All Forum Posts by: Ron S.

To get the low down payment, you should look into how you could afford it without a co-borrower. Perhaps a lender would consider existing rents to offset the PITI you'd be responsible for. If you're inheriting tenants with active leases it might be easier too.

I think handling the maintenance is 80%+ of a property manager's job.

I treat property manager's like I do insurance.  Yes, it can feel like "wasted" money on months where rent is auto-paid and there is no maintenance to be done, but when you get a bad tenant or two or when deferred maintenance finally catches up to you, they certainly earn their keep.

At your scale, you might be able to get a bulk discount with a good PM, especially if you can show how well your current systems are working and how they'd be needed less than usual.

I would take a hard look at the numbers for each property to see what's worth keeping and how much you should continue putting into the fixer upper.

You mention that the rent covers the mortgages, but does it cover your other expenses and budgets as well?  You should budget 6-10% for property management, even if you're doing that work yourself, plus vacancy, maintenance, and capex.  I use a back-of-the-napkin number of 25% of the rent for those four expenses.  Do you get any cash flow after your mortgage (assuming your payment covers taxes and insurance in escrow) and that additional 25%?  If so, that a good start and they may very well be worth holding onto.

For the fixer upper, you should look at those same numbers, but also look at the cash on cash return of putting in additional money.  Basically, take your annual cash flow divided by all the money you've put into it, including down payment, closing costs, loan fees, and the costs of fixing it up.  Where does that number stand today without fixing anything else?  If it's over 10% and you're almost done, it's probably a good investment.  If you're at 7% or under, it's verging on being a bad investment, especially if you have additional fixes to make.  You can also use this number to figure out how much more to invest before your returns start dipping too low.  You could calculate this on your other properties as well, but it's generally used in due diligence prior to purchase, and since you already own them, I wouldn't worry about it too much personally if they're cash flowing well.

Hate to be the only naysayer in the thread, but this seems like a lot to bite off for your first investment.  I'd recommend sticking to something that doesn't require rehab upfront and look for something that you can rehab while you live there and add value to over time.

I recently went through this same experience, so I'll answer in the way I was thinking.  Probably worth discussing with your agent or lawyer for more formal answers.

1. I only asked for the rent roll to ensure they were paying on time consistently.  I think you can also ask for the initial background check, but I didn't because I couldn't really act on any information in there.

2. I just sent a welcome email with my contact information.

3. I waited until the existing tenants moved out before starting the noisy rehab.  I asked the contractors to prioritize the loudest work and whatever would need water shutoffs.  Then when I got new tenants, I warned them of some remaining noise occurring and it wasn't an issue.  I also looked for ways to improve the tenants unit at the same time to make them less likely to complain -- for example, adding a video doorbell and a Nest thermostat.

4. I would proactively ask the tenants if they have any issues they'd like to see addressed.  It may set a welcoming tone as well.

5. That's definitely a route to consider.  We didn't go that route because we had the time to wait for their lease to expire.  We let them know 90 days in advance that we wouldn't be renewing and they ended up leaving 2 months early, which allowed us to start sooner than planned.

I may be the odd one out, but I prefer older properties.  I get the sense that they were built with better quality and materials, and if they've survived 50+ years without any major structural issues, they'll probably last at least another 50+ years while I own them.

I agree with the neighborhoods already listed here. One thing I'd add is to find a great lender that can walk you through the different loan programs and where they apply. Once you have those, just start punching your pre-approval numbers into an MLS aggregator real estate site/app, select multi-family, and see where options pop up and drill down into the areas to see which ones you'd like to live in.

I own a 100+ year old 2-flat in Lincoln Square, welcome to the neighborhood!

I had water issues in my basement too, but with a concrete foundation.  I've never heard of a brick foundation, it feels like you'd have a lot of issues because brick is very porous.  For me, I had several cracks in my concrete foundation and the sidewalk running alongside the house was several inches above the foundation, so water was pouring in through the brick and over the top of the foundation.

One company suggested running tarp (there's a fancier term) along the inside of the problem walls, then drainage tiles to a sump pump.  That might be the route you have to go.  The quote was around $10k for roughly half of the basement.  I didn't like that the water was still coming into the basement, so I got a second quote.  The second company opted to repair the cracks and then dig a ditch along the problem exterior wall and put in a membrane from a few inches below the foundation to a few inches above the sidewalk, effectively raising the top of the foundation (to water).  This was $9k.

Both quotes were for an unfinished basement and neither company handles any of the interior work, that I know of, so you'll need to find a contractor to handle that.  Feel free to send me a message if you'd like to know which companies I got quotes from.  It's the two big places in Chicago.

If you purchase the other unit, you still have two distinct parcel IDs, two titles, two tax bills, etc, but it sounds like (or your lender is interpreting) that you want to refinance the whole building, which I've never heard of with a conventional mortgage.

You can combine the properties to own the single building with two households (one parcel, title, etc) to refinance the whole building, but then you do lose the option to sell off one unit later (though you could rent it just fine).

If you are just wanting to refinance the unit you purchase in cash, I don't see why the lender would want any changes to the HOA. I think legally an HOA must exist for multiple units in a single building. Perhaps there's something about HOA being wholly controlled by a single person (because there are rules around having a 'board' and maybe you can't have a board of one person). I wonder if that doesn't apply for third-party management companies, which might be worth exploring, or seeing if the lender would accept that.

Welcome aboard!  I agree with starting to narrow down your preferred market before looking for a company to partner with.  To help narrow down, figure out what numbers make sense to you and which markets can meet those numbers.  For example, I haven't heard a lot of newbies looking at Austin.  My numbers are really hard to meet there and it's typically a market for appreciation.  There are a lot of other factors that play into good markets, job growth, industry diversity, population growth, etc.

Once you have your market, take a look at the types of deals that can be found. I started off in Kansas City and turnkey providers are a dime a dozen there, so I met with a bunch and purchased from one of them. My second market was Pittsburgh and as someone already said turnkey providers aren't really a thing there, so I found an investor-friendly realtor and purchased off the MLS.