BANK
ARV 150,000
FMV 100,000
PP 70,000
80% LTV of PP 56,000
Here you’re still required to put 20% down and you might/would lose out on the deal since you didn’t just have 20% lying around
HML
ARV 150,000
FMV 100,000
PP 70,000
75% LTV of ARV 112,500
They lend you the money and then some. You are demonstrating ownership of the deal by paying the HML and thus you can refinance out your property when the time comes. You can/will typically use all of the money the HML gives you to fix up the place, pay for the fees/points associated with refinancing the place. Once that is done however you’ll have a 30k equitable position and you’ll be cash flowing at a much lower interest rate.
Friday, December 30, 2011
Thursday, December 29, 2011
Credit Application Steps
Handing out application
1) Rental Application
2) Third Party Guaranty if they haven’t rented before (Paying rent to parents doesn’t count) ($10 for credit check (http://www.mrlandlord.com/html/creditfaq.html)…do we want more for just the time to process the application?)
3) Associated Application Fees ($10 for credit check (http://www.mrlandlord.com/html/creditfaq.html)…do we want more for just the time to process the application?)
4) One pay stub
5) Copy of Photo I.D. (Drivers license)
6) An application is needed for each applicant 18 and over so as to not discriminate, even if they are not working or paying any of the rent so that we have a file of them on hand
Before Accepting the Application
1) Check to make sure all pages have been signed
2) Check to make sure there are no pets
3) Must have valid residence history before they can rent, otherwise we need a third party guaranty and the money needed to do the third party guaranty.
4) Check for money necessary to process the application
5) Give them a receipt and keep a copy of the receipt (carbon copy)
6) Check for copy of photo I.D.
7) Check for pay stub
8) Check for SS#, phone number to contact them (a valid number to get directly to them), and an email address
Approving the Application
1) Check sex offender/criminal database
2) Contact each and every previous landlord and ask them the questions for resident history
3) If first time renting:
· Check work to see if they still work there _______ (yes/no)
· How long they’ve worked _______ - ________
· Whether they are having issues that would lead to termination of work _____ (yes/no)
· Verify the amount that they are making each pay period/month $________
4) Run Credit Check (Also for Third Party if necessary)
5) If approved using the “Approved Form”:
· Call and tell them they’ve been approved
· Tell them which unit they will be in
· Find out when they are moving in
· Find out exactly how long they plan on living there so that you can fill it out on the Lease Agreement and the corresponding amount of pro-rated rent that is due the day they move in
· Find out when and what time they will be getting the security deposit to us
· Finally let them know that the longer they wait to get the security deposit to us that the less likely they are to have the apartment as we may rent it out to somebody else if we do not have their security deposit.
Once Application has been received and approved
1) Lease Agreement (Copy goes to tenant)
2) Lead Disclosure-booklet (Copy goes to tenant)
3) Mold Disclosure-booklet (Copy goes to tenant)
4) Move-in Inspection List (Copy goes to tenant)
5) Cable Channel List – leave with them
6) Maintenance Request - leave with them
7) Keys (Mail/Entry – record how many keys are given to them)
8) Have them read the lease agreement or give them a quick run through of everything, including various fees associated with lockouts, late rent, noise complaints that are tended to, and bounced checks
9) Let them know when rent is due and where to send it to
1) Rental Application
2) Third Party Guaranty if they haven’t rented before (Paying rent to parents doesn’t count) ($10 for credit check (http://www.mrlandlord.com/html/creditfaq.html)…do we want more for just the time to process the application?)
3) Associated Application Fees ($10 for credit check (http://www.mrlandlord.com/html/creditfaq.html)…do we want more for just the time to process the application?)
4) One pay stub
5) Copy of Photo I.D. (Drivers license)
6) An application is needed for each applicant 18 and over so as to not discriminate, even if they are not working or paying any of the rent so that we have a file of them on hand
Before Accepting the Application
1) Check to make sure all pages have been signed
2) Check to make sure there are no pets
3) Must have valid residence history before they can rent, otherwise we need a third party guaranty and the money needed to do the third party guaranty.
4) Check for money necessary to process the application
5) Give them a receipt and keep a copy of the receipt (carbon copy)
6) Check for copy of photo I.D.
7) Check for pay stub
8) Check for SS#, phone number to contact them (a valid number to get directly to them), and an email address
Approving the Application
1) Check sex offender/criminal database
2) Contact each and every previous landlord and ask them the questions for resident history
3) If first time renting:
· Check work to see if they still work there _______ (yes/no)
· How long they’ve worked _______ - ________
· Whether they are having issues that would lead to termination of work _____ (yes/no)
· Verify the amount that they are making each pay period/month $________
4) Run Credit Check (Also for Third Party if necessary)
5) If approved using the “Approved Form”:
· Call and tell them they’ve been approved
· Tell them which unit they will be in
· Find out when they are moving in
· Find out exactly how long they plan on living there so that you can fill it out on the Lease Agreement and the corresponding amount of pro-rated rent that is due the day they move in
· Find out when and what time they will be getting the security deposit to us
· Finally let them know that the longer they wait to get the security deposit to us that the less likely they are to have the apartment as we may rent it out to somebody else if we do not have their security deposit.
Once Application has been received and approved
1) Lease Agreement (Copy goes to tenant)
2) Lead Disclosure-booklet (Copy goes to tenant)
3) Mold Disclosure-booklet (Copy goes to tenant)
4) Move-in Inspection List (Copy goes to tenant)
5) Cable Channel List – leave with them
6) Maintenance Request - leave with them
7) Keys (Mail/Entry – record how many keys are given to them)
8) Have them read the lease agreement or give them a quick run through of everything, including various fees associated with lockouts, late rent, noise complaints that are tended to, and bounced checks
9) Let them know when rent is due and where to send it to
Wednesday, December 28, 2011
Currencies Are a Poor Measuring Stick
People often think that when they see their bank account go up in value due to the investments that they’ve made that they are getting richer. What they fail to take into account is inflation. If their investments only make 5% return and inflation is 10% then that means they actually lost 5% over the period. Just to break even they would need to make a 10% return, which historically, the stocks market barely does. Funny enough, when people see their holdings in gold/silver go up they also think they’re getting richer because they argue that those things are holding their purchasing power intact and now they can buy more things with it. Truth is that it is just maintaining their wealth and not increasing it.
A better way to measure your wealth is by measuring with other stores of value. For example, measure things like gold and silver with oil, real estate, and the DOW. The gold/DOW is often used as a measure of value for the dollar and whether or not gold/DOW is under or overvalued. The mean DOW to gold ratio has been about 4. That means it takes 4 ounces of gold to buy one share of the DOW.
Interestingly enough in 1929 it took 18 ounces of gold to buy one share of the DOW. Because the DOW was overvalued and it had to revert to the mean, in 1932 the DOW/gold ratio reverted to 2 ounces of gold to buy one share of the DOW. In 1966 the ratio was 28:1. In 1980 the ratio was 1:1. In 2000, the ratio was 45:1. Currently we’re hovering around 6-7:1. We’ve got a ways to go before we see things return to normal. Some people even believe, which is not entirely impossible, that we’re heading towards hyperinflation as a country, which means that the ratio could be 1/10th:1.
What is funny is both gold and silver are undervalued, but the silver ratio is even more volatile.
Peter Schiff says that the proper ratio of oil to gold should be 10:1. Right now it is about 18-20:1. With the 7 billionth baby being born we see the demand for oil only getting greater. Another way I’m learning more about is to measure value with the mortgage to rent ratio, more on this later.
Basically if you can use proper measuring sticks and those help you to get out of a certain investment at the right time you and you can buy into the undervalued asset you can make a killing.
A better way to measure your wealth is by measuring with other stores of value. For example, measure things like gold and silver with oil, real estate, and the DOW. The gold/DOW is often used as a measure of value for the dollar and whether or not gold/DOW is under or overvalued. The mean DOW to gold ratio has been about 4. That means it takes 4 ounces of gold to buy one share of the DOW.
Interestingly enough in 1929 it took 18 ounces of gold to buy one share of the DOW. Because the DOW was overvalued and it had to revert to the mean, in 1932 the DOW/gold ratio reverted to 2 ounces of gold to buy one share of the DOW. In 1966 the ratio was 28:1. In 1980 the ratio was 1:1. In 2000, the ratio was 45:1. Currently we’re hovering around 6-7:1. We’ve got a ways to go before we see things return to normal. Some people even believe, which is not entirely impossible, that we’re heading towards hyperinflation as a country, which means that the ratio could be 1/10th:1.
What is funny is both gold and silver are undervalued, but the silver ratio is even more volatile.
Peter Schiff says that the proper ratio of oil to gold should be 10:1. Right now it is about 18-20:1. With the 7 billionth baby being born we see the demand for oil only getting greater. Another way I’m learning more about is to measure value with the mortgage to rent ratio, more on this later.
Basically if you can use proper measuring sticks and those help you to get out of a certain investment at the right time you and you can buy into the undervalued asset you can make a killing.
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