All Forum Posts by: Scott Radetich

If i'm not mistaken, owning rental properties is a business.  And if you own a business you have to be prepared for a downturn.  Every time I've purchased a property, the mortgage company required me to show I have 6 months of payments in an account for all my properties.  So those that are highly leveraged and buying properties that don't make a ton of sense ie 400k homes renting for 1800 a month.  We may see some of them disappear.  But for those who have a rainy day fund with property screened tenants and a RTV of over .5, they may be taking some losses for 2020 but i fully expect to see them continuing to rent for the 2021 year and beyond.

Also, if it does get as bad as some in the news wants us to believe.  There will be a moratorium on foreclosures as well.  Same as when disasters hit in the past, hurricanes Katrina, Sandy, Rita.  Fires in California and so on. If you could prove you were affected, you weren't foreclosed on and that included landlords.

Its going to be an interesting couple of months that's for sure.  

On home purchases where I will be moving into the home, I like to use 80/10/10 loans. You get a normal market rate on the 80% loan, the 10% loan is a bit higher rate but its less than paying PMI, and you are in a home with only putting 10% down. That saves a lot of money for renovations. And you can refi those two loans a year or two later into one loan. However, If you are buying a property you won't be living in, you will be putting 20-25% down.

As for where to go for loans, Key bank is pretty strict on their required boxes to be checked.  I've used Security National in the past.  They will do 80/10/10's.

Here's my 2 cents.  A paid off home is great, i'm looking forward to the day i have a few of those in my portfolio.  But, getting started in real estate and  acquire more properties, unless you have a trust fund, you are going to need to acquire debt.  At the start of each month you are going to owe $XXX to  mortgage companies, My bank account is blind to which houses those payments are made on. So i look for what is the cheapest debt out there.  Cheapest debt to me is owner occupied financing.  

You have one paid off home with about 280k available (80% ltv).  I would cashout refinance that property and with that money, buy a new owner occupied plex to house hack.  You don't need to take out the full amount available either, just pull 100k out.  That 100k would buy you a 500k duplex in Portland.  And a 100k mortgage at 5% on a 30 year fix is $526 a month, for 30 years...  You should be able to cover that amount (plus Taxes and Insurance) in Portland.  

I'm not familiar with pricing on VA loans, so if they are cheaper than 20% down conventional, ignore above and just get a VA on a plex.

I've only had 2 inherited tenants so take this as you will.  But for me, my main concern's are 1 they don't trash the place and 2, they pay on time.   If you are buying a place with tenants already in you get to see how they keep their place maintained.  i'd think if the place looks good and the rent roll show's they make their payments on time, i wouldn't need to go any farther.  I wouldn't feel the need to do a new credit or background check.  I"d just look at the original applications the current owner has on file.  

If the place isn't being well kept or they are habitual late payers, then i think you'd want to discuss with the seller about a no cause eviction and who's going to be paying the relocation fee.  What i would do is go to portlandmaps.com and look for any violations or complaints that have been filed recently on this property.  Maybe this is a party house and there have been a ton of noise complaints.  If that shows they are trouble tenants, time to discuss the no cause.

There's also market rent to be discussed, but since you didn't mention it, i'm going to assume the current rent is set at a reasonable amount.

I am curious to see how many people here rerun inherited tenants background and credit check.

You are off on your rents.  That should pull in over 3500, making it a break even at best now.  However, If you get that fourth unit built though,,,    Portland's not really a market for great cash flow right now.  Getting a value add play is something to look to do.

For the loan question, I've never done an FHA loan so i can't help you there. I have used Security National before for some deals. Their standards can be a little less stringent than other banks in the area.

@Rachel N.  Those are the lawsuits i expected to hear about but that's my question.  1, Wouldn't insurance cover those?  2, if insurance didn't cover those and the property was in an llc and lets say it doesn't have much equity, what happens to the settlement, its still owed right?  Who pays it?  And as to my op, to get hit with a 7 figure settlement, I've got to be at fault.  I've got hand rails on all my stairs and no mold in the crawlspaces.

@Tom Gimer  I would love to see that, especially in Oregon since that is where my properties are.

@Account Closed - yep happy wife/life is what brought me to this post...

I'm getting to the point where i should start to look into what an LLC can do for me. My wife really wants to set one up but I can't think of a scenario where i'd be sued for more than I'm already covered. I honestly think for me to get sued and lose a million dollar plus judgment, I'd really need to be negligent, and i'm just not that. But the thing is, you don't know what you don't know,,,

What i'm looking for is some real world examples of when you, or someone you personally know, has been sued and lost, and i don't mean lost 15k I'm talking real money, six/seven figures.  

I want to hear about why you got sued, how you lost, who's fault it really was, and if you had an LLC, how good of a job it did to protect your assets. And for those that didn't have an LLC, how did that worked out with using your insurance (umbrella policy and homeowners).

Help me out, convince me i need this thing. I'm not interested in what it can do for estate planning, just how it has protect others from litigation vs their normal insurance coverage.

You sure its a 100% match?  That is an amazing deal if the case.  Take the match and max out your 401k.  You probably wont get that match forever.  My first job they matched 50%, so i maxed out my 401k, through the years the match amount dropped.  Two decades of work later, i get no match and have dropped my contributions to peanuts...  I did recently take out my first 401k loan to assist in funding my latest deal.  So build it up now while you get that match and borrower from it later. 

thanks for the reply.  One follow up question, regarding water sitting in the pump.  Do i run the machine until no more liquid is coming out of the gun?  I used the liquid shield with a gallon of water, i ran the machine until the gallon was gone, but i stopped running it prior to the gun running out of water.  Make sense?  

That was one thing none of the instructional videos stated.  They all said run the gun till the water is clear.  I couldn't figure out what to do after that, run the gun till no water comes out, or just leave the water with the liquid shield mix in the pump...