All Forum Posts by: Scott Donahue

@Colleen F. Thank you! These are all good pieces of advice!

In the process of transitioning from SFR to Mixed Use Commercial! Just purchased a value add 16 unit rooming house with 3 commercial spaces. The property has about $50k in deferred maintenance, but surprisingly, a 90% occupancy rate. None of the tenants have leases in place and all are paying below market rents, in cash, to an onsite property manager who stays for free. I plan on SLOWLY raising rents to slightly below market rates as the rooms turn over. Same with the commercial space. My question is on the rooming rooms (yes, I know it's redundant): Does anyone have experience with leases in medium (if that is a thing) term rentals? Most of the tenants are week to week, but have lived in the property for years. I would like to get leases in place for numerous reasons, but I've never heard of such a thing for week to week renters. Any help here would be outstanding!

@Raul Quezada

0-6 Months: Loan to Cost (I.e. can finance update to purchase price).

6+ Months: 75% Loan to Value (I.e. can finance up to 75% of appraisal).

@Shaun M.

The first property I purchased, a sheriff’s sale in the Indianapolis MSA, came with a boat! I considered becoming a pirate (sans the eyepatch) post completion.

https://www.biggerpockets.com/topics/726443

Hey BP Forum. What are you all paying in closing costs for a cash out financing?

I'm BRRRR'ing properties in the Midwest and doing 100% loan to cost (leaving rehab money invested into the house) with no seasoning. My closing costs are averaging ~$5k on $100k to $150k properties. Is this too high?

@Hans Moscicke Yes. Period. Only the serious tenants will pay the application fee. It’s a fantastic barrier for entry and way to pre-screen you tenants without actually doing any work. Why not have them self select out versus you having to select them out and open yourself up for a law suit? Remember, the non-discrimination laws are unforgiving.

@Mark Monroe

Much more to consider on a commercial property than just cash reserves. Such as required cap rate, market cap rate, NOI, DSCR, vacancy, levered CCR, Unlevered CCR, 50% rule, etc. That being said, three months of gross rent in cash reserves is a good rule of thumb in any REI, but it all depends on the condition of the property.

@Sharlene Burch

I started at 35 years old. After climbing the corporate ladder and reaching what some would call the pinnacle (top 1% income earner), I burned out hard, and nearly had a heart attack (even though I'm super fit). I decided I needed a change. Since starting in June of 2019 I've purchased three SFRs, under contract on my fourth and just entered into a partnership and moving into commercial. Using the BRRRR.

@Aaron Bonne

A wise entrepreneur once told me to NET 20% more than your living expenses prior to leaving your W2. This helps account for unexpected expenses, increases in living expenses (kids, kids education, health care, etc.). For me, that minimum net monthly cash flow is $9,240.

What are the best sources of macro economic data / news out there? What do you read for market signals, national trends and general economic insights?