All Forum Posts by: Karen Johnson

Apartments.com is fine when your tenants can get things set up. I got migrated to it after they bought Cozy. Got a new tenant and he had all kinds of problems setting up his payments. Tried Avail because of the price point. For that tenant, only used it for rent collection. Recently acquired duplex and used Avail for everything- advertising, screening, lease signings, deposit collections, etc. Great value at $5/unit. Highly recommend.

Thank you very much for your response, @Greg Scott. This was very helpful. I did not realize that HELOCs can be withdrawn at any point. This is good insight and would lead me towards withdrawing the funds and depositing into the bank. I do realize that a HELOC will affect my DTI and will discuss with the lender. I do not have much debt outside of mortgages on my primary home and investment properties, so I am not extremely concerned about this, but it's still something to take a closer look at. Also do not intend to keep the HELOC for the long term; really just looking for a way to get the larger down payment without liquidating other assets. I will look into forming an LLC, if it's more likely needed for the commercial loan. I'll call a few lenders and see what they say.

Hello fellow BPers!

I've been reading related posts on the forums, but I need someone to explain a few things to me slowly and carefully, LOL.

Here is what I would like to do:

-Take out a HELOC on one of my investment properties.

-Use said HELOC as (part of) a down payment to purchase 5 units.

--Note: The 5 units will be split apart and sold as a duplex and a triplex.

My initial questions (and I probably should have more) are:

-Since I'm hoping to purchase all 5 units, does it make more sense to get a commercial loan, vs. trying to get 2 conventional mortgages? Seller is set on re-zoning as opposed to keeping the 5 units tied together.

-For commercial loans (I've never done one), can I acquire one as an individual or must I open an LLC?

--If both are possible, is one more beneficial? I understand that I may still need to personally guarantee the loan even if I create an LLC. I'm reading up on commercial lending, but still in the beginning stages so any insight would be helpful.

-Do I need to take a draw from the HELOC and allow the funds to get "seasoned" in my account, or do I just need to show proof of the draw from the HELOC when the time comes?

-Are there any other things to consider besides making sure to account for loan repayment is accounted for in the numbers?

Hello,

My tenant's lease is set to expire in April 2020 without the option to renew. This is because tenant felt certain they would move out and purchase their own property in that time. Tenant is now opting to extend lease to a 2 year lease as they will not be ready to move by the end of the current lease term. Great tenant so I'm happy to accommodate.

Question - do I use a lease extension addendum or draw up a new lease?  Which option is better and why?  If a new lease, should the date be as of today or as of original lease date?

Thanks in advance!

Hello everyone,

Does PA landlord-tenant law require tenant to be present during move-out inspection? I could not find anything to that effect. I was contemplating just having the tenant leave the keys and forwarding address at the property, and then doing a move-out inspection after the property is vacant. I would take lots of pictures and provide a detailed move-out report. We did a move-in inspection with the tenant and a detailed move-in report when tenant first leased the property. If tenant requests, then I would agree to have him present for a walk-through. I just want to make sure I'm in compliance with the law. If there are any other cons to this, I'm happy to hear them.  For what it's worth, this tenant has been stellar throughout his stay and has kept the property in great condition overall.

Thanks!

@Wesley W. thank you for your feedback. That’s where I’m leaning right now. It doesn’t seem worth the risk, even to get my ideal rent. They may be perfectly good tenants but I’m not sure I want to take the chance that they are not.

@Caleb Heimsoth thanks. This bothers me too even though it’s a misdemeanor. For a felony charge I wouldn’t think twice. The second one was also recently enough that I can’t write it off as “youthful exuberance “. 

@Karl B. thanks for responding. It does seem like a lot of red flags and I wanted to make sure I’m not blowing anything out of proportion. 

They have been at their current residence since March 2017, so just over two years. They were at the previous location for 3 years but they were not able to provide current contact information for their past landlords. I’m trying to find contact info for them now. Current Landlord says they keep the place clean, don’t smoke inside and it doesn’t smell like smoke. He says he would keep them on as tenants if he was not selling. 

I have a house for rent. In the interest of full disclosure I think I may have overshot the monthly rent and was planning to lower my rate this weekend. In the mean time, I’ve actually had a family of four (boyfriend and girlfriend, girlfriend’s mom and her aunt) apply for the home just yesterday. They seem like decent enough people. However, they have poor credit, explained as being the result of job loss. I’m somewhat concerned but can require additional security. Their old landlord is selling his property, but gives them decent ratings as tenants. They were late on payments to him in the early days “but only by a couple of days and that paid the late fees.” They have pets (allowed by me, although if I had two identical applicants I’d choose the ones without pets). They are “outdoor” smokers. I’m (mostly) okay with this. I know some outdoor smokers whose homes smell fine. If they smoke in the house they would be out. One of the tenants has two arrests for misdemeanors, including one for use or possession of drug paraphernalia. This I don’t like at all. And the Mom has early onset dementia. I wouldn’t have known if she didn’t mention it. And while I don’t think it’s grounds for denial, I do worry about future implications as her condition deteriorates. Also the boyfriend is mom’s caregiver and that is the sole source of his income. Between the four of them, they make 3.2x the rent (regular job, disability payments for mom and aunt, caregiver income for the boyfriend). Part of me says this is a lot to take on in tenants, and part of me says that there’s no guarantee a perfectly good, highly qualified tenant doesn’t end up in a life altering situation that makes them a worse bet. So, what do you folks say? I have grounds to deny based on my criteria. The question is if I am making too much out of “life” and should take a chance on these tenants. It’s a nice home in a good neighborhood (A/B). I want to make a sound business decision and not just an “everybody deserves a chance decision”. Would you pass in these tenants or not? And in either case, why?

@Nick Pacheco what interest rate is your student loan debt at? Do you have private or federal loans? Are your rates fixed or variable? How is your monthly cash flow when you account for your loan payments? Do you have any other debt outstanding? Do you have other savings (an emergency fund)? I feel like those are all things to consider when deciding which way to go.

Depending on your current position, I would actually think a hybrid approach of buying a duplex (or other multi) with an FHA loan would be a good way to go. Lower cost of acquisition, still have available cash to pay down student loans and also can benefit from having a tenant in your primary residence (house hacking).

Best wishes.