All Forum Posts by: Tim Porsche

Hey All, would love to get opinions from seasoned landlords on this. I have an applicant for an apartment who looks great in every other way except for one thing...she doesn't have a history of fulltime employment.

She is young and just out of college. She has worked as a waitress for the past 4 years for several days a month while going to college. She has a new fulltime job lined up which I have verified is a permanent position where she will be making more than 4x the rent. She starts in June.

Would you rent to someone without a record of fulltime employment, but who has a fulltime permanent job lined up? This person  has received good references from previous landlords, has good credit, never evicted, wants to stay long term, and looks very good overall. Any advice is greatly appreciated. Thanks 

@John Leavelle Thanks for the reply. I'm getting owner occupied financing as I'm planning to live in one unit for at least a couple of years. The main unit is a 3/1 and the second unit is a 1/1. 

The rents I listed are what I conservatively think I can get after upgrading and fixing up the property. They are not currently rented out, but when they were the main unit was bringing in $850 and the second unit $480 per month. Good point about including PM in the analysis...if I ever moved out of state I'd definitely want to still be able to do well on the properties with PM costs factored in. 

Also on a side note, I think the storage unit, which is in the same physical building as the 1/1, could be turned into a small studio apartment...probably bringing in at least $500 a month in additional income. I need to investigate the feasibility and cost of doing this further though and confirm it would be okay with the township...but if it could be done for under $20,000 which I think is very doable, that would be a great ROI I think.

Hi Jack, the $710 monthly PITI payment includes taxes and insurance. I will self manage, and lawn care will be done by a tenants. I'm just looking for general feedback if this looks like a solid deal or not...although I know everyone's definition of a good deal varies

Hi All!

I have a duplex I'm looking at in the Muhlenberg area of PA. It's in a decent neighborhood, but the schools aren't great. Listed below are the numbers. Could you please let me know what you think? Would love to get some opinions before agreeing to purchase this.

Purchase Price: $89,000

Purchase Costs (with 10% down): $11,000

Estimate Repair\Upgrade Costs: $25,000

Total Cash Investment: $36,000

Unit 1 Estimated Monthly Income: $950

Unit 2 Estimated Monthly Income: $525

Unit 3 (storage) Estimate Monthly Income: $100

Total Monthly Income: $1,575

20% of rent for repairs\capex\vacancy: $315

Net Monthly Income: $1,260

Monthly PITI: $710

Net Monthly Income after expenses and PITI: $550

Yearly Total Income $6,600

Total Cash Investment: $36,000

Cash-on-Cash Return from cashflow alone: 18.3%

Please note that at the price points for rent, after the upgrades I'll do, I'm not planning on including any utilities or lawn care with the rent, so that would be the tenants' responsibility, in case you're wondering why I didn't factor that into the analysis. 

Any advice would be greatly appreciated. Let me know what you think please...yay or nay :)

@Patrick Stewart Also you can look up Jeroen Harmsen, he deals in the Reading\Berks area. He's helped me buy two investment properties so far and is very good. 

@Stephanie Medellin Thanks for the information. I'd try to buy more rentals in the periods between flips so I wouldn't be taking on too much debt. Do you know what the general debt to income ratio is now days that they usually look for? Also how do they calculate the portion of your rental income that can be counted against debt? I thought I heard somewhere before that it was 80% but I could be wrong...and I'm not sure if that is 80% of the profit after all expenses and debt servicing, or just 80% of the gross rent. 

Hi There, I have question for you all that I'd greatly appreciate any feedback on. I currently work full-time and invest in buy and hold rentals on the side. Currently I have three doors. I've toyed with the idea of cutting back to working 3 days per week instead of 5 if the company would allow it and it could be managed feasibly. What I'm trying to figure out is...

1. Will the 40% drop in W2 income make it hard for me to get conventional loans on future rentals?

2. If yes are there any solutions to work around that problem, other than continuing to work full time until I'd have more rental properties and more rental income? 

My plan would be to use those two extra days per week that I would have off to look for, buy, and work on flip projects. I believe that by flipping houses I should be able to AT LEAST replace the income from working two less days at the W2 job. I'd really only need to do one or two flips per year. 

If it matters, I should still be in the green at least $1,000 every month after accounting for all expenses, without flipping any houses, just working 3 days and receiving the current rental income. I'm just trying to figure out if I'd have a tough time getting loans for future rentals if I made the change...any advice\info you can give would be great. Thanks!

@Eric F. I do have a good W-2 job, plenty of income and good credit so I don't think I'd have trouble getting a traditional mortgage (I currently have two properties already with 30 year fixed mortgages). I guess my question was more about the hard money lender, and whether or not they want to see you hold the hard money loan for a certain amount of time before paying it off. From what you're saying it sounds like that would be the best route to take...buy with hard money, then refinance as soon as I can into a 30 year fixed. 

The ARV isn't as important to me because I'm not planning on rehabbing and selling, but just putting it under conventional financing as soon as possible, THEN doing the light rehab while I live in it for a year, and then renting it out. So the monthly rent estimate is what I'd be looking at the most. As I said I trust this wholesaler. They have a very good name around here, and actually run the local landlord group in this area. So it's not like this is some shady person I've never met before.

@Eric F.

Lots of good information, thanks! I see what you're saying about them wanting cash. I do have a relationship with a hard money lender, so if I would put down 25% of my own money, and finance the rest with hard money to close the deal, could I then refinance with a traditional mortgage right away? Or would I need to keep the hard money loan for a certain period of time? 

Alternately, would a wholesaler likely be okay with conventional financing if I offer to pay their holding costs for a month or two until closing happens? Like I said the house only needs a light rehab, and is completely habitable, so qualifying for a conventional mortgage should not be an issue. 

As far as checking the contract they have in place with the seller, is this something I should have a lawyer do or is this something you can do yourself?

@Eric F. Thanks for the reply! I guess I'm just a little bit nervous because I've never done a purchase where the behind the scenes things weren't handled by someone else, so if I do this I want to make sure I don't forget anything. I'm probably over complicating it though. Exactly what steps do I need to take to make sure the title is clean?

I would like to get conventional financing on this...it is a very light rehab, not a lot of work required, and it is definitely habitable. I plan to live in it for a year and rehab it as I live there. I'd like to lock in a 30 year fixed rate now before rates go up, if indeed they do go up as everyone seems to be expecting. Also it will save me 3+ points to do it this way instead of hard money, plus a lot of interest charges obviously. Would you see using conventional financing as a possible issue or are most wholesalers okay with it?

Also in your experience, generally how willing are wholesalers to negotiate price and terms. Would I be amiss asking them to just cover half of the closing costs for instance? 

I'm still not sure if I'll buy the deal or not, but I have a lot of faith in the wholesaler as they have many, many rental units of their own, and have been doing rehabs for a long time and have a very good name around here, so I expect the deal will be a good one. I still obviously need to get all of the details though and see it first, have it inspected, etc.