All Forum Posts by: Adam Smith

I am not sure if that method qualifies for Fannie/Freddie loans.  We have only had the loan for 4-1/2 months and we have not been notified that it was sold.   I will say that they rent on the appraisal is $300/month less than what we are renting it for so not sure how accurate it even is....But if they count 75% of our total rent it is better than nothing.

Just our experience.

@Tyler Treadway 

To my knowledge only licensed realtors can access the MLS. I am not familiar with Phoenix but each area could have "public" MLS access which does not include all available information that is for agents only. For example, in Denver and northern Colorado there are two (2) MLS's. The public versions are www.recolorado.com and www.coloprop.com.

I understand your dilemma...my wife is a realtor and she set up an automatic search so I get new listings that meet our criteria nightly.  I can't imagine asking a realtor every time I  find a potential property.

Good Luck!

@Sean H. 

We use a local regional bank for our investment property mortgage which we put 20% down.  We only have one purchased awhile back and fortunately didn't need to count the rental income as income to qualify.  (prices are lower where we are located).

We recently contacted them about purchasing another rental (with 20% down) and they said they would count 75% of the potential rental income based on the rental income portion of the appraisal.  When we get an appraisal on an investment property the appraiser does a "rental appraisal" based on the property and local current rents.  They would use 75% of this as income.  I believe the 75% is based on vacancy and repairs.  We have not purchased another investment property yet but they said they would do this.

Not sure what banks, credit unions you have looked at but maybe find a local institution that knows the market.  Keep in mind our bank does require 20% down which might be tough in southern California...

Just an idea.

Where in FL is the property located?

I have never had a contractor look at a home before we purchased it but we have always had a home inspector inspect the home.

My personal opinion is we will always have a home inspection done by a licensed inspector.  My wife is a realtor so we know some good local ones.  Some people (like my co-workers) might not agree with this but I look at it as cheap insurance.  For a typical home inspection in my area it is ~$350 plus another $150 for a sewer scope.  We have done this for the two personal homes we have had and the one rental.

The one downside is that it is my experience has been that inspectors are knowledgeable in all areas but masters of none.  If they see a crack in the foundation they may say it is possible settling and you should have a structural engineer look at it.....if there seems to be a problem with the furnace they will tell you to have it checked out by a HVAC professional.  An example that happened to us on the investment property is the inspector said the roof looked old and showed some damage so we should have a roofing contractor look at it.  We called a local roofer and he looked at it and said he would certify it for 10-years.  This is a contractor that if he would have said it needed replaced he could have had a chance to win the work (we would have gotten three (3) bids).  At the end of the day, I like the reassurance that it was inspected and have the report with pictures to use in negotiations of the purchase price.

An inspector could give you approximate prices (or range of prices) on fixing certain items but a local contractor should be able to give you his price for the work.

Hope this helps!

That is great that you have family in the business....sorry I didn't know that before my last post.  As far as a checklist, I don't think BP has one (or at least that I have found) but if you search for it on BP I have seen posts on what to look for.  Personally, I would look first at the larger (and more expensive) items like the roof (you mentioned it was newer), HVAC, electrical, plumbing, drainage around the house and any signs of settling. 

The only one I can speak intelligently about this the drainage because I am a Civil Engineer.  It is very important that all water from downspouts and the grade around the house slopes away from the home.  Hopefully, the grade drops 1' vertical in the first 10 horizontal feet around the house on all non-hard (concrete) surfaces.  Obviously, concrete walks or patios will not slope that much but a good 2% slope is what I look for. 

Spent some time in FL but never looked for property so not exactly sure if this is the standard there. 

Good Luck!

It has been my experience that texture is pretty normal here.  Although, I have a co-worker (and landlord) that is from NY that says smooth is what he is used to....guess it is a regional thing.

@Conner S. 

This is a hard question to answer without knowing more details.  The first questions that come to mind are:

• It meets (or is really close) to the 2% rule which is rent being 2% of the purchase price.  Which could be good (can't get this in my area).  Search 2% rule and you will find a lot on BP.
• Use the rental calculator on BP to figure in all of your costs and rents. You really have to nail down all costs associated with a rental and who pays for them.  For example, does the current landlord pay for all utilities?  I have heard that depending on the area in FL, the taxes and insurance can be really high.  Is the property located in a flood zone?
• What is the condition?  Does it need a lot of work? Updating?
• Are the current tenants really paying $1,000/month?  Some landlords have the rent in the lease as higher than what the tenant actually pays.  Typically, I have seen this as the rent is listed as $1,000 but they give a discount to $800 if they pay on-time (or close to it) or sometimes the tenant just pays less than the lease on a verbal agreement because it looks better on paper to the landlord and banks.   Not saying this is the case (or the norm) here but something to keep in mind.  Get actual rents or maybe talk to current tenant.
• Being a long distance landlord involves a lot more than just collecting rent.  There will be issues that come up with repairs, late payments, tenant turn over, etc....you name it and it could happen.  This could be more than your family signed up for (maybe not though....don't know your situation).  You could also look at a local property manager but make sure to factor in the costs.

There are a lot of things to consider when becoming a landlord and even more when you will be a long distance landlord.  It can be done but you just want to know every detail and how you will handle certain situations.  Take some time and search "long distance landlord", "2% rule", "FL evictions", etc. on BP and you will have more information than you can handle.  Call local insurance companies for insurance quotes, look up property taxes on the property (you said it was currently rented but be careful of homestead discounts).

After a long winded post I guess the answer is that more information is needed before you can decide if it is a good deal.

FYI-we have looked and ran numbers and talked to multiple landlords for 4 years before we bought our first (local) rental, and it has been great!!

Stay motivated!

Welcome!!!  You will find a vast amount of information on BP!!!

Firestone, Colorado!  Moved to the area after graduating from the University of Wyoming 15 years ago. Love the Colorado weather and the small town feel of the Tri-Town area with Denver attractions only 35 minutes away!  Just wish there was a beach nearby.....

Good advise.  In two months we will be doing repairs on our first tenant turnover on our first rental.  When we bought the rental 4 months ago the previous owners decided to rent is back from us.....at a 60% increase from their mortgage to our rent price.  They are wonderful tenants but they are purchasing another property so the repairs/updates that we were planning to do when we closed on the property we have to do in two months when they move.

This was a question I was curious about....list it for rent while painting/repairs or wait until they are complete.  Ultimately, we would like to reduce the time the property is vacant while not discouraging potential tenants.