All Forum Posts by: Troy DeLong

 I would love to hear what lender / program you got setup with to use your Solo 401(k) with NON-recourse financing. I've only been able to find traditional recourse, which they don't allow with a 401k (My understanding). 

Affordability and value-add smaller multifamily can all be found in Lansing, MI. Government jobs, Universities, two major hospitals, General Motors, new Amazon facility, and so much more. 

@Tzvi Keisar

That is absolutely an option for a DSCR loan. As a newer investor, the 80% LTV might be a stretch. Until you get your portfolio built up and build a relationship with some lenders, you might be looking more at 65%-70% LTV. But, that's for the lender to decide when you speak with them.

I highly recommend you reach out to Greg Huegel with Lima One Capital (Hard Money lender). They've got great loan options across the board for what you're wanting. 

Greg Huegel  /   864-249-7020

@Mike York I agree with Joseph on this. Sounds like there might be more to this... 

Whether or not they can find the leak is irrelevant after NINE days with no water. The landlord should have licensed plumbers there fixing the problem and they should find suitable housing for the tenants in the meantime. The landlord should be sub-leasing them another unit or putting them up in a hotel until the problem is solved. Read through the leases if you can and see what the Landlord's responsibility is as far as 'Maintenance & Repairs' go. 

Or, sounds like it's time to call a local lawyer and get the ball rolling on some legal recourse. Nine days with no water would make a property 'Uninhabitable' in my eyes.  

-Troy 

@Vincent Lattuca 

First, you're gonna be bound to whatever their lease states. Maybe they just renewed their lease and they have 10 months left at the current rent. Maybe it is a month-to-month lease and you can give them a 30-day notice. Maybe they don't have a lease at all, in which case you might want to talk to an attorney to see what legal issues (eviction rights / squatter rights) you could face as the possible new owner. 

Second, take into account what type of tenant they are. Most (not all) long term tenants are LONG term because they are good tenants and pay. Maybe they take really good care of the property and don't cause extra hassle to you or your PM. Those are big bonus points in my book. 

Third, you'll want to figure out what your break-even numbers are gonna be. Take into account if the properties current rental income can support the listed purchase price and new taxes/insurance. If they can, then you have some time to slowly raises rents, if you choose. If not, then you know you absolutely have to raise rents right from the start. 

All in all, here are the two most likely scenarios. 

1) Tenants are great and you'd like to keep them. Raise rents 2-5% each year. Tenant is fine with that and stays. 
2) You don't really care whether the tenant stays or not. Raise rents to market value. Tenant moves out. Consider how much you'll spend on a turnover (paint, flooring, touch-up, cleaning, etc) and how long your property might stay vacant for and how long this 'Lost Income' will take to makeup with the new tenant vs. keeping the old tenant at a lower rent. 

Hope this helps. 
-Troy 

@Chi Sastry Whether you accept these terms or not will depend on if you are in a competing situation or not. In Michigan, we call these 'Appraisal Guarantees' and they are very helpful when competing with other Buyers. BUT, they can be very dangerous if you don't know what you are doing. Are you being represented by a RE Agent? 

In our Purchase Agreements ("Offers"), we have verbiage in the contract to dictate what happens to the contract if a property appraises lower than the contract price. See what your lawyer says when they compare it to your Purchase Agreement (Offer). 

As far as your question about losing your EMD... the Addendum they are proposing just states that you would lose your addendum IF you back out of the contract before your 'Due Diligence Period' (ie. Inspections and appraisal).

At the end of they day, seek legal / professional help from someone who has access to all documents and contracts relating to this. 

@Jon Haney

From reading your contract screenshot and the reply from your agent, you (The Buyer) don't need to pay anything. The Seller paid his commission. 

If his minimum is $2,000 then he should have clarified that with you before and got it in your contract, but he didn't (From what you are sharing with me). And from his reply, "Which we never discussed, so its no big deal." says all you need to know. Shake hands and head onto the next deal. 

But definitely know what you are signing next time. Best of luck! 

@Jon Haney The 'Compensation' referred to in that screenshot you shared (Exclusive Buyer Agency agreement) is stating that your agent (Buyer's Agent) is entitled to the compensation offered by the SELLER in a property that is listed by a Listing Agent. You DO NOT pay that as a Buyer.

Now, if you purchase a property using your Buyer Agent and the Seller is NOT offering any compensation / commission, OR the compensation is under your agents minimum (2.7% or $1,000 stated in your Exclusive Agency agreement) then you are responsible, as the Buyer, to cover the difference. 

As far as your agent's comments on the $2k, he's probably just saying that you are getting a deal, I guess, or something of that nature. But you're not obligated to pay the $2,000. 

Hope this helps! 

@Ian Hutton 

What do the current leases look like? Are they year leases (if so, how much time remaining)? Are they month-to-month? 

If you need to raise the rent that much on them, then you will most likely lose all the tenants. That's not necessarily a bad thing though. If that happened, you then could bring all units up to market rent. 

What do the mechanicals and utility meters look like at the triplex? Are there separate meters for all units? Does each unit have it's own furnace/AC? This will determine if you can put the new tenants on their own utility bills. 

You might also want to look into upgrading the property with energy efficient upgrades (ie. LED lights, slow flow shower heads and faucets, added attic insulation, basement/foundation insulation, etc). 

@Lucas Rodrigues ferro  If you will be working at MSU, then Okemos, Haslett, Mason or Williamston are all fantastic areas to live and commute from. I live in Mason myself and love it here. Taxes in all areas are fairly high, with Haslett probably being the highest. 

If you are looking to invest some more in the area, then you have tons of options as far as price, location, SFR vs. MFR, tenant pool, etc.

I see you're a contractor? I work for a local builder and am also a licensed agent. Let me know when you get moved into the area. I'd love to buy you a coffee and chat.