All Forum Posts by: Ryan Moore

2 years ago I purchased my first buy-n-hold investment, 4-plex that was 100% occupied at contract signing.  While under contract, 2 of the 4 units went vacant without notice from seller.  I discovered 1 vacancy from appraisal report pictures (earlier inspection report showed clear signs of occupancy) and the other on final walk-thru the week of closing.  Both units had leases that were broken by these vacancies.  

Not only did this cut my scheduled rental revenue in half upon closing for a few months, but each unit required several thousands in turnover cost due poor condition.  This was quite the baptism by fire for my first purchase.  

Currently, I am getting ready to purchase another multifamily and I wanted to know if others feel that it would be good to place some sort of contingency in my offers that states if any unit's lease is broken while under contract, I have the right to back out or renegotiate.

Good idea?  Bad idea that will scare off sellers?  Sure, I get that if the deal is good, who cares... and no one likes inherited tenants anyways, but I wouldn't mind a little more protection during the purchase.

 A lower negotiated price will definitely be a good idea.  Just keep in mind, if you went down to even 280k per building, and still plug in for the 5% in all areas like I mentioned before, that bumps you up to ~$75/door w/ minimal put towards repairs, capex, vacancy.  With 8 units, I'm assuming 8 AC's, 8 of many other appliances, etc... I think I know what property you are looking at, there is a lot of yard to maintain.  Plus, your property manager numbers are pretty low... but I know you said you already have a PM at your other properties so I can only assume that is the correct fee schedule?

I live in Phx and own a 4-unit here.  You will most defintiely find youself sub-$100/door.   Just factoring in 5% for vacancy, repairs, and future capital expenditures, you are already at $50/door based off your anticipated rent.... and 5% doesn't leave much wiggle room when it comes to repairs/cap ex  That's only $270 each for 2 buildings, 8 total doors.   

Thanks for the insight.  I've never thought about reaching out to title companies in my previous lending situations.  I usually just use whoever the lender is using.  So if I'm understanding correctly, I can contact title companies just like I was doing for lenders, and I would be asking them about their cost if I were to involve them in my refinance?  And they can help me to understand the money I would need to bring to closing that involves items like taxes and insurance?  Granted, I own the property so I already know about those cost and when they are due, but they will tell me the amount I will be asked to bring to close.

Also, what does it mean when a lender has included title fees in their quote to me?  Are they basing that off a title company they use?  Is it just some generic/not very accurate number?  Do any lenders make you use their preferred title company or can I always bring mine own to any lender?

The name of the document that replaced it is called the Closing Disclosure.  

1) For anyone that knows, will a lender provide me a Closing Disclosure before I apply?

2) If not, then do I just ask for a breakdown of all closing cost estimates?  The picture I tried posting above shows that this one lender sent me closing figures including 11 line items (lender processing, appraisal, title insurance, etc.)

3) When I am ready to pull the trigger on my refi, should I just apply to all the lenders that were within the same ballpark and get their disclosure so I can do as much of a apples to apples comparison as possible?  Am I right to assume that having my credit pulled many times within a few days of eachother for the purposes of acquiring a mortgage will all be classified as one inquiry?

So with refinancing my rental, I'm finding it easy to compare the simple stuff: rate, points, ltv.  Next level stuff for me will be the closing cost.  Some lenders have provided me a complete list (see image below).  In that example, is that straight up all the cost I would be looking at? Or are the hidden cost/fees that I should be looking for?  Should I just be asking all the lenders I'm getting quotes from to give me a complete closing cost list, and that way I'll have all the info?

Awesome, thanks for the above and beyond response :-)

Dumb question, but when a lender says 7 year fixed w/ 15-30 year amortization, that's just an ARM correct?

Thanks Chris.  Sounds like I just need to be asking if they will honor any appraisal waiver from their underwriting system and about the quality of their company they will use.

Thanks for the article link also.  Read it all, just reinforces the need to always be checking everywhere, not just sticking with the same person/company I've been used to.

Thanks Andrew. I've started reaching out to local lenders/brokers in regards to this refinance and seems the majority of them do not seem to care about the LLC. Mostly I'm hearing that I, as an individual, have to be on the title at closing but then I can have it recorded the same day to my LLC.

I'm guessing the best thing for me to do is be upfront with any potential lender/broker on what my plans are.