All Forum Posts by: Ryan Gillette

I've never done it because our zoning board cracks down on it. They search (and neighbors report it) and can pretty easily figure out the house. The two other issues are whether your mortgage terms allows it (most don't) and whether your insurance allows it (most don't).

That's fine. 

With insured loans, the issue is when a section of the house, usually a converted attic, lacks a "permanent heat source". That's a health and safety issue. Health in having heat. Safety in whether the heat source used is supposed to be used as a permanent heat source. That is, if an owner installs an electric register or gas unit, which is supposed to be used as a secondary heat source and it's used as a primary heat source in the dead of winter.. 

It's how much you would net cash-flow to live comfortably - whatever that means to you (going part-time, retiring, etc). So if you need to make $5K a month to meet your and your family's needs for housing, food, activities, health insurance - that's your freedom number. You work backwards from there. So if $5K is the number, that's $60K annually. If your cap rate on real estate is 6%, you'd need about $1mm in equity invested. It gets a little more complicated leveraged vs unleveraged, but broadly that's the easy way to look at it. So if you buy a $1mm property (or 10 x 100K single-families, and on and on) that grosses $100K in rent and then your net CF after taxes insurance maintenance cap-x, and so on - is $60K, there's your freedom number. That $1mm investment churns out, after alls said and done, that $5K for you in perpetuity. 

Buy them out. Reimburse for moving costs, maybe first months rent at their new place, broker fee. Short of that, tough cookies.

Credit is the key to everything pretty much. If it's not there, you'll have to steer away from banks. Any legit bank programs that are asset driven usually still look at your credit score and usually won't do $20K loans. 

First, I'm telling you this because someone will. It's not necessarily the best thing for you or your financial situation. So take stock of that. The solution here is probably hard money. You find someone with $15K who sees it's, say, a $40K property. They lend you $10-20K. With your credit, they may want to see skin in the game from you and/or they may not give you any money for the repairs; or cash advances. If either are the case, you might look to revolving credit. Opening a few credit cards with $2-3K balances will finance your materials. Just be prepared for how that will impact your financial situation overall, because the interest rates on those might be in the 25-28% ballpark - it's something you'd want to have a short term horizon for paying off.

This is me. I would start with health and safety, and then focus on the updates with the highest ROI. Sister the floor joists, then fix the roof. Have the electrician look at the system - ungrounded isn't ideal, but I would find out if it's truly a safety issue or okay as is. Windows I wouldn't worry about unless there's a safety element to it or they're cosmetically ugly or if you're paying for heat/cooling. If you are paying utilities, then I would look into energy efficient windows - but keep it on the back burner. It'll save you money in the long run, but it's not an immediate project like the other things.

If there's still money left over, then the obvious cosmetic things in the units that are high ROI that you can drive higher rent prices with (or lower vacancy times).

Hmm. Maybe different laws. Here in CT at least a tenant isn't liable even if their unit was bug free when they moved in unless the landlord can definitively prove they brought the bugs into the apartment. If there's reasonable doubt another unit brought in the bedbugs and it spread to the tenant's unit (say bedbugs in just one other unit or in the hallway), it's tough to blame the one unit or the units that had bedbugs. 

Your income, because it won't continue for at least 3 years from closing, is ineligible for what's called an "insured" loan. This is the majority for the mortgage market. The only option is to use a co-signer like a wife, girlfriend, parents, or grandparents who have income and can help you qualify. The debt would go into both of your names.

The other option would be what's called a "portfolio" loan. These are not insured by the big agencies like FHA, Fannie, Freddie, VA or USDA; instead they are insured by depositor funds (like you putting money in your checking account) and therefor are not subject to the 3 year continuance requirement. They can use a little more common sense in these types of situations (your education level, your track record, your income, etc) and lend on that basis. You will find "portfolio" loans at your local credit union or savings bank.

Local statutes almost always have a separate section for this, but generally the rule of thumb is if you can definitively track it to a tenant, they're liable. If not, the landlord covers the costs. So if it's a SFR, tenant pays. Multi-family or apartment, generally landlord.

Where it gets a little tougher to distinguish is when only one unit has bedbugs. You know 99% it's stemming from the unit that has bedbugs, but they can still claim it's originating from another unit.