All Forum Posts by: Alex M.

Have you ever bought a property that was heavily infested with bugs? If so, what did you do about it during the home inspection/contractor bids/etc?

Were you able to get home inspectors and/or contractors into the property to give you a report and bids? 

Did you bomb the place yourself before closing? ...is that even allowed?

I'm in the process of buying two properties - walking into them, I was instantly covered in fleas in both, and one of them had literally thousands of roaches, and what I am guessing was bed bugs crawling around. It was pretty nasty. The neighbors mentioned they were occasionally spraying the outside steps as the bugs were just spilling out.

I'm the kind of newbie investor that gets really excited about the potential for a property - I literally spent hours at a time in my first rental planning out the rehab and envisioning what I was going to do to the property to make it look great - exposing brick, reconfiguring upstairs layout, enhancing outdoor space, etc. With these properties, though, I have not set foot in them since getting them under contract. I'm buying at a good price, and it will be hard to go wrong here, but I would feel much better having contractors in before closing to get my numbers a little tighter. 

If you have ever been in a similar experience, I would love to hear how you handled it.

Robert - on first glance, these numbers look good. As with other posters here, though, I am far from an experienced investor (yet). You really want to do your due diligence on this, but it sounds like it could be a good deal. 

If this is your first deal, are you considering moving into it? Using FHA finance would mean less money down (3.5%) - the cash flow would be reduced, but having it be a personal property would mean you are both gaining the experience - in running your numbers, managing your expenses, and landlording - as well as reducing your cost of living down to close to zero or below.

Same question as @Account Closed

If it is not too bad, you may want to consider a private or hard money lender for 6 months to a year If you think you can rent it out and cover costs + some cash flow on the extra unit, then refinance out of it once a bank is willing to.

@Bill P.

Great thread! Thanks for starting this and bringing the depth of discussion that you did. I am currently in the process of looking at ways to ensure I have a scalable business. At this point, I just have one property that I am renting - with 2 more closing in the next 2 weeks. However, I have two LLCs and finance partners and am looking to scale up quickly once I have the basics in place.

Based on the discussion that I am seeing here and on other threads, I see Buildium as the leading contender for a PMS for me as I grow. My biggest remaining concerns are:

1. Do I eat this cost now at the start in order to ensure systems are in place to scale - even though my current portfolio is so small as to be manageable with Excel and a bank account?

2. As I grow to 100+ units in the next few years, will I be missing advanced features such as Quickbooks integration, or is Buildium sufficient for me to manage multiple LLCs and a growing portfolio?

From what everyone is posting it seems to be a great solution for a small to mid-size investor with somewhere in the range of 10-100 properties. Under that it sounds pricey, and over that I see concerns around accounting complexity. Would you agree?

Whoops - I meant to say Ariel not Rob.

Originally posted by @Ariel O.:

@Rob L.

That's what everyone says about a lot of things (you only wish you have insurance when the house burns down). It's human nature.

The big issues with credit cards are chargebacks, and the big issue with ACH is similar (60 days with Fed Regulation E). The consumer just says the charge was fraudulent, and you can fight it, but you won't always win. I come from the consumer payment side of things so I've dealt with this stuff a fair amount, and I am always curious to hear that most managers aren't aware of it. There's a giant thread on the NARPM group in LinkedIn with all sorts of managers who got burned, actually.

 Hey Rob - if you are taking 1st, last and a security for all tenants, and you have 30 days to pay back the security deposit, don't you cover most of this risk already: : Lets say they move out the end of June. That means that you had all of June collected 12 months ago (last month), and May was paid by May 1st. You would not have to pay them the security until the end of July - almost 90 days later. At the least, you would be out the amount you would want to hold from the security. 

I'm just getting into this, so if I am missing something here - and there is more risk than I am aware of - please feel free to tell me this. 

Agreed on those terrible backsplashes. Also, add to that brown, spackled granite countertops.

John P. I'm not anywhere near an expert, so take what I say with a grain of salt, but I've heard a lot of folks on BP say if you have a great deal to get it under contract. If it is really a great deal, you should be able to find the partners/ private lenders. If you don't already have the phone numbers for some in your area, going to your local REIAs should be a good place to connect you with local hard money lenders.

Hi Alex. Similar to Joey Palmer my fiancé and I used FHA for our first property. We did not find a multi that worked for us, but found a really cheap home in a transitional neighborhood. Moved in and rehabbed it - I believe it is called a live in flip. We bought at $67 with 3.5% down and a $4k seller assist. It's now worth around $180-200 a year later. Since then I tried another FHA (under my name) but it fell through and I "lucked" into a private lender who loaned to me at a good rate. We bought that in December for $66. Put around $15k in and rented it in June for $1200 a month. My private lender and kept talking and we now have an LLC. I've got two more properties under contract and will be closing in two weeks. As I mentioned this arrangement to some family and friends, they got interested and I also have one more LLC in the formation. I hope to keep finding finance partners to buy properties, but as I am quickly learning, what you set out to do in these early stages often turns into something completely different. I think the most important thing is to just jump in. Some of the best advice I got on BP was to just pull the trigger once I found a deal - I as originally holding out to find a multi, but I just could not find it. I forget who said just buy a single family to me, but I decide to listen and it has now grown into a great partnership with more properties in the works. Good luck. With good incomes, you guys should be able to find multiple paths to getting started.

Would love to help, as I am in Philly, but don't have enough experience to make any recommendations yet. My one Philly rental (I have two more under contract right now) is currently insured through all state. There are a lot of active Philly BPers on here, though (Troy S. ) who may be able to advise. Good luck and let us know what you use.