All Forum Posts by: Richard Jahnle

I showed my rental unit yesterday and had 3 couples apply who all meet my criteria. They all emailed their applications within 4 hours of each other. They are all qualified but my gut tells me to go with the 3rd set of tenants who applied, as I think they will be there for multiple years due to the one tenant just starting his medical residency at a nearby hospital.

My plan was to email the other 2 tenants and say "I had a lot of interest in this unit and opted to proceed with another applicant. Thank you for your interest in the unit and good luck with your search." 

Is this response (or me picking the 3rd applicant to apply) breaking any fair housing laws that could come back to bite me?

Also if the denied tenants email me back and ask whey I proceeded with another applicant, I don't really have a reason other than I went with my gut. What is the best thing to say? 

@Ross Goeringer - There's not a ton of inventory on the MLS right now when it comes to multi-family properties in Manayunk or Roxborough (I see five 2-4 unit properties in all of 19128) as of today, so it might take some digging to find a property that is a good investment, as I doubt any of those 5 properties cash flow anywhere near their listed price.

But if you are moving to Manayunk, I think house-hacking is a great option. If you can get an ok deal on a duplex, you can live cheaper than if you were renting, and use some of your handyman skills to improve the property while you live there. Or you could live in a 2 or 3 bedroom and sublet the rooms if you can't find a multi-family that makes sense.

As far as each side of the duplexes being owned separately, I think you may be thinking of a "twin house". A lot of houses in Manayunk/Roxborough are twin houses, where a single house is divided into two separate properties. Basically, you just share a common wall with your neighbor to your right or left, but each of you owns their own property, has their own deed, etc. I live in a twin home, where I have neighbors who own the left side of the house, and I own the right side, and we share a common wall. My right side of the house is a duplex, with my tenants living below, and myself living on the 2nd/3rd floors. 

@Rob Anderson Welcome to BP. Podcasts and the forums are a great way to learn and get started. Good luck in your quest to house-hack - I started by house-hacking a duplex in Philadelphia about a year after I started listening to the podcast. If you have any questions along the way, feel free to connect.

@Bryan Satter

I had a similar question to my Philadelphia lender for this situation. He said that this is a common problem that investors face with the transfer tax in Philly. 

Also I believe that transfer tax is 4% of the assessed value, not the appraised value so it would not be quite as much as you think, a lender could probably explain that to you in more detail.

If you are interested in talking to a loan originator who works for a smaller lender (aka not a Wells Fargo, BoA), I can direct message you his information. I am not sure that he can help you out of your dilemma, but at the very least he could help you pinpoint your costs if you do have to transfer to your name and then back to the LLC. That may help you decide if it is worth it to go the private lender route or not. Either way, good luck with the property!

@Luiny Tavares - You can qualify for an FHA loan using 1099 income (I am assuming you will be an owner occupant of this property). The lender I used in New Jersey can help you out. I can message you his details.

@Rachel Krull - This is a question that seems to come up a lot on the forums for Philadelphia properties. Check out this thread, think it has a lot of info that may help - 

https://www.biggerpockets.com/forums/432/topics/466893-zoning-permit-in-philadelphia

@Cameron Jordan - I think house hacking is a great way to get started with rental properties. I'm definitely glad that I went that route. I have been house hacking a duplex in Roxborough for about a year now. Here's some advice as you work towards finding that first property.

1) Keep educating yourself on rental properties. Listen to podcasts, read books, keep talking to people who have rental properties. The more well-versed you are, the easier things will be and the more comfortable you will be talking to professionals throughout the process.

2) Find a good real estate agent that you can trust. There's a lot of real estate professionals that you are going to need to work with (lenders, contractors, accountants, lawyers, etc.) in the course of buying, renovating, and renting your house, and you definitely want to network and build your team with all these professionals. But it's not real until your agent is taking you around to look at properties. It's also probable that your agent will connect you with your lender, the other professional that you will not be able to get your property without. So get a good agent. 

Good luck with the process. If you have any questions at any point along the way, feel free to reach out. 

@Jay Sechowicz A few tips that helped me land good tenants in my house-hack:

When marketing, put a big For Rent sign with your phone number in large numbers. Set up a Google Voice number if you don't want to have your phone number out in the public. Then, list the unit on the sites that everyone uses. Craigslist and Hotpads are the best (I think when you list on hotpads it automatically gets listed to Zillow, Trulia, Padmapper, etc. 

Make sure you set requirements to weed out potential bad tenants. Set a minimum credit score (600) and salary (3x monthly rent). Make your tenant pay for a background check and credit check (Cozy.co is good for this, it's free to use and they can do background and credit checks. You can also set up your tenants to make automatic payments on Cozy).

A lot of the forms I used in the application process came with the book on rental properties by Brandon Turner (besides the lease - get something that is specific to Philadelphia and PA). When you buy it on Kindle the forms come in Word form so you can just throw your address and names on them. Helped me out a lot.

Good luck - I hope you find tenants that will really make the rental income passive. 

@Account Closed - Like Joe said, it depends on your budget. If you're looking for easy access to NJ, South Philly may be your best bet.

@Jordan Turner A lot of these questions should are best answered by your realtor and lender as they are the experts that should be guiding you through the process. In the meantime, maybe this will clear it up a little:

1. It's up to you if you want to use the home inspector provided by your realtor. If you trusted him/her enough to help you locate a property, then I would think you could trust him enough to provide an inspector. If you trust the seasoned investor you talked to more and he recommended you a specific inspector, than go with that one. 

2. Great contractors can be hard to find but they are out there - there are many resources on this site that give great advice on selecting a contractor. My recommendation is to reach out to contractors who have been used by people in your network already, that way you know you will get a legit reference.

3. There are likely two different types of escrow accounts that you will have when you purchase this rental property. The first escrow account (the "middle man" that the investor was talking about) is set up when you purchase your house, and it holds funds that are used to pay your property taxes and homeowners insurance. The lender sets this up, and you should definitely reach out to him (the loan officer assigned to you) so that he can explain it to you, I'm sure it's something that he does all the time. Basically, each month, you make a payment for your mortgage, taxes, and insurance. The portion of that payment that goes towards the taxes and insurance in put in an escrow account, which is controlled by whoever is servicing your debt, i.e. the lender. Once a year, when your taxes and insurance are due, the lender pays it from the escrow account. The amount in this escrow account doesn't really matter much to you - the key thing to understand is the amount that you owe each month in taxes and insurance.

The second type of escrow account you are talking about is completely different. This is an account that you can set up and control when you get tenants in the property, and you collect security deposits from the tenants. The seasoned investor was telling you that your bank likely will allow you to open a separate account where you can hold the security deposit funds from your tenants, until they need to be returned to the tenant when the tenant moves out. 

Hope that helps - talk to your realtor and lender though, they will answer these questions much better than I can and more specific to your situation.