All Forum Posts by: Todd Willhoite

@Claudia Becerra I sent you a private message on lender. 

There is a lot of truth to what Owen Dashner says, the paperwork in doing a conventional loan is a real pain compared to my portfolio lender. Conventional lender requires 6 months of seasoning to do refinance on ARV. Portfolio lender may not require you to wait that long.

You may be able to see a value add opportunity where you can change operations, or upgrade units, or cut expenses and get the Net Operating Income to increase more on one deal than another.  As stated before, Cap rate tells you what happened in last 12 months, not what is going to happen in the future, or can happen if you have a plan.  But without making any changes and if the properties will perform the same over the next 12 months as they performed over last 12 months, then in theory the 8 cap rate produces more than 5 cap.  

@Shawn McKee I bought with a portfolio loan.  No reason I chose portfolio loan to start, other than I have a good relationship with the banker and can call and get loan much easier and less paperwork than 30 year loans.  Problem with portfolio loan is 20 year amortization and 5 year adjustable rate.  Changed to 30 year to avoid interest rate risk.  Could have refinanced with portfolio product if I didn't plan to hold for long term. 

@Shawn McKee I used portfolio loans on those, so I ended up paying twice the closing costs for the loans (the initial loan, and the 30 year loan).  I am doing it a little different on two more.  I put a heloc on my primary residence and bought two rental properties with cash taken out of the heloc.  I will wait six months and then apply for 30 year loans on the two properties that I bought.  With the proceeds from the loans I will pay off the heloc and be able to repeat the process again.

I think it is common to put the 20% down initially.  Then you fix it up, hopefully you bought low enough that there is a lot of equity after the rehab.  After the rehab, then you refinance based upon the new equity and maybe pull out the 20% down payment and what you spent on the rehab.  

I have two houses I just did that with.  Bought them with about 20% down, one a little over six months ago, the other one year ago.  Fixed them both up and rented them.  I refinanced both with 30 year loans and got 100% out of one and all but a couple thousand out of the other.

Your property tax rate will change based on the sales price. If the previous owner bought the property for much less than the sales price then the taxes will go up. You can call the county assessor to find out how to calculate the approximate amount. You have your numbers based upon an FHA 3.5% down loan. That indicates you will be living in one of the units, so that income will not be coming in, but you are correct to run the numbers on the total amount so you can see what your returns will be if you move out after a year. If you don't plan on living in a unit, then you will have to get a different loan which might require a 20% down payment.

Has anyone used Shaw Floorte series of flooring in their rentals?  It looks good and claims to be waterproof. Wanting to know if it stands up to tenants dragging couches and other items around on it.

Thank you @Jeff O'Neal

This is a great list.  I don't see anyone listed who installs tile.  Does anyone have a recommendation.  Thanks.

In 2013 I needed to learn how to be a landlord and https://www.biggerpockets.com/renewsblog/2013/01/27/tenant-screening/

is what led me to Biggerpockets.   Screening the tenant is one of the most important decisions in renting your house.  They can make you a profit or destroy your place.  If you have a nice place in a good neighborhood and get the right tenant, then it won't take much of your time.  I have a great tenant, she takes care of the house, sends the rent on time or early each month.  I talk to her once a year to renew the lease and maybe inspect the house once more during the year.  Not much time involved after you get that right tenant.  Getting that right tenant may take a dozen times screening phone calls by potential tenants and showing the house half a dozen times, or more.  

Now if you have an older house in not great shape, then you may get several maintenance calls throughout the year and need a network of people to repair your property.  If you don't have the time to find repair people or the network, then a property management company will have people they can get out to repair the property probably quicker than an individual can get the repair people to respond and maybe at less costs since they deal in volume.  

If your property is local, I recommend doing it yourself to learn what is involved before hiring a property management company.  But the learning process may take time away from your life that you would rather spend doing something else.