All Forum Posts by: Ric Ernst

@Perry Livingston I just closed an Indy refi with Chemical Bank. The experience was far better than others I've used such as Chase. However, all lenders are moving at a snails pace these days. 90 days is not unusual.

@Shay Levin there are many wholesalers in Indy that are a Google Search away. Many are active on this network and most have websites with links to sign up for their mailing lists. You'll see several emails a day once you sign up. DM me if you'd like me to give you a list of contacts.

You'll be a priority to any of them if you prove that you are a serious buyer with cash who follows through. That means actually closing deals with them quickly and painlessly on their terms. The volume players aren't going to give much priority to tire kickers or needy investors. Their business model is to move properties quickly.

@Kelcee Lucero property managers are not one size fits all. If you want good recommendations, let us know what sort of properties you have or are looking into. A PM that manages higher end houses is not going to be a good fit for you if your investing in lower end properties and you would not want a PM that specializes in section 8 housing to represent you if your investing in A or B class properties.

@Eddie Brady Hocker & Associates

@Rabeeya Khan what sort of properties do you have? Some PMs are more appropriate for one type of property that another. You don't want a section 8 specialist managing your A class property and and A class PM might not be a good fit if your properties are C class.

@Danny R. the question on when to form a LLC or not is a hotly debated subject. I am not an accountant or lawyer but I can share this much. Assuming you are from California and assuming you form your LLC out of state (as in Indiana) you will need to create a parallel LLC in California and file and pay state taxes on that California LLC. The minimum for this is $800 per year. A LLC is not going to guarantee you anonymity or complete liability protection. Whether you form a LLC or purchase property as a private person, I would suggest you protect yourself with an umbrella insurance policy. Your property manager is not going to protect you from liability. As for a real estate lawyer, you may want to consult with Hocker & Associates in Indianapolis.

@Kirsten Milliken I can't comment on your numbers but will say that a very low interest rate is going to have higher points and closing costs. In most cases, the math will pan out that those higher costs are nothing compared to what a lower rate will save you in the long term. I've worked with a few lenders but am happy with Chemical Bank right now. DM me if you would like contact info.

Property taxes will be closer to $3,200 per year depending on the assessed value. The only way insurance will be that cheap is if you insure it with a $50,000 replacement value. $100,000 replacement value will probably be closer to $1,300 per year. You also need to consider if the property falls into a flood plain which will jack insurance up significantly. That's a broad zip code so hard to know exactly what you are looking at. But, in general, houses in this area are 80 - 120 years old and no matter how good of a job your TK seller did getting it into shape, you will have expensive repairs at some point. That said, could it be a good investment? Sure! Just go in clear eyed and know exactly what you are getting and don't plan on a windfall. If the house is in great shape, has a newer roof, newer windows, newer AC and water heater, updated electrical and the foundation is solid, you may get away with lower expenses to start. If you get lucky and have a great tenant that stays for a few years, you won't likely lose money and may even see some appreciation. However, if you have lose a tenant, not only will you lose a month's rent, you'll also be plowing $1,000 - $2,000 into it to repaint and clean it up to prep for the next tenant. There's risk in this game.

@Kunal Lakhwani not sure how you came to $250 cash flow but am guessing you are overoptimistic on your expenses. Your mortgage alone is going to set you back around $550 - $600 per month. Property taxes will be a bit over 2% of assessed value so figure $260 per month. Property management will be around 10% or $130 per month. Insurance for a rental property will depend on the square footage and what you claim as a replacement value. Just guessing here but that could be $100 - $150 per month or more. Those alone put you at $1,040 - $1,140 per month before you add in repairs and maintenance, vacancy and capital expenditures. Depending on the age and shape of the house, those could add up significantly. Also, without knowing the details or location of your property, it's hard to give an opinion on rental values but, sellers will generally overstate those numbers and first time investors are often apt to envision higher rents than are realistic.

Thanks to all for the input. Quite honestly, it isn't worth the effort to pursue this but I was curious if anyone had a similar story and how they handled it. 

Even if I wasn't 2,000 miles away, the effort for small claims court with the limited damages and possibility that it doesn't go my way and the even stronger likelihood that collecting would involve more money would be a waste of my time. I'll sick a collection agent after the previous tenant for unpaid rent and gladly pay the 30% commission for whatever small amount I can get back.

This was a great tenant until he was not around the time COVID hit. The pandemic is really showing character and, thankfully, with only one other exception, all my other tenants are paying in full and on time. 

The other turnover I did have was filled immediately at higher rent and it looks like I have a tenant lined up for this one at a higher rent even though it'll take a couple weeks to get it back in shape.