All Forum Posts by: Ray Harrell

I agree, with good tenants it's not always about maximizing rent. There is significant value in a tenant who pays $500 on time every month, makes his own minor repairs, and doesn't damage or place or complain, vs a $700 tenant who is always late, makes emergency calls all the time, damages your property, causes problems with neighbors, etc.

Unfortunately, you can't raise one person's rent $50 while raising a similar unit a full $200. Tenants talk, and you may find yourself in court for housing discrimination. Find a happy medium where your current tenants will stay and your problem tenants may consider moving.

I, too, would love to see this come to fruition with your documented steps. You must have some equity in your own home that makes you confident that you can pull this off. If that's the case, then your "I don't have the 20% down" statement is somewhat misleading.

I'm personally looking to purchase my second building, likely a 3 - 6 unit. But I'm not finding any help on how to do this without the 20% down or the income to support an additional building. So I'm very interested in your journey.

On thing I would also say, is if you are planning on buying more properties, bite the bullet and save the 20% for this one and save your FHA opportunity for a more expensive, owner occupied property. 3.5% of 400K is half of 20% of $140K.

@Carlos Araujo, there are some banks that will do 10% down, but the loan will be based on your current income/debt ratio and not consider the income from the building. Also consider this, if you purchase a building that's occupied, chances are you won't live there for the first few months anyway, or if it needs extensive rehab, or if you're locked in a lease or a property that you can't sell or rent right away. Nobody expects you to move in on day 1.

I had a lender tell me they would finance a property with 5% down, but I had to qualify with my own personal income, and it would have been owner occupied.

@Rachel Payton, there is that sweet spot that nobody really wants to share info about how to get from that first unit to the second and beyond. It seems that nobody really has the secret, or wants to share it. I'm SURE people didn't wait 5 years to save up another 25% to get that second property. That's where I'm struggling. I see great buildings all the time in Chicago, but I don't have the down payment saved up yet, and they aren't necessarily rehabs.

I just want a mortgage at a decent interested rate with 5% down based on my credit and payment history. @Salvatore Lentini, I would be so sad if my credit score was 650!

@Salvatore Lentini, how many properties do you currently own? And are you doing the 15-20% down payment? It's hard for little guys to really get into owning multi-units when we have an average person's income.

I was looking to buy a second multi, and the banker explained it to me like this: your personal income is used to determine whether you qualify for the first building. If you want a second, your personal income, excluding income from the property, will have to be able to sustain both payments. Since your "investment" is less than two years, you can't use that income to qualify for another mortgage.

So it looks like I have to wait two years to use the income from my first building to qualify for another building. After that point, maybe it gets easier. I'm not sure if each building has to be seasoned for two years, or just the investment endeavor.

Hi @Kevin Guo, I used 

Already Home Inspections

Inbox me for the number.

He inspected my 3 unit, all three units, bricks, roof, garage, basement and everything. He even measured the railing on the balcony and discovered it was not up to code. He pointed out things that were wrong and what i could do to prevent it from happening again. All that for $500! I was VERY VERY impressed. 

Does anyone have property in Chicago and use a property manager? I'm a new multi-family owner and my management company is already causing me to lose income from poor management. I am ready to switch, but most companies only manage properties that they actually own.