All Forum Posts by: Mathew Pezon

Hey Richard,

Spot-on with your follow-up! Here's a streamlined approach that I have trained my team on: Coordinate a single walkthrough day for all necessary contractors. This saves time and hassle for everyone involved, including your realtor. If gathering everyone on the same day isn't feasible, detailed photos and videos of each area needing work can be a great alternative for initial estimates. Share these with potential contractors for a rough quote.

Once you've got your estimates and you're ready to move forward, ensure everything's detailed in a contract, covering the scope of work, costs, and timelines.

Simplifying these steps can make the renovation planning process a lot more manageable. Good luck!

Hey Gladys,

Jumping into real estate investing is an exciting step, and it's awesome you're weighing your options carefully. Between multifamily units and single-family homes, the best choice really hinges on aligning with your financial goals and investment strategy.

Multifamily properties can be a great kickstart, offering the convenience of managing all your units in one location. This could mean a steadier income flow, especially since vacancies in one unit don't leave you without any income. Yet, the initial investment might be heftier, and the management could be more complex given you're dealing with more tenants under one roof.

On the other hand, single-family homes might spread out your risk and potentially cater to longer-term tenants, promising less frequent turnovers. Managing multiple properties does come with its own set of challenges, like juggling different maintenance issues, taxes, and possibly even varying market conditions if they're not all in the same area.

Here's where your financial goals come into play: Are you looking for a more hands-on investment with potentially higher cash flow from the get-go? A multifamily unit in Providence might be your answer. Or, do you prefer a more diversified approach, possibly aiming for long-term appreciation and stability? Then, several single-family homes could fit the bill.

Aiming for a cash-on-cash return of about 8% or higher is a solid baseline, but remember, this can fluctuate based on many factors including your specific market. Ultimately, the decision should mirror your financial ambitions, how actively you're looking to manage your portfolio, and your risk tolerance level.

Take some time to reflect on what you hope to achieve with this investment. Whether it's building wealth over time, generating immediate cash flow, or a mix of both, let your financial goals guide your choice.

All the best in making a decision that aligns with your vision for the future!

Hey Aspen Jay,

Diving into off-market deals is quite the adventure, especially when you're just starting out. It's fantastic you've got an agent with rental experience you trust to guide you through. Figuring out how to compensate them, though, can feel a bit like uncharted territory, right?

So, usually, agents get something like a 5-6% commission split between the buyer’s and seller’s agents for the traditional market deals. But with off-market deals, things are a bit different since you might not be using their full spectrum of services in the usual way.

It's all about kicking off the conversation on the right foot. Chat with your agent about what you’re hoping they can help you with. Is it evaluating the deal, or maybe you want them in your corner negotiating? Once you're clear on that, it gives you both a better sense of the value they're bringing to the table for this specific deal.

From there, it's really about figuring out a compensation that feels fair to both of you. Some agents might lean towards a fixed fee for off-market deals if they're more in a consulting role rather than running the whole show. Others might still go for a percentage, but since it’s off-market and might not involve as much legwork, they might be open to something less than the usual rate.

Who throws out the first number? Well, it might be easier to let them pitch their fee structure first. They’ll let you know how they usually handle these situations, and you can negotiate from there. It's all about finding that sweet spot where you both feel valued and fairly treated.

Remember, transparency and being upfront about what you value in their help can really set the tone for a great negotiation. You’re acknowledging their expertise and the role they play in making you feel confident about your investment.

Wishing you all the best with this deal and hoping it’s the first of many successful ventures for you!

Take care,

Mat

Hi Richard!

Kicking off your BRRRR journey is an exciting step, and it sounds like you've got a solid base with your current rental. Leveraging that asset to finance another deal is smart play, and the townhouse you're eyeing seems like it could be a great addition to your portfolio.

When it comes to budgeting for renovations, it's definitely a challenge to nail down accurate estimates, especially when resources might feel a bit outdated or not region-specific. Here are a few tips that might help you get a clearer picture:

1. Local Contractors: One of the best ways to get accurate estimates is to connect with local contractors. If possible, get multiple quotes for the work you're considering. This not only gives you a range of potential costs but also helps you gauge the reliability and reputation of different contractors.
2. Real Estate Network: Tap into your local real estate investor network. Other investors can offer insights into renovation costs in your area and might even recommend trusted contractors. Real estate meetups or online forums can be gold mines for this kind of info.
3. Detailed Inspection: Consider hiring a professional inspector with experience in renovations to give you a detailed rundown of what needs to be done. They can often spot potential issues that might not be obvious but could impact your renovation budget.
4. Contingency Budget: Always add a contingency buffer to your budget. Renovations can uncover unexpected issues, so having an extra 10-20% of your estimated budget set aside can help you manage unforeseen costs.
5. Start Small: If it's your first time budgeting for a big renovation, consider tackling the project in phases. This allows you to adjust your budget as you go, based on actual costs incurred in earlier stages.

Given the specifics of the property and the ARV, your $60k estimate might be in the ballpark, but it's essential to validate this with as much local input and professional advice as you can gather. It's also worth revisiting the scope of the renovations you're planning—are there areas where you can save without compromising quality or appeal? Could some updates be more cosmetic than structural to stretch your budget further?

Remember, preparation and research are your best tools in this phase. Don't rush the budgeting process; taking the time now to get it right will pay off in the long run.

Wishing you the best of luck with your BRRRR adventure! Feel free to reach out if you've got more questions down the road.

Cheers,

Hi Joshua,

Finding yourself eyeing up a killer deal without the cash upfront is a spot many of us have been in, so you're definitely not alone in this. Here are a few creative ways to round up that down payment you might consider:

Team Up: How about finding a partner who's as excited about this opportunity as you are? Splitting the investment (and profits) could make it easier on both your wallets and kickstart your real estate journey. The Bank of Family and Friends: Sometimes those closest to us can be willing to back our ventures, especially when we're as passionate as you sound. Just make sure any money exchange is well documented to keep things smooth down the line. Leveraging Other Assets: If you've got equity in another property, a Home Equity Line of Credit (HELOC) could be a way to tap into that without selling up. Look for Private Lenders: They're out there and often more flexible than traditional banks, though the interest might be higher. If your deal's as sweet as you say, it could well be worth it. Crowdfunding: Ever considered it? Platforms out there let folks invest smaller amounts in real estate projects. It's a way to pool resources and get that investment moving. Seller Financing: This one's a bit of a long shot, but if the seller's keen to move quickly, they might just finance the deal for you.

And here's a crucial strategy to add to your arsenal: aim to purchase the properties at least 15% below market value. Not only does this approach give you instant equity, but it also positions you well for a refinance. After you've improved the property and increased its value, refinancing can potentially allow you to pull out most, if not all, of your initial investment. This strategy can set you up for the next investment without depleting your resources.

Every option has its ups and downs, so weigh them carefully. You've got a great eye for spotting an opportunity – now's the time to harness that creativity for finding the funds. You got this!

Best of luck, and here's to hoping those properties soon have your name on them!

Cheers!

Hey Matt,

First off, hats off to you for handling this with a lot of understanding up until now. It's clear you're trying to balance being a compassionate landlord with the realities of managing a property. Here's a mix of steps and strategies that might help steer you through these choppy waters:

1. Documentation Is Your Best Friend: Make sure you've got a solid paper trail of all interactions, notices, and agreements related to rent payments. This isn't just about keeping things organized; it's your safety net if things escalate legally.
2. Legal Grounds Check: It's wise to touch base with a legal expert familiar with your local landlord-tenant laws. They can guide you on the notice to pay or vacate, ensuring you're on solid legal ground without inadvertently stepping over any lines.
3. Consider a Payment Plan: Given the surgery situation, a structured payment plan might be a reasonable middle ground. It's a way to show empathy while also setting clear expectations for how rent can be caught up.
4. Look Into Rental Assistance: There might be some local government or nonprofit programs that can assist tenants in these scenarios. Pointing your tenants towards these resources could be a win-win.
5. Keep Communication Open (But Documented): Continue trying to reach out. Whether it's text or email, having everything in writing not only keeps a clear record but also maintains the professionalism of your interactions.
6. Brace for Vacancy: While no one wants to go down the eviction route, it's important to be financially and mentally prepared for this possibility. Planning for this scenario doesn't mean you're giving up on finding a resolution—it's just smart property management.

You're navigating one of the trickier aspects of property investment with a lot of grace. Remember, balancing compassion with firmness isn't just fair; it's necessary for your success and sanity in this business.

Best of luck with everything, Matt. Here's hoping for a positive outcome for you and your tenants.

Great job on completing the 4-point inspection for your investment home. Regarding the secondary roof issue, your first step should be to consult with your current insurance provider. If they are insuring the property in its current state, it's likely that a new buyer will also be able to obtain insurance without trouble.

As for the mortgage aspect, the key factor will be ensuring that the house, including the patio "room" and its roof, meets all local building codes and standards. If everything is up to code, mortgage approval should be straightforward for potential buyers. However, it's always a good idea to address any potential issues upfront to avoid complications during the sales process.

In short, if your property is currently insured and meets all building codes, replacing the secondary roof may not be necessary. But staying proactive by consulting with professionals in insurance and real estate can provide further peace of mind.

 Absolutely Mike, good luck! 

Hi Neetu! 

As a landlord with numerous Section 8 tenants, I can attest that participating in the program can be a great way to secure reliable rental income. However, it does come with some specific rules and procedures to follow. Here are a few key things to keep in mind:

1. Understand the program: Section 8, also known as the Housing Choice Voucher Program, is a federal housing assistance program that helps low-income families, the elderly, and people with disabilities afford decent, safe, and sanitary housing. The government pays a portion of the rent directly to the landlord, while the tenant pays the remaining amount based on their income.
   
2. Get your property approved: Before you can rent to a Section 8 tenant, your property must meet certain housing quality standards (HQS) set by the Department of Housing and Urban Development (HUD). This includes ensuring the property is safe, habitable, and in good repair. You'll need to schedule an inspection with the local public housing authority (PHA) to verify compliance.
   
3. Follow fair housing laws: As with any rental, you must follow all federal, state, and local fair housing laws. This means you cannot discriminate against tenants based on race, color, national origin, religion, sex, familial status, or disability. You also cannot refuse to rent to someone solely because they are a Section 8 voucher holder.
   
4. Screening tenants: While you must accept Section 8 vouchers, you can still screen tenants based on other criteria such as credit history, criminal background, and rental history. The PHA will also conduct their own background check on the tenant.
   
5. Sign a lease and contract: If you approve a Section 8 tenant, you'll sign a lease agreement with them as well as a separate contract with the PHA outlining the terms of the voucher payments. Make sure you understand your rights and responsibilities under both agreements.
   
6. Collect rent and communicate with the PHA: The Section 8 program typically pays its portion of the rent directly to the landlord via direct deposit or mail. The tenant is responsible for paying their portion on time. If there are any issues with the tenant or the property, you'll need to communicate with both the tenant and the PHA to resolve them.

In my experience, Section 8 tenants can be some of the most reliable renters. The guaranteed portion of the rent from the government provides a stable base, and I've found that many Section 8 tenants take pride in their homes and are eager to maintain a positive relationship with their landlord.

Of course, as with any tenant, proper screening and communication are key. But overall, I highly recommend considering Section 8 tenants as part of your rental strategy. The program can provide a win-win solution for both landlords and tenants in need of affordable housing.

If you have any other questions about my experience with Section 8 or the program requirements, feel free to ask!

Hi Cade!

I'm so sorry to hear about the fire at your rental property. That must be an incredibly stressful situation to deal with as a landlord. While I haven't personally experienced a tenant causing major fire damage, here are a few thoughts and suggestions based on what I've learned from the BiggerPockets community:

First and foremost, I hope everyone is safe and unharmed. Dealing with insurance and repairs is secondary to the wellbeing of your tenants and neighbors.

Once you've confirmed everyone's safety, it's important to document everything thoroughly. Take photos of all damages, keep copies of all incident reports and communication records with your tenants, fire department, and insurance company.

I would strongly consider working with a reputable public adjuster, especially for a claim of this size. They can help navigate the complexities of the insurance process, ensure you document losses correctly, and negotiate with the insurance company on your behalf to maximize your claim payout.

When interviewing public adjusters, ask about their experience with similar rental property fire claims, references from past clients, and their fee structure. Many will work on contingency, taking a percentage of the final claim amount.

In the meantime, you'll want to secure the property to prevent vandalism, further damages, or injuries. Consider hiring a fire damage restoration company to help with cleanup, repairs, and rebuilding.

Lastly, take care of yourself during this difficult time. Lean on your local investor network for support, and don't hesitate to seek legal counsel if needed for insurance disputes or liabilities.

I hope this helps provide a starting point for dealing with this challenging situation. Wishing you all the best in the recovery process. Keep us posted on how everything goes.