All Forum Posts by: Wilson Pun

Thanks Melanie!  I was actually just wondering about the MF situation in Phoenix.  Will reach out to you later to discuss the market there if you don't mind.

Yes, transferring title from an individual borrower to an LLC controlled by original borrower is exempt from Due on Sale- D1-4.1-02 of the Fannie Mae servicing guide, allowable exemptions-

a limited liability company (LLC), provided that

• the mortgage loan was purchased or securitized by Fannie Mae on or after June 1, 2016, and
• the LLC is controlled by the original borrower or the original borrower owns a majority interest in the LLC, and if the transfer results in a permitted change of occupancy type to an investment property, such change does not violate the security instrument (for example, the 12 month occupancy requirement for a principal residence).

My vote is with the LVP/LVT, the more durable the better.  Get the thickest/best quality for value your budget can afford.

In addition to what other people responded with, you should have some photos/videos of the property.  Use those to get an idea for your initial scope of work and itemize out everything you want done so you can get an initial cost estimate on your end.  Once you have this in hand, you can then get your PM's opinion and a GC's opinion as well on work that has to be done.  This will help you better estimate cost of rehabs as well as learn what may be necessary/unnecessary, rehab pricing and prevent over-rehabbing

Can't hurt to have the spouse's income included so that you can verify an additional source of income.  I'm assuming the spouse will be living in the unit as a tenant as well so having her name on the lease as an additional applicant shouldn't be an issue?

As for verifying income for applicant's with own business, ask for at least 2 years of tax returns to verify that the income is there and stable.  If they file jointly, then this also takes care of 2 birds with one stone.

As some of the other posters have mentioned, unless you can purchase a property at substantially below market, taking on negative cash flow means your play is either to profit with a flip (which doesn't seem to be your intention), or gamble on appreciation- and it is a gamble.  Real estate appreciation has certain seen tremendous growth in many markets, but many believe we may be nearing the end of a market cycle and heading into a period of low or no growth (if not negative), with negative cash flow is a big risk.  I see the same difficulties in finding cash flowing properties in NYC.  You can always consider investing in out-of-state markets.

Finding the best possible school districts where potential properties  can reach your minimum level of required cash flow.  Positive cash flow is a must and if the school is also good, a lot of the other factors fall into place as well.

Exactly this, keep in mind that a lot of times when you buy properties where Seller is not agreeing to deliver vacant, you are almost always buying a problem.  That's why the Seller is selling, you're essentially being paid (or hopefully being given a deal) that's priced into the sale price with the assumption that the tenant will cause you problems.  Unless it's a very quick, all-cash closing, there's no reason a Seller won't agree to give notice and get rid of a month-to-month tenant unless it's going to be a chore.

What you are proposing is fine as a conditional waiver of payment obligations as to damages.  The security deposit though is not to be used for late/lost rents, it's only for damages beyond normal wear and tear, usually state laws are pretty strict with that but you may need to check your state specifically.  

Any amounts of non-payment of rent you are owed under the lease, is within your right to pursue, but if you choose in an agreement to forego that right provided tenant vacates the premises and agrees to a full lease termination AND provided there's no additional damage to the unit, that's something that can be drafted up as an agreement with a conditional move-out inspection.

Hi Duane, it's always about time in the market vs timing the market.  Timing is much harder and especially just starting out, finding a property where the numbers work will help build the experience and you always have the option to trade up via 1031 for a multifamily property in the future.