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rufflesinc said:   those of you mortgages, for the property taxes and insurance, do you escrow them?
  No

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I have escrows.

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Do you have to fill out additional paperwork when you apply for new mortgage, because the lender wants to see how much you're spending on property taxes and insurance?

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rufflesinc said:   Do you have to fill out additional paperwork when you apply for new mortgage, because the lender wants to see how much you're spending on property taxes and insurance?
  
They know how much you spend, whether you escrow or not. It is all public knowledge. 

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blueiedgod said:   
rufflesinc said:   Do you have to fill out additional paperwork when you apply for new mortgage, because the lender wants to see how much you're spending on property taxes and insurance?
  
They know how much you spend, whether you escrow or not. It is all public knowledge. 

  How do they know how much your insurance is?

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bterwilliger said:   I am interviewing potential tenants. Can I require that upon their departure from the property there be no offensive odors? Specifically I am concerned about cooking with curry. We had to replace carpets, drapes and repaint after one of our other tenants moved out. They were onlly there a year, but the smell was still UNBEARABLE after 3 months of airing it out.

I would like to stipulate that if there are offensive odors I will dock their security deposit for the cost of neutralizing them.

  
I have a tenant vacating in a month that has unleashed that indian curry smell on my unit. Is there an easy way that anyone knows to get this odor out?

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rufflesinc said:   
blueiedgod said:   
rufflesinc said:   Do you have to fill out additional paperwork when you apply for new mortgage, because the lender wants to see how much you're spending on property taxes and insurance?
  
They know how much you spend, whether you escrow or not. It is all public knowledge. 

  How do they know how much your insurance is?

  
Same way they know when your insurance has lapsed. 

Even if your particular company does not report, they know how much generally your insurance is. It is not their first day in business. 

When you apply for a mortgage, you give them consent to check you out. They will know what you pay for the car, and whether or not you had too many twinkies... 

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blueiedgod said:   
rufflesinc said:   
blueiedgod said:   
rufflesinc said:   Do you have to fill out additional paperwork when you apply for new mortgage, because the lender wants to see how much you're spending on property taxes and insurance?
  
They know how much you spend, whether you escrow or not. It is all public knowledge. 

  How do they know how much your insurance is?

  
Same way they know when your insurance has lapsed. 

Even if your particular company does not report, they know how much generally your insurance is. It is not their first day in business. 

 

  Report to what?

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rufflesinc said:   
blueiedgod said:   
rufflesinc said:   
blueiedgod said:   
rufflesinc said:   Do you have to fill out additional paperwork when you apply for new mortgage, because the lender wants to see how much you're spending on property taxes and insurance?
  
They know how much you spend, whether you escrow or not. It is all public knowledge. 

  How do they know how much your insurance is?

  
Same way they know when your insurance has lapsed. 

Even if your particular company does not report, they know how much generally your insurance is. It is not their first day in business. 

 

  Report to what?

  Usually insurance companies report to a database called "CLUE" and many report to the three credit bureaus as well.  CLUE and privacy

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My tenant has wasps at the back door and wants them removed. The lease states the tenant agrees to provide pest control, but it doesn't specify a "pest". Since it's not something they caused (like fleas) should I still put it back on them or is it really my responsibility?

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tommycollins said:   My tenant has wasps at the back door and wants them removed. The lease states the tenant agrees to provide pest control, but it doesn't specify a "pest". Since it's not something they caused (like fleas) should I still put it back on them or is it really my responsibility?
  Clean up your lease and define what the terms mean. In the law, if a contract term is undefined or ambiguous, one can use a dictionary or other reasonable means of defining and/or resolving the ambiguous term. I think most of us would agree that stinging insects are pests (and we can find any number of on-line references buttressing that interpretation) and should not be allowed to congregate near an egress. You have the choice to treat them yourself and minimize your liability or force your tenant to do so based on the lease clause and reasonable interpretation. Were it me, I would treat them and make sure the tenant understands going forward who does what and who pays for it.  My main concern would be liability if someone gets stung --- especially after being put on notice. Woman dies after wasp sting 

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tommycollins said:   My tenant has wasps at the back door and wants them removed. The lease states the tenant agrees to provide pest control, but it doesn't specify a "pest". Since it's not something they caused (like fleas) should I still put it back on them or is it really my responsibility?

Are you sure they aren't up in a tree: http://www.fatwallet.com/forums/finance/1384709/

Lot's of good ideas on how to take them out from that thread, at the least

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Does anyone do ACH pulls from their tenant's accounts and set them up automatically? I hate going to the bank every month and trying to round up checks.

I was thinking I could use my Schwab account for it but I didnt know if it would work for an account that isnt mine.

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Krazen1211 said:   
bterwilliger said:   I am interviewing potential tenants. Can I require that upon their departure from the property there be no offensive odors? Specifically I am concerned about cooking with curry. We had to replace carpets, drapes and repaint after one of our other tenants moved out. They were onlly there a year, but the smell was still UNBEARABLE after 3 months of airing it out.

I would like to stipulate that if there are offensive odors I will dock their security deposit for the cost of neutralizing them.

  
I have a tenant vacating in a month that has unleashed that indian curry smell on my unit. Is there an easy way that anyone knows to get this odor out?

  
Find a tenant who already likes the odor. Perhaps advertise the unit as "seasoned"

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@homeguard....If you are trying to get someone out, and you allow them to automatically pay you, it could cause you problems. If you go to court and you want them out, but they transferred the money, in some states, you have no choice but to let them stay.

I have BOFA, and they have mobile check deposit. I'm sure other banks do. I love it. Make it easier if the check bounces too. You just redeposit after the tenant corrects their bank issue.

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drew2money said:   @homeguard....If you are trying to get someone out, and you allow them to automatically pay you, it could cause you problems. If you go to court and you want them out, but they transferred the money, in some states, you have no choice but to let them stay.

I have BOFA, and they have mobile check deposit. I'm sure other banks do. I love it. Make it easier if the check bounces too. You just redeposit after the tenant corrects their bank issue.

  I would just request a voided check from them and be able to control when the and if the automatic payment happens.  I just turn it off if I want them out.

edit:  I dont think schwab would work.

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Localized question but I know there are some PTI area guys here - any recs for a property manager in Greensboro? Am buying up some very low end stuff there and it's a bit too far from me for self-manage

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Hi,
I have learnt a lot from this group over the years and has helped me buy a couple of cash flowing 4-plex's since 2009. I am thinking of buying another multi-family property, but a 5-12 unit property this time around. Most of the lenders I have talked to offer a 5-7 year term loan with a 20-30 year amortization schedule. I was wondering of any loaned with a 20-30 year term exist for such properties. I would prefer a fixed mortgage payment through the length of the loan rather than something that keeps adjusting every 5-7 years.

Does anyone know of lenders that offer such loans.

Thanks

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drew2money said:   @homeguard....If you are trying to get someone out, and you allow them to automatically pay you, it could cause you problems. If you go to court and you want them out, but they transferred the money, in some states, you have no choice but to let them stay.

I have BOFA, and they have mobile check deposit. I'm sure other banks do. I love it. Make it easier if the check bounces too. You just redeposit after the tenant corrects their bank issue.

  
I use Chase quick pay. It protects checking account numbers from either parties. It requires receiving party to accept the transaction there by preventing unwanted payments.
Requires one party to have chase account. Follow the link for details https://www.chase.com/online-banking/quickpay

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lovelovingdeals said:   Hi,
I have learnt a lot from this group over the years and has helped me buy a couple of cash flowing 4-plex's since 2009. I am thinking of buying another multi-family property, but a 5-12 unit property this time around. Most of the lenders I have talked to offer a 5-7 year term loan with a 20-30 year amortization schedule. I was wondering of any loaned with a 20-30 year term exist for such properties. I would prefer a fixed mortgage payment through the length of the loan rather than something that keeps adjusting every 5-7 years.

Does anyone know of lenders that offer such loans.

Thanks

  
I believe that's pretty much standard for commercial loans. It's why residential loans are better, they're more liquid for the banks to resell whereas with commercial loans, they usually just keep those in house so they don't want to be stuck with an interest rate for 30 years whereas conventional loans are sold off as bonds and they'll just trade back and forth as the markets dictate. So while cash flow is great with 5+ units, financing is much more expensive so they're not worth as much per unit as a 3 or 4 unit building.

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lovelovingdeals said:   Most of the lenders I have talked to offer a 5-7 year term loan with a 20-30 year amortization schedule. I was wondering of any loaned with a 20-30 year term exist for such properties. I would prefer a fixed mortgage payment through the length of the loan rather than something that keeps adjusting every 5-7 years.
  Some posters have reported that they negotiated loans were the interest rate increases were capped at a certain amount. You're going to have to call around more.

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lovelovingdeals said:   Hi,
I have learnt a lot from this group over the years and has helped me buy a couple of cash flowing 4-plex's since 2009. I am thinking of buying another multi-family property, but a 5-12 unit property this time around. Most of the lenders I have talked to offer a 5-7 year term loan with a 20-30 year amortization schedule. I was wondering of any loaned with a 20-30 year term exist for such properties. I would prefer a fixed mortgage payment through the length of the loan rather than something that keeps adjusting every 5-7 years.

Does anyone know of lenders that offer such loans.

Thanks

  
I believe you are talking about ARM (adjustable Rate Mortgage), which has gotten a bad name because people who signed up for them COULD NOT READ the documents, and then blamed the banks for signing them up. 

There are different ARM's, 5/1, 7/1, 5/5, 7/7 the first digit is the length of fixed interest in years, and the second digit is the number of years subsequent adjustments apply. 

All ARM's spell out the exact maximums that the rate can change per adjustment period and over the life of the loan. 

I have 2 properties finance via ARM, and it worked for me. I am fully aware of the risks, but the benefits were greater than the risks. 

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Hello everyone,

I am trying to get into the rental property business and have done quite a bit of research. Here is what I have analyzed so far (in my area). I gathered the rent numbers off of craigslist and property price/history information from realtor.com. The areas I am looking at have good schools and all these properties are townhomes not SFHs. When looking at areas with poorly rated schools, the homes sit on the market for a long time which makes me shy away from those areas:

- Am not able to achieve a 1% rent rule of thumb
- Cap rates fall in 6-7% range
- Total ROI 14 -18% range (Rent Income + Equity - (Mortgage 4.5% for 30 yrs +1 month vacancy rate + property tax + insurance + $800 yearly maintenance expense))
- Rents are in the 1100-1300 range
- Cash flow around $2,600 per year
- Down payment of 20%
- Higher RO1s are achieved with older homes (> 30 years) since home price is lower than homes <15 years old.
- Based on past price history, I noted that townhome prices do not appreciate, they are pretty much stagnant.
- I understand these are not true numbers but rather a budgeted scenario.

From what I have gathered, investors look for cap rates of at least 10% and ROI of 30%. This makes me wonder if it's worth venturing into this business. Can experienced landlords help shed some light if these numbers are worth it from an investment perspective or if I am missing something from my analysis? Is purchasing a SFH better in the long run, even though cap rate and ROI will suffer which will hopefully be made up in the appreciation of the property?

Thanks a bunch!

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SirFatWallet said:   Hello everyone,

I am trying to get into the rental property business and have done quite a bit of research. Here is what I have analyzed so far (in my area). I gathered the rent numbers off of craigslist and property price/history information from realtor.com. The areas I am looking at have good schools and all these properties are townhomes not SFHs. When looking at areas with poorly rated schools, the homes sit on the market for a long time which makes me shy away from those areas:

- Am not able to achieve a 1% rent rule of thumb
- Cap rates fall in 6-7% range
- Total ROI 14 -18% range (Rent Income + Equity - (Mortgage 4.5% for 30 yrs +1 month vacancy rate + property tax + insurance + $800 yearly maintenance expense))
- Rents are in the 1100-1300 range
- Cash flow around $2,600 per year
- Down payment of 20%
- Higher RO1s are achieved with older homes (> 30 years) since home price is lower than homes <15 years old.
- Based on past price history, I noted that townhome prices do not appreciate, they are pretty much stagnant.
- I understand these are not true numbers but rather a budgeted scenario.

From what I have gathered, investors look for cap rates of at least 10% and ROI of 30%. This makes me wonder if it's worth venturing into this business. Can experienced landlords help shed some light if these numbers are worth it from an investment perspective or if I am missing something from my analysis? Is purchasing a SFH better in the long run, even though cap rate and ROI will suffer which will hopefully be made up in the appreciation of the property?

Thanks a bunch!

there are some important dimensions in rental property acquisition that probably arent immediately obvious to a new investor:

1) really great cash-flowing properties do not typically sit on the market. they get snatched up quick.
2) cash versus financing is huge. if a place can't be financed conventionally because it has some glaring flaws that scare lenders, it will really beat up the value and present opportunities for those who have cash. if a place is perfectly fine for the 80%+ of the buyer pool who need financing, then the demand goes way up.
3) most SFH's do not meet the 1% rule or get preferred cap rates. even in my very landlord-friendly area, this is true. this is partially due to #2 above - also, most buyers want SFHs.
4) there are several schools of thought on long-term RE investing. some people just want to stay cash flow neutral or better, hoping for eventual appreciation and a nest egg for retirement. they play it safe with neighborhoods and house types, and don't get aggressive with rehabs or challenging renters. others are all about the cash flow, and don't really care if the places appreciate. some people are willing to rehab heavy, some aren't. some buy established hoods, some [try to] contribute to gentrification. virtually every decision is particular to the investor, and reflects their own risk/return perception, free time, goals, etc etc

14-18% LEVERAGED return is not very good in my area (especially when you're factoring in principal paydown, which i don't)...BUT if you don't have much money, or time to hawk the market or rehab or anything else, then it will probably beat the stock market most years. I would personally advise you to keep trying, learn your market, get creative, do some research in your district, be patient, and when the time comes - act quickly and confidently.

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solarUS said:   
..... said: .....
there are some important dimensions in rental property acquisition that probably arent immediately obvious to a new investor:

1) really great cash-flowing properties do not typically sit on the market. they get snatched up quick.
2) cash versus financing is huge. if a place can't be financed conventionally because it has some glaring flaws that scare lenders, it will really beat up the value and present opportunities for those who have cash. if a place is perfectly fine for the 80%+ of the buyer pool who need financing, then the demand goes way up.
3) most SFH's do not meet the 1% rule or get preferred cap rates. even in my very landlord-friendly area, this is true. this is partially due to #2 above - also, most buyers want SFHs.
4) there are several schools of thought on long-term RE investing. some people just want to stay cash flow neutral or better, hoping for eventual appreciation and a nest egg for retirement. they play it safe with neighborhoods and house types, and don't get aggressive with rehabs or challenging renters. others are all about the cash flow, and don't really care if the places appreciate. some people are willing to rehab heavy, some aren't. some buy established hoods, some [try to] contribute to gentrification. virtually every decision is particular to the investor, and reflects their own risk/return perception, free time, goals, etc etc

14-18% LEVERAGED return is not very good in my area (especially when you're factoring in principal paydown, which i don't)...BUT if you don't have much money, or time to hawk the market or rehab or anything else, then it will probably beat the stock market most years. I would personally advise you to keep trying, learn your market, get creative, do some research in your district, be patient, and when the time comes - act quickly and confidently.
 

  
Thank you for your insight, solarUS. These are some good points to note. I have a couple of follow up questions:

1. Are older homes (>30 yrs) harder to rent compared to newer ones (<20 yrs)?
2. So, from a landlord perspective, SFH is more preferable over the long term compared to TH (property appreciation being the major advantage and maybe easier to rent).  I am not considering multi-plexes since I have a day job and am not experienced at all.
3. What do you aim for %wise regarding leveraged return?

Thanks.

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