All Forum Posts by: Steve Borodin

@Martin Neal I definitely hear what you’re saying. Are you familiar with any kind of family discrimination laws that come into play here when limiting the number of occupants if they’re all immediate family?

@Rachael Agruso there are others interested in viewing the house, but that’s the only application so far. I would be paying the water bill, which works out to about $30/mo. They pay all other utilities.

Hey everyone, I could use a little advice from the community on a rental property I currently have listed. I can probably guess which direction most of the advice will go, but I am definitely a bit torn on this particular situation.

The property is a 3 bed/2.5 bath SFR in an A class neighborhood. I listed the property for rent and had a viewing and subsequent application to rent the next day at full asking price, providing a 30% buffer over PITI obligations to account for all expenses.

It turns out, the family is relocating temporarily because the mother has been diagnosed with stage 4 cancer, and they are undergoing clinical trials in the area. In speaking with the applicants, both are very well spoken and friendly, and came prepared with an extensive list of references, including past landlords.

The biggest issue I’ve run into is they have 6 children. I only have a 3 bedroom house to rent including the master, about 1988 square feet in the entire house. And to compound the crowdedness, both of their mothers were planning to alternate long-term visits to understandably help out while she undergoes treatment.

I’ve tried searching maximum occupancy standards for the state of NJ, and I’ve found lots of conflicting information, but I’m sure a family of 8+ has got to be pushing it.

To compound the situation, they have a poor credit history from mistakes when they were younger, which have since improved. Since they are relocating, the father will be between jobs until he moves up as well. Their children are all adopted, so they get a guaranteed $3500 subsidy each month to support them. Combined with the father’s current job, they clearly meet the 3x rule for income, but he will obviously need to seek out a comparable job in this area, until then, only guaranteed income is the adoption subsidy.

I realize from a strictly analytical standpoint this seems like a very risky chance to take. However it’s not always as cut and dry when you’re dealing with real people. Obviously I would love to help them out in a tough time, and with the lease I would cover all of my expenses and then some. From unofficial vetting (social media) they have a very strong support system and solid references, but it’s very difficult to ignore the elephants in the room.

Also, if I were to deny their application because of maximum occupancy, could that be considered discrimination against having children? Any and all inputs would be greatly appreciated for this situation. Thanks!

Zack Karp That's exactly the kind of reassurance I was looking for. Thanks a lot for the solid advice!

@Patsy Waldron 

I think I have to agree. The other question I have to ask myself if I pull out the full amount is whether I would rather get one solid B+ property or two C type properties with the funds. 

@Zack Karp

Thanks a lot for the advice. In your experience would you agree that a Home Equity Loan is a better way to go than a HELOC when using it for a downpayment? My logic was primarily to avoid the variable rates. It also seems like it would be too easy to make only the interest only payments for the term, which would leave you with the full principal still to pay off or roll into a new mortgage at the end of the draw period.

Hey everyone. I'm looking for some advice on my next deal. Currently, I own one rental property which I purchased using a conventional mortgage with 20% down. That property is currently rented out. I'm looking to buy my next rental property, but obviously my first purchase absorbed most of my liquid cash (aside from emergency reserves which I plan to hold onto). I do, however, have about $65k of equity in my primary residence. Although it's not enough money to fund the entire purchase, pulling out that equity would provide more than enough for a downpayment and minor rehab on my next property. That's all assuming I can lock in a lender that would be willing to count that cash as usable funds. I'm looking to buy either a SFR or a duplex in the neighborhood of $140-$170k. After speaking with a few lenders and hearing the terms, I decided that a HELOC wouldn't be the best loan for my plan of action. I initially inquired about a home equity loan to pull out some cash. After further discussion, I found out that since I have a VA loan on my home, I could also do a cash-out refinance for up to 100% LTV. I am currently 3 years into a 30 year mortgage at a fixed 3.25%. My options for withdrawing $50k of equity would be the following: - 15-year Home Equity Loan @5.5% which amounts to $408/mo - 30-year cash out refi at 3.375% which would add $180/mo P&I to my current mortgage payment (plus the 3 year extension) My DTI is currently 30% and my credit score fluctuates between 780-800. Not including the rental income it would bring in, acquiring this property would put my DTI at around 36%. I have a few questions to go along with this: 1. First of all, are there lenders out there who will view this cash as a legitimate source for a downpayment? 2. If I can't translate this cash directly to a downpayment, could I deposit it into my account for a few months to let it "season" before seeking a conventional loan? 3. Which option would you recommend for extracting equity? On one hand I would have the loan paid off in 15 years and my original loan would remain untouched, however the interest is 2 points higher. On the other hand, my primary mortgage rate would increase very slightly and my loan term would get extended by 3 years, but my monthly additional payment would be significantly smaller. This would make it much more likely that my rental income would cover both my mortgage payment and the additional payment incurred by the refi. 4. Should I just take out the minimum amount of money needed to fund the downpayment? Or with money coming so cheap currently, should I take out a little extra to put towards future investments right now? 5. Any other pros or cons you could point out with using this method of funding would be appreciated. I'm all ears and have a very open mind in regards to this. If you've used a similar strategy in the past, I'd love to hear your lessons learned. Thanks for hanging with me through this mini novel. Looking forward to hearing from you all!

Ryder,

I second Taylor and would also highly recommend Jeff Copeland. I'm an out of state investor, and Jeff is extremely prompt and helpful in getting everything done for me.  Feel free to PM me if you'd like any more details.

@JOSEPH DELISI Aside from owning my primary home I don't have any properties in NJ.  I would have loved to focus on a more local area, but I've just had trouble finding deals that made sense, particularly with the high property taxes in our area. I'm sure they're around, I just haven't had that luck. 

Hi Joseph.  I highly recommend @Jeff Copeland for this area.  I am from Barnegat, NJ myself, and I literally just purchased a rental property with Jeff in the Tampa area.  He is extremely knowledgeable about St. Petersburg, especially.  Jeff is an awesome resource for information, and he is also a jack of all trades--providing realtor services as well as property management.  Less than a week after closing we are already in the process of placing my first tenant at full listing price.  It is an extremely competitive market right now, and there is no way I would have been able to lock down this property without Jeff's quick actions and expertise.  If you have any other questions at all, feel free to reach out to me.