All Forum Posts by: Tim Porsche

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Hello All, 

I'm about to purchase a flip project that seems like a good deal, but I'd love to have your opinions to make sure I'm not potentially missing something. The numbers look good on paper...purchase price of $110,000, rehab all in about $40,000, and resale value should be around $220,000. 

Anyway, the house is up in the mountains and has a grandfathered in cesspit for sewage. I have had the cesspit load tested and visually inspected and it passed both tests. However, the downstairs bathroom has sewage coming up out of the toilet and all over the bathroom floor. That bathroom will be a full gut job. It's also backing up into the utility sink in the basement. The septic inspector said there is likely a crushed drain pipe between the house and the cesspit (cesspit is only about  10 feet from the house), and if this is repaired it should be fine. My contractor is estimating around $1,000 to replace that section of pipe. 

My question is, are there any other potential causes for this sewage backup, and anything else I should be thinking about that could make it much more costly than $1,000 or so to remediate? Right now the people living there are carrying water in and out of the house...obviously not a good situation.

Thanks in advance for any feedback and advice. 

@Will Fraser @Nathan Gesner Thanks so much for your feedback! Just to clarify, if I go this route it would be treated as a legitimate business and not a hobby. Ideally I'd like to manage around 100 - 150 units and work 30-40 hours a week doing it. I'm assuming each unit will take about 1 hour per month on average to manage...does this sound about right? That's what I've been seeing with my own rentals thus far. I have a fairly streamlined process and procedures set up for advertising, screening applicants, doing showings, onboarding and offboarding tenants, doing maintenance/repairs, etc. 

I just have a few follow up questions I'd appreciate your input on...

1. In your experience, will it be difficult to find a broker to work under as a property manager with a real estate license? Or is signing up to work with one pretty straightforward? I'm completely new to this so am not really sure how that works. 

2. I know the cost of working on a broker will vary, but on average what should I expect to pay...for instance are we talking 5% of my commission or 50%? What's the norm (if there is one)? 

3. To get my real estate salesperson license, and then eventually broker license, will I be required to sell any real estate? I read somewhere that you need to have a certain amount of transactions under your belt before you can become a licensed broker...but maybe entering into an agreement to manage a property or set of properties for a landlord qualifies as a transaction?

Hi All,

I've been managing my own rental properties (currently have 6 units) for the past 5 years with good success and lately have become interested in managing properties for others as a way to create an additional stream of income. My plan would be to start small (managing 10-20 units) and take on more clients once I get a better feel for the business and see how things are going after a year or so.

 As I understand it, in PA you either need to be a licensed broker to do this, or else have your real estate salesperson license and then work under a broker. My questions are...

1. Is it worthwhile to go through the whole process of becoming a broker just to manage others' properties?

2. If you go the route of getting your real estate agent license and work under a broker, what sort of monthly/annual fees is normal to pay the broker in order to engage in the property management business under them? 

3. If working under a broker, would you be able to set your own rates and policies and run your business as you choose? Or does the broker do all of that while you work more as an employee under them?

4. How much in annual fees would you need to pay as a broker? How much in annual fees if a licensed real estate agent?

Thanks in advance for any feedback!

Thanks for the replies everyone! Especially @Andrew Postell. Those are awesome pre-qualification questions to ask a lender that I'll definitely be using in the future.

Just to update, I put in an application with another lender (Better.com) and the whole process has been a breeze so far. I really stressed to them the importance of making sure my DTI will work BEFORE an appraisal is ordered and we go any further. After looking over everything, taking into account all sources of income, assets, debts, etc, they are confident the DTI won't be an issue. Also as a bonus, it looks like I'll be able to use the appraisal from the previous lender to qualify for the loan, saving me about $600 :). The rate is the same as the first lender (3.875%) with just .5 points and what I really like is that getting to closing usually only takes about 4 weeks they said because of how streamlined the process is.

So it's been sent to underwriting now and we'll see what happens. I'm feeling pretty good about it from all my interactions with everyone so far though. 

Hello All,

A little background first of all. I currently own 2 duplexes and 2 SFHs as rentals. Both duplexes and one SFH have mortgages on them. The other SFH I paid cash for, rehabbed, and have rented out right now. I am looking to do cash out refinance with a 75% LTV ratio. I had initially been working with NewRez to do a cash out refinance, and after taking all my information and going through the preliminaries they said I should be fine to do a 75% LTV ratio loan. An appraisal was ordered and paid for (by me) and the loan was sent to underwriting.

Now I am being told that they can only do 45% LTV on it because my DTI ratio is too high. Aside from being annoyed that I paid $500 for an appraisal (still waiting on the results of the appraisal) and am now being told they can only do 45% LTV instead of 75% LTV, I have a few questions for those of you who know more about this than I do.

1. Is it worthwhile applying with another conventional lender who uses fannie mae and freddie mac, or am I likely to run into the same issue with any other conventional lenders I would apply with?

2. If a conventional loan isn't an option in order to get the desired 75% LTV ratio on the refinance, what would you recommend as my second best option? Local community banks, portfolio lenders, credit unions, etc?

Thanks in advance for any suggestions! :)

@Jeff Willis Yeah that's what I'm leaning most towards doing right now. Just wanted to hear what others would do in this case. Definitely wouldn't feel good about charging the downstairs tenant anything extra. 

Hi All, I have a little bit of a tricky situation here and would appreciate any feedback or suggestions. I have a duplex (top and bottom unit) with a single water meter. Each unit has only one tenant in it. The normal quarterly water\sewer\trash bill is around $300 but this time it was about $600. The cause was a leaky toilet in the upstairs unit. I am not sure how to properly bill each tenant though. On the one hand, the leases say they are each responsible for 50% of the water bill. On the other hand I don't feel the bottom tenant should be paying for water he hasn't used. How would you handle this situation? Some options I'm thinking of are:

1. Bill the bottom tenant the normal amount of $150, then split the remaining $450 with the upstairs tenant. I would pay $225 and she would pay $225

2. Bill the downstairs tenant $150 as normal and bill the upstairs tenant the full $450 as it was caused by the leaking toilet in her unit.

3. Follow the lease and bill each tenant $300

4. Bill each tenant $150 which is about normal and absorb the extra $300. 

 The lease for both tenants says this in regards to utilities and the water bill:

"

25 The Tenant is responsible for the payment of all utilities in relation to the second floor of the Property. The Tenant’s portion of the trash pickup, sewer, and water bill will be initially paid by the landlord quarterly, with the agreement that the Tenant will repay the landlord in full within 14 days of receiving a copy of the bill from the township. If payment is not received in full by the end of the 14 day period, a $30 late fee will be added to the bill. Unpaid utility bills will be considered as unpaid rent.

27 Water will be billed on a per person basis between the upstairs unit and the downstairs unit. For example, if there are two tenants living in the upstairs unit and one living in the downstairs unit, the upstairs unit tenants will be responsible for 66% of the water bill and the downstairs tenant responsible for the remaining 33%."

What do you all think is the best course of action? Going forward I would like to see if we can sub meter the water for each unit, but I still need to figure out what to do in this instance. Thanks in advance for any advice. 

Hi All, I just purchased a property to rehab and flip with cash, and would like to finance it now to free up some cash. I only need\want about $30,000 - $40,000 though. What are my best options for this loan amount? I thought of doing hard money, but the minimum loan amount most seem to want is at least $50,000 - $75,000. If I own the house outright, could I get a line of credit on it perhaps? Thanks in advance for any suggestions or ideas! 

@Greg Dickerson Thanks for your reply, lots of great information there and things to think about! I like what you said, 

"The only true security is in your knowledge, skillset and ability to earn money without relying on anyone else." that is so true. 

I would definitely be more comfortable finding another steady job. It's the safer and easier path, but would I be happier, more fulfilled, more excited to wake up every morning...probably not so much. I feel like I won't know if going full-time on REI is the right fit for me or not until I actually try it and see first hand.

By the way that is really good to hear that you only need one year of steady business income to qualify for most conventional mortgages. Definitely makes me feel better knowing I could potentially start buying rentals again sooner than I thought.