All Forum Posts by: Tom Parris

Hi @Jaclyn Sugg,

In addition to a home inspection, I'd recommend getting the advice of a licensed HVAC tech, and an engineer. I steer clear of foundation issues. Since it's your foundation, and that can impact load path, and the stability of the entire home, I tell my clients to go in a different direction. The remediation can be costly, and time consuming, but even after remediation, you would still have to disclosure that there was an issue, and can prove difficult to sell in the future. 

Hi @Valentine Antony,

I charge 100% of the first month's rent and 8% a month to manage, with a $100 application fee. That fee can change, but it depends on the property, location, and the difficulty to get it rented. It also depends on what's included in their fee. Ask how they market your property? are they putting it on the MLS, and being marketed to other agent's clients? Are they taking professional photos? Are they doing online or paper applications? Are they using an attorney backed lease? Do they have people on staff that can take care of maintenance issues when they arise? Do they have any property management designations?

We charge $100 for an application fee because it's a barrier to know the prospect is serious about the property, and shows that they can afford to spend $100 on an application.

Hi @Nathan Buck,

Just DM'd you my recommendation.

Tom

@Solomon Stavis.

Once you begin looking at single family properties for under $100k, you'll understand a different struggle. Why are they that price? Is it the area it's in, the condition or both? Each come with a different set of challenges, like the kind of tenant you'll get, or the condition is so bad, that you may have to sink a bunch of money in areas that don't add value. 

Yes there is an HOA. But it doesn't all come out of your cashflow. That fee pays for amenities, but also pays for a lot of maintenance which you can account for in your monthly escrows if you choose to have them. I have owned a condo for going on 4 years. This year, my HOA went up $14/mo, but that money went to fund all new roofs in the community. So I'm going to pay an extra $168 a year for a new roof. Over 15 years, that's $2500. While I would have spent easily twice that for a new roof on a single family home with similar square footage. So while everyone bashes HOAs, if you understand their utility, know what to look for on the front end and are able to abide by their simple rules, it's very easy to capitalize.

Hi @Solomon Stavis,

Welcome to the community. Lots of good stuff here. As you move forward, I would recommend getting clear with your goals and expectations. Talk to a lender to figure out your strategy. Talking with a lender allows you to understand what you can afford, what your payment is going to be, and the rate you'll likely get. Once you understand your limits, you can make an educated decision on the property you're willing to buy, the type of tenant, and ultimately understand the return you're going to achieve. 

I'm a big fan of smaller units in condos and townhomes, and it's what I've been investing in. They are great entry level properties, typically turnkey, newer construction, less maintenance, easy to manage from afar and most provide some level of security and amenities to your tenant. The area is attracting younger professionals not looking to spend a ton, but have a comfortable space. 

Good luck!

I recommend looking for properties that meet your return goals. Don’t narrow your sights to just multi family. The MF inventory here is either super expensive, very old or in rough areas with tons of deferred maintenance. 

I love townhouses, and condos. I know the risks, but I also know what to look for. They’re great starter investment properties, that certainly can earn a competitive return. 

Hi @Brittney Kemp,

I would guess that home was built by an organization like Habitat For Humanity that builds for low income families. 
The land was donated to the builder to develop and for the sole purpose of providing quality homes that low income families can purchase. I believe there is a 10 year block on who you can sell it to and how much you can sell it for. The only people that can would be those who qualify, or organizations that would help low income families. 

The City has leaned away from Habitat and donated roughly 75 vacant lots to Domain Homes to build these homes. They call it Urban 360. You can google their site, and all the info will pop up. They do exactly the same thing Habitat was supposed to do, but they have way more resources to get the project done much faster. 

Hi @Andrew Cummings,

Welcome to the community and thank you for your service. I'm a local agent, investor, and just became a residential contractor. I love where your head is at, but I wanted to see if you'd like this strategy more. I would leverage your military experience with MacDill AFB and market your vacant units to service members who are there short term, looking for a furnished place. That way you can make the same amount of money as you would renting out the unit on AirBnb for 20-24 nights/month. Gives you more stability, less turnover costs and a tenant that's almost guaranteed not to ruin your place. Happy to chat anytime. 

1. Does a portfolio lender preapproval letter count as cash when searching leads? - It all depends on your purchase agreement. The As-Is sale and purchase agreement allows you to check the box saying you're paying cash, but that voids that ability for a financing contingency. You can say you're a cash buyer all day long, but if you want that safety net of being able to walk away from the contract if you get denied, then you wouldn't be a cash buyer. I recommend getting familiar with that contract. I've used it on 100% of resales, and only use a different contract when doing new construction, and using the builder's contract. This is also what you'll use when you list the home. I recommend marketing yourself as "well qualified buyer".

2. When searching leads, what keywords tell you they'll accept portfolio lending? (if PL doesn't =cash) Portfolio lending would be the check box marked "other" on the contract. Just explain to them it's not traditional financing, and say, feel free to call my lender to verify my strength as a buyer. You can still check the box other and be a strong buyer. Strength of the contract isn't always price, it's about control and the terms. Just make sure you use your due diligence period appropriately. 

3. Depending on answers 1&2, is hard money lending usually the foot in the door for beginners low(er) on cash? It usually is because a lot of people getting into REI don't have the capital to do both, buying the property and funding the rehab. Hard money allows you to do both at the same time with the same loan. Lenders aren't dumb either, they are a good source of advice when they underwrite your property. 

4. Do I need to ask for a preapproval letter each time I want to make an offer, or can I use one to submit for multiple leads to save time? Pre-approvals are going to be generic as they come. Listing agents (if one) is going to want one that's younger than 60 days old. They usually have an expiration date on it. It isn't also necessary, but it makes you seem more legitimate. 

Good luck!

Watch out for those cash only deals. Property condition is a huge here, and whether or not the home can be insured. Honestly, that is one of the best approaches you can choose when thinking of buying the house. At the end of the flip, you have to sell it to an end buyer. That buyer is going to use traditional financing, and if you don't fix the roof, HVAC, plumbing, or electrical, you won't have an easy time selling that home. So make sure the homes systems are in good working, and insurable shape before you move forward. There are a lot of really terrible flips here, so there's opportunity to separate yourself from the competition, just make sure you budget correctly and make sure there's enough meat on the bone. 

The HOA does have a say in 55+ communities. There are rules that allow for a certain percentage of the owners to be under 55, for those that have spouses that are under.You might get turned down by a couple, but could get lucky where the rules are a little relaxed.