All Forum Posts by: Zachary Corum

Its been my experience that it is easier to work with a local bank in the area you are investing.  Establishing a bank account that you pay your mortgage or loans from can help make future lending from that bank a little easier.  Given your situation you could always close those accounts in the future and pay everything from one centralized location when you are back in Oregon.

I am currently enrolled in the realestateexpress.com course and I like it so far.  Its mostly self directed but the course structure is broken down very well and easy to follow along.  There are webex style meetings every day that you can join in to learn more and ask questions about.  The material they cover may not be what you are focusing on but if you send questions to the teacher they usually try to cover it during the next days webex.

Ill Bite, I bought my first 3 Unit in the North East Pennsylvania Market last year in December and have had great success with it so far. Since I do not have access to the MLS have been recording properties as they are sold in my farm in the Luzerne County. I have pulled most of the information from Realtor.com and update it once a month. This data only includes the 19 small to mid size cities and towns I am interested having investments in.

2016 Multi-Family Sales

2 Unit Apartment Buildings in my Farm took a dive last year, would have been a good time to buy a 2 unit building but I opted for a 3 unit with better cash flow.

59 (2)unit properties sold

• Red line is the sale price, Blue line is the list price
• The average sale price for the year was close to $65,000
• The average Discount from list price averaged $9,000
• Only 10 of the sold properties were purchased at list price or above
• Price per unit was a whopping average of $28,654

3 Unit Apartment buildings in my Farm did a little better on price the building I purchased was the last 3 unit in December in 2016 at a 10% discount from the list price and about 11k below market rate at that time.

13 (3)unit Buildings sold

• Red line is sales and the blue line is discount from list price.
• The average sale price for the year was close to $83,000
• The average discount from list price was $9,000
• Only 1 building was purchased at 5k above list price
• The average price per unit was $27,487

2017 Multi-Family Sales

2 Unit apartment buildings in my farm this year are not suffering as much of a hit to price this year although the average price has continued to drop but only slightly.

62 (2)unit Buildings sold

• Red line is sales and the blue line is discount from list price.
• The average sale price so far is $58,000
• The average discount from list price so far is $7,141
• 7 Buildings have sold above list price
• The average price per unit was $30,000

3 Unit apartment buildings 2017

10 (3)unit Building sold

• Red line is sales and the blue line is discount from list price.
• The average sale price so far is $75,000
• The average discount from list price so far is $8,723
• 1 building has sold at list price
• The average price per unit is $25,175

Synopsis

Although there are some minor fluctuations in the NEPA Multi-family market the next chart shows all Multi-Family sales year over year which shows the relative stability of the market.  Appreciation is not something you need to worry about here in NEPA ;-) Cash flow is king.

2-6 Units in the whole farm over two years

Hi @Jim Stevenson Here is a little more data on the Kingston market that will hopefully help you make a better decision. I don't have access to the MLS so all data that I have collected is from Realtor.com, and other public sites.

Here are all the sales of Rentals in Kingston over the last two years that have posted on Realtor.com this is a bit broad so we will look at trending next.

Here are the two unit sales over the last two years.  You can infer a slight downward trend on Two Unit sales in Kingston.

Here is the three unit sales trend as well.

Here are some Ideas around the downward trend on the Kingston 2 unit sales.  It seems that there is a glut of overall quality apartments on the market currently.  This is leading to a saturation of older less desirable apartment buildings which are fetching lower than market rates.

Right now Kingston seems to be a solid market as it also has one of the lowest average discount percentages compared to other close by markets.  This also means that you might not be getting as good of a deal on a two unit apartment building as you would in a different town near by.  A similar building in Pittston is selling with an average discount of 16%.

As with most information on this site this data and analysis is purely based off of opinion, I would recommend consulting with a real estate professional that has experience with multi-family apartments and working with investors.  If you message me I would be happy to provide you with mine.

Good luck investing and if you have any questions please feel free to reach out.

First off thank you everyone for providing your opinions and experiences.  I for one do not want to discriminate which is why I posed the question.  To sum up this thread here is what our company plans on doing based on your recommendations.

1. Require the last two years of their 10-99's to validate a stable income pattern.
2. Require the last 2 Years of bank statements which can help establish the applicant's financial responsibility and steady income.

Along with our other minimum requirements we should be able to vet potential applicants with no problem, regardless of their legitimate income stream.  So long as they can prove that they are financially responsible.

Does the rise of self employed workers driven by (no pun intended) companies like Uber, Lyft and other app driven service jobs pose more risk than a standard 1099 applicant? Sure some can make 55k a year but some months could be worse than others.  Apps can shut down quicker and with out notice.

Here are my current minimum requirements, fairly standard.

1. Photo ID or Valid SSN
2. Income of 3x rent amount
3. Positive reference for past 5 years
4. No evictions or unpaid judgments from previous landlords
5. Minimum credit score of 600
6. Background check for all applicants over 18
7. Non-smoker
8. No Pets
9. Occupancy limited to 2 people per bedroom.

Here are some questions I have been thinking of as I advertise one of my apartments.

Is their 1099 sufficient enough?

Does a person with multiple 1099's from different service companies qualify higher than a person with one?

Do you require a co-signer?

Do you rank applicants differently when weighing multiple applicants with different types of income?

Your feed back would be great especially hearing from other landlords that have or are renting to tenants with this income background might help clarify for other Landlords in the future.

@Steve Babiak Thanks for pointing that out! The second post was perfect for explaining how the CLTV can really make or break the amount you can achieve using the ELOC. I wish I had found that post first!

@Sara Finley Here is some research for you to get started on to better understand the HELOC or (ELOC as @Steve Babiak put it) and how it works.

@James Mc Ree Makes a good point it is up to the bank (your father in law), it may take some negotiating.

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Number 9. on the Ultimate Beginners Guide gives a few good real world examples on how a HELOC works.

https://www.biggerpockets.com/real-estate-investing/financing

This Blog Post by Karen Barber gets a little more detailed on how the math works as compaired to a refi.

https://www.biggerpockets.com/blogs/7561/47508-what-is-a-heloc

Here is a strategy I am about to try out.

1. I purchased a 3 unit building for 72k using my 401k loan for the down payment and some minor repairs.

2. I am going to use an equity line of credit as a second position mortgage on this property to gain access to my equity for the next investment.

3. The second investment I purchase (when I find it) will be purchased with the intent of using the BRRR strategy. Once the property is fixed up and fully rented I will refinance it to pay back my HELOC.

4. Now that my HELOC is paid back I can use it again for the next investment. Rinse and repeat.

This is the fun part about investing, getting creative with funding and closing the deal with little to no money out of pocket.  Once you learn all the different strategies of financing it can open many avenues.

Good luck!

Have you considered in stead keeping those low interest mortgages and going to a bank for a HELOC (Home Equity Line of Credit) You might be able to borrow between 70 - 90% LTV depending on the bank. You can use that money like a credit card and purchase more properties. Then you can refinance your HELOC back and use it again for your next investment.