All Forum Posts by: Troy DeLong

If your HELOC loan is big enough for the purchase and rehab, I highly recommend you do it! 100%.

A HELOC is essentially a high limit credit card that you pay yourself interest on. No sense in paying interest to someone else at much higher rates and fees. When it comes time to writing your offer, a HELOC is considered cash. Hard Money is NOT cash, but still just a loan/mortgage when writing your offer.

Plus, any HML will want to do inspection draws (depending on size of rehab) and will just slow you down. I would argue that the only difference between HELOC and a HML (or Private Money) is 'who is the bank' and 'what are the fees/interest'. Risk on the purchase and rehab doesn't change.

I've listened to the Bigger Pockets podcast for a while now and recently added Real Estate Rockstars to my podcast list. Both started episodes in the early 2010's. Listening back to those older podcasts (2012-2015) I've heard so many of the "Expert" guests predict the crash that was supposed to happen "within the next couple years" and used that as a reason why they were holding off on buying new properties. The many 'crashes' predicted have still never happened... 

If someone is confident enough to sell you on the idea of a crash, they're either lying or just don't know what they're talking about. Buy at a decent price, in a decent area that could still support good paying tenants during an economic downturn, ensure your property will cashflow, and ride out any "crashes" until it makes sense to sell. 

@Usman Siddiqui Hey Usman. I would look at the rentals that your Realtor is using for the $3,500 and $4,000 numbers and see what quality of kitchens they have. That would be your deciding factor for what to get. I would have to think they are very high end homes if you're getting those rent numbers. The cost difference between quartz and granite over the life of the counter top is small and well worth the investment, especially in a B+ / A+ neighborhood I think. I would avoid anything less than quartz or granite. Hope this helps! 

Property: Triplex
Layout: Main level = (1 unit) 2 bed / 1.5 bath 
           Upper level = (2 units) 1 bed / 1 bath 
Condition: Both upper units are messy (tenants) and rented under market value. The bigger, main level unit is not livable at the moment (Flooring all ripped up. Needs all bathroom fixtures and appliances.) Property appraised for $146k last year (2020) in the As-Is condition of the lower unit not being livable.
Status: Off-market property found through direct mail.
Seller Motivation: He doesn't "have to sell" but would consider it for the right price. Says he isn't losing any money but also isn't making any. The owner is getting older and is tired of being a land lord. He's not looking forward to having to fix up the lower unit. He won't sell for anything lower than the $146k appraised value. Or, that's what he says... 
Current Financing: Owner still has a loan on it. 

My question... What are some creative ways I could acquire this property, fix up the lower unit, get rid of the messy tenants, fix up their units, and rent this place out at market rents. Repairs are gonna be around $40k and ARV would be around $200k.

Was VERY intrigued after listening to the BP Podcast episode with Pace Morby discussing Due-On-Sale insurance. But that Equity Assurance website does absolutely nothing for me... Most of their site is "under construction". No contact information. No pricing. Seems like a dead end. Very disappointed.

That being said, are there private money lenders out there that will be your DOS insurance? EX: I get under contract on a sub-to with a Seller for a $150,000 remaining balance and want insurance for that potential $150k due-on-sale. Could a contract be made up where private insurer agrees to cover the potential DOS amount for a monthly premium from buyer of, say, $50/month? Or whatever terms the parties come up with.

@Michelle B. Yes, I think most around the area would agree that Mason is the best of those 3. Holt still can get very good rents in the nicer parts. Mason has great schools and is a county seat city (Ingham County). County seat cities are usually more active with jobs and businesses. 

@Michelle B. Holt (Delhi Township) requires rental registration and inspections every 2 years. They are not quite as picky as Lansing, but still require extra fees and inspections. The areas and tenants are much better in Holt than in Lansing. 

Mason is the best location of all three, but you will definitely pay more here. Mason, at the moment, does not require rentals to be registered or inspected. 

Hey @Michelle B., 

Lansing is a great option for affordable properties if what you're looking for is cash flow. Good vs Bad neighborhoods in Lansing is subjective and is always changing over the years. I would recommend finding an agent who knows the neighborhoods and can point you in the right direction. A good start would be Old Town, Reo Town, and Downtown Lansing (East side). 

City of Lansing can be pretty picky when it comes to your property "meeting code". I would expect quite a few repairs if the property isn't already licensed. After it's inspected and approved, it's pretty easy going after you pay all your fees. 

Hope this helps! 

@Kyle Hilliard Much of what Brandon said above. Those annual relicensing fees and inspection fees are just the cost of doing business. Although they are a bit higher than most cities around the Lansing area, just build those into your rents. 

When considering whether to sell or rent it out, I would keep it as a rental if you don't need the cash out of the property. If you do need the cash for another project, then selling would be the way to go. 

@Allen Gross I love seeing landlords out there who look to actually take care of their properties and tenants!

Unfortunately, what you're looking to do might cause more headache than not... This could get pretty grey in some areas and all it takes is one bad apple out of all your properties to make you wish you had never done this. 

For the tenants that you respect and appreciate, I'd keep it simple with a handwritten card and possibly a coupon/gift card (Free holiday pie, a free turkey, $20 gift-card to the local supermarket, etc). Most people like to enjoy some sort of holiday meal and/or HAVE TO buy food and this would pair well with the timeframe you're wanting to give something back. 

Most landlords out there never speak to their tenants, so something as simple as this will show good character to your tenants. And feel free to save money and ignore the tenants that have given you headaches! Best of luck.