull the trigger.

Because there is so much to learn, all of this can take time for the novice investor.  So, by the time you are comfortable with making the move, she can be on board.

Feel free to contact me.

Good Luck!

I use Craigslist...I've heard Postlets is also good.

Conventional financing would probably go smoother if it was "owner-occupied" and indeed you actually moved into the property for 1-year minimum.  Being on-site every day, even if it was professionally managed which I would budget for, would give you piece of mind and you would know what it takes to "run" such a complex.  This would be your building block for a larger complex.

Call around to Property Managers and have them tell you what they think of the location and the property.  Actually, you can give them just the general area.  Believe me they will know if there are any issues.  ***Why is this a bank repro?** would be my first question.

Do you own any other rental property that you can sell and do a 1031 Tax Free Exchange?  This would definitely increase your cash flow position and you would have more skin in the game for the mortgage lender.

A couple years down the road, you could do a HELOC to pull cash out for your next wealth-building purchase.

Good Luck!

I have the same issue for my owner-occupied 4-plex.  The rents are really low.  Tenants have been with me for 3 - 4 years.  Had to put a new roof on so a good opportunity to raise the rents.

I started out by saying "Because I really value your tenancy, I am raising the rent in increments as follows:

1)  Effective September 1, 2015 the rent will increase by $75.00 from $1,575 to $1,650.

2)  Effective March 1. 2016 the rent will increase by $75.00 from $1,650 to $1,725.

3)  Effective September 1, 2016 the rent will increase by $75.00 from 1,725 to $1,800.

A rule of thumb when budgeting your rent is usually 25-30% of your income.  So, if your monthly income is $8,000 then your rental maximum would be $2,000 - $2,400."

Laura, your tenants are now settled being their for 15 months.  Give them the opportunity to stay without sticker shock.

By the way, when I notified my tenants in writing I never heard anything.  I ended the letter "to let me know if you have any questions or concerns".

Walnut Creek is a nice area.  I lived in Pleasant Hill for many years and went to DVC.

Visit all the Open Houses in your area and know how far they are going with their rehabs and of course get a flyer on the property.  You don't want to over rehab for the area, but you do want to make it nice and to stand out from the rest. 

I agree with @Jessica S. - about painting the front door and I would also include the soffits (trim).  It would give the impression the whole house has been painted.

Also, the flow of the house is important to a buyer - can you tear down non-load bearing walls to really open it up?  There's nothing worse in an older home, not to have it flow properly.

Suggest you consider having it professionally staged.  Get at least 3 references from the stager - did this result in a fast sale?  Using the appropriate furniture arrangement, the stager can help you sell the house.  It's not too early to consult with a stager.

Yes, please address the landscaping - even if it is GREEN grass freshly mowed and trimmed, that would be okay.  There is such a thing as "curb appeal"!  Plant a few pansies and your done.

Buyers are going to be in full force this spring and you might create a bidding war!  People want to buy that dream!

Good Luck!