All Forum Posts by: Tim Herman

@Ilena Napoles Hard to analyze without more info. Size of the property, affects capex numbers. How many units. Interest rates seem low for an investment loan. Be closer to 6.5  to 7%. Like @Mitch Miller said your insurance and taxes seem extremely low. Most taxing authorities are at 1% of purchase price or more. I don't know if your state changes taxes after a purchase. If you looked it up the present owner may have a homeowners exemption and his taxes will be lower. Your new tax bill could be $2000/12 or $166 per month. A vacancy factor is the same as a turnover every 20 months. 5/100=1/20. What happens if you have to evict and it takes you 3 months to get them out. Your next tenant will have to stay 60 months to get back to the 5% vacancy. 

You will need to run a capex and maintenance budgets to see if your numbers look good. Using a percentage may not be the right answer. Here is an example of a maintenance budget. Upon turnover what are you going to do. A complete paint ot touchup. Are you going to deep clean before the next tenant. How many service calls in your time line. Using the 20 month turnover. Cost to paint $1000. Cost to clean $300. Number of service calls 1.5@$150=$225. Total cost $1525/20 months=$76.25. This would be how a maintenance budget would be done. You might have groundskeeping upon turnover and that would have to be factored in. You would have do a similar process with a capex budget.

@Matthijs Pol when looking at a HOA make sure you study the documents. They can limit the number of rentals in a complex. What are the reserves like? Are they saving enough for future capex or are you going to get hit with special assessments? You have no control when the hoa determines when to do major capex( roof replacement). Yours could be fine for several more years but they will go ahead and replace all the roofs at one time. Especially bad when they hand out special assessments at the same time.

@Oles B. I believe you are in a triple damage state. Illegality taking unwarranted costs from the security deposit will likely get you in trouble. You might end up paying 3k to the tenants. Paint older than 5 years will be the landlords responsibility. Do you have photos of when they moved in. You have to prove the tenants damaged the property. The previous landlord should have taken care of the door at the time it occurred.  What does the lease say about pest control. How did the tenants cause the problem. Could it have been caused by the other tenant that moved out. You need to read the landlord tenant handbook in the jurisdiction you are renting. There is a timeline that will be specified in the handbook at the amount of time before you have to send the security deposit and copies of the costs that are deducted from it. If you go to court make sure you have all your documentation.

@Miah Atwood depends on whether it is a deed of trust or mortgage or contract for deed. Deed of trust and mortgage, title transfers right away and the seller will have to foreclose. Contract for deed, the legal title will transfer after all conditions are met. All of those can be refinanced at any time. 

@Roger Turner a little light on the description. Hard to analyze without knowing if sfh or quad. Size of the buildings. Number of bed/baths. Any other landlord expenses. landscaping, snow removal, water/sewer, etc. Did you run capex and maintenance budgets. Taxes seem extremely low for a 195k property.

@Alexia McIntyre the minimum to take out is the mortgage balance or you will have to come up with cash. You will need to get permits and that figures in the valuation of the property for taxes. Did you check what the assessed value of the property is? Certain areas reassess the property tax on a sale. If the tax is based on a 100k value and you pay 319k your taxes will jump the next year. Have you checked the zoning and made sure you can operate a triplex? How are you getting a zero down payment on initial purchase? Do you have the cash for the remodel? Has a contractor given you a bid for the basement.

@Alexia McIntyre better look at your math. You will have an existing mortgage of 319k and your refi is 275k.  So to do that you need to bring 44k to the closing table plus closing costs on the refi. 50k to do 2 kitchenettes and two bathrooms and 2 entrances plus 2 egress windows seems impossible for the 2 studios. taxes seem low for 450k property.

@Jasmine Pickney all money should be sent to a legitimate title company not an individual. You might already have lost the money you have sent. Sorry.

@Stefan Demopoulos No, an llc is to protect your other assets only if used correctly. Is the llc going to buy the property and how is it going to qualify for the mortgage. If you are worried about your other assets get an umbrella policy.

@Chad Teeters google longest eviction ever. Happened on Long Island. Only  23 years to get him out. Make a condition of buying that the squatter is out. Sounds like a pro renter that knows the laws. You are buying in a tenant friendly state.