Jul 22 2012

Help, How do I get a an apartment with Bad Credit or No Credit?

Published by under Bad Credit

What to do. Find your audience.

If you haven’t found out already, the larger apartment complexes and management teams will not be very open to renting to you. They spend a fortune on advertising and as such, will have a large number of tenants to choose from. Cry if you want to, but let me save you some cash right now, you can thank me later.

“you’d be wasting your time and money…”

Large companies run things by the numbers, people with low credit scores tend to not pay their rent. Thats just statistics. You can certainly try, but unless you’re very convincing, I think you’d be wasting your time and money on application fees. Your best bet is to find a small mom and pop operation, and talk with them right up front. Most of their references will be from word of mouth, free website postings, and good old signs posted in the front yard. Don’t make the mistake of thinking you can just sweet talk your way into an ideal little apartment. This is a unique little group, just because they don’t have a system in place and an army of lawyers, don’t think they are a bunch of knuckle heads that are waiting to help you out. These folks are even more paranoid than large apartment complexes. When you’ve got the time, google a search for “professional tenant horror stories.” You need to present yourself as a great tenant that will respect a landlords property. Scratch that, you NEED to BE a great tenant that will respect a landlords property, and you need to prove it.

Step one. Set yourself up to shine.

What is an ideal tenant for a small mom and pop landlord?
One that they don’t know exists. An ideal tenant pays rent on time. Hooks up the utilities before they move into the unit. Lives a clean drug-free life. Each adult has a bachelors degree, a steady middle management job of five years in a field thats stable. If the tenants are a family, it is a family of two nobel prize winning kids. The ideal tenant has no drama, but does have a long list of references that have known them for years and can attest as to how immaculately they left their last residence, and how courteous they were to their fellow neighbors. One that communicates clearly and with as few words as possible.

If you have bad credit, it is your job to prove which of these characteristics you have, as well as possible.

You need to be well organized, and committed. Before meeting with a landlord, get their application ahead of time. Fill it out. Get a letter from your employer stating how long you’ve been employed, what your job is, and how much you earn. If you are new to the area, get a letter from your previous employer stating the same thing. If you are self employed get yourself a copy of your tax returns. Scan or photo copy, all of these documents. If you can email this to your potential landlord ahead of time, you’ll be way ahead of the rest of your competition.

Step 2. The number one thing to do because you have bad credit. Pre-Qualify your landlord.

Yep, lets weed out the bad landlords. Do this by including a brief cover letter. Write in a formal, but not a stuffy tone. Explain briefly exactly what you are looking for. Keep in mind it does not have to be exactly what the landlord is advertising, ideally it shouldn’t be. Now, since you have negative information about yourself, bring it up first. Remember, you are trying to get a very paranoid owner to hand over the keys to their investment. You need to show that you understand and appreciate their concerns. What you are doing is opening a conversation. This letter may be the only time you get the chance to pitch yourself, so make it good. Acknowledge that you had some set backs, this shows respect for yourself and those you deal with. Identify some steps that you’ve taken, maybe sold a car you couldn’t afford, or are downsizing to a more affordable rental unit. Finish by asking for a simple bit of help, as you continue on your path to improving your credit.

Cutting to the chase shows that you value thier time. In fact you may want to write that in there just to emphasize the point. Also by bringing it up first, you eliminate a bad suprise and acknowledge that you are responsible. You may think, this will knock you off of thier list of candidates. It might and that’s fine, at least you won’t waste your money on an application fee. Rest assured anyone that turns you down at this point will have turned you down as soon as the credit report gets back to them. They’re paranoid and if you don’t bring this up, they’ll think you’ve lied to them. True you’ve wasted some time, but you’ve also organized your files, and practiced your pitch.

Step 3. Ready to begin. Your Pitch.

Okay so you’ve found some ads and phone numbers from signs. Give them a call. If it sounds like a company, you can pretty much hang up. If it sounds like a hesitant person, congrats you’ve found a small time landlord (or you got the number wrong. ;) ) This is your route to success.

Remember though, they won’t know you at all, so it wont be an easy sell. On one hand they’ve probably had non-paying tenants and on the other, they certainly will have heard plenty of horror stories. Luckily you’ve got that cover letter, and you know what they are looking for in an ideal tenant.
To start the conversation, keep it simple and non-assuming. You want to build a little rapport. Start by talking about the property. “Is the property still available? Great, do you have a few moments to talk about it? Great. Well first off, if I meet your standards how soon can I move in?” It should go without saying to Be overly polite.
Next, ask for their requirements. Mostly they’ll just say that they want the rent in on time. Write down any additional requirements.
Now remember you are trying to show you are professional and will be a smart, fiscally minded tenant. Ask the estimated monthly utilities. They may not know, so you can ask if it has energy efficient appliances, fans, shading from trees, vaulted ceilings (which are more expensive to heat and cool!!).
Now be honest about being able to meet their rent. If not, don’t lead them on, just say “well I wish I could, but I know I cannot afford that right now.” Maybe they will lower the rent. If it all sounds good, tell them “it all sounds great, and I want you to send me an application so I can get it all filled out ahead of time, but I have to be honest, and I really don’t want to waste your time. I don’t have the most ideal credit. If that’s a deal breaker for you, I totally understand.” They may want an explanation. Tell them. Short and direct. If they object. Thank them for their time and then, ask if they know anyone who would be open to helping you out. End with, “if you change your mind, here’s my phone number, feel free to contact me.” Thanks again. If they are open to having you as a tenant, send them all your info and their application filled out, then contact them again to set up a date to check out the property. Don’t let them set up a date without looking over your paperwork. (You want them sold before you waste your time!)

NEVER DO THIS!!

DO NOT, and let me repeat that, DO NOT pay, or even offer to pay multiple months of rent up front!!! While it sounds like simple idea that would solve a lot of headaches, it opens up too much legal problems for the landlord, and it handcuffs you as a tenant! (Lets face it there are plenty of crummy landlords out there.) Hopefuly you won’t have to resort to this. But it does get results. The best approach, offer a larger security deposit than the landlord is asking. There are certain legal rights you are entitled to with a security deposit. With a bit of proper documentation, and a little bit of forethought you can be assured that you will be fully refunded.

Rest assured.

Obtaining a nice rental in a nice area can be done, even if you have bad or no credit. It just takes a little smarts. Best of luck. -Eric Gross

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Oct 29 2009

Market Stabilization vs. Home Buyer Assistant

Published by under General

Okay so everyone is aware by now that the housing bubble was created by people borrowing more than they could afford. Money was easy to come by and you could buy a home, sell it for a profit. People thought they were geniuses. Prices rose. Even better, people now had money for serious down payments to buy the dream homes they “deserved”, or more likely thought, hey prices are going up by 4-8% a year, I can buy a more expensive one, live like a player for a few years, then sell it. A more expensive “investment” home would yield a higher return. Take the profit from that and buy a home outright, retire at 38 and live the good life.

Then reality set in, buyers became scarce. Owners couldn’t keep making mortgage payments, home repairs, and everyday living expenses. Banks started foreclosing so they looked at their loose lending policies and tightened them up. Resulting in even fewer buyers. The market adjusted, prices returned to realistic and even bargain levels.

In short people who shouldn’t have had money to play with, and little experience with housing, bought houses. Creating a Market Bubble.

In Georgia, in my favorite area, you can buy a 3 bedroom 2bath for $185,000. And if there’s a little bit of repair work needed, you can cut that price by a third. Now if you’re smart and ambitious, you’ve got money saved up, you can figure out cost of owning, repairing and living, you can capitalize on this in a big way. Using a few simple calculations you can even see if its smarter to rent it out generate a tax sheltered cash flow, or live in the home.

If you have no money to purchase, and more importantly have no experience owning a home. The government will give you $8,000 tax credit for buying a new house. You’ll also qualify for for 1st time lender rates, and even with somewhat questionable credit, FHA secured loans. Now if this is a second home, or a rental property, you are exclnded from these bonuses.

In short, people with limited cash and no experience are now encouraged and able to buy homes.

Now, I know, I’ve seen this approach before…

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Mar 05 2009

The American Recovery and Reinvestment Act

Published by under General

I just received a handy little article from Steve Friedman, one of the mortgage brokers I’ve used. Here’s some info I thought my fellow San Francisco Bay Area Real Estate Rehab and Investors may appreciate.

On February 17, President Barack Obama signed into law a $787 billion economic stimulus plan. That package includes many provisions that may directly benefit you:

New Housing. First-time homebuyers are eligible for an $8,000 tax credit, which does not have to be repaid unless you sell your home within three years. The credit is available for purchases between January 1, 2009, and before December 1, 2009. The credit phases out for individuals with AGI of $75,000 to $95,000 and married couples with AGI of $150,000 to $170,000.

Green Homes. New tax credits are now available for green home improvements on a principal residence starting January 1, 2009, through December 31, 2010. The credit covers 30% of qualifying upgrade costs, or a maximum amount of $1,500. Qualifying modifications must meet a certain efficiency level to be eligible for the credit. For record keeping, experts advise that you retain all receipts.

Steve’s always sending me timely info, saving me from information overload. Visit his site or contact him at:

Mortgage Planner
Prospect Mortgage Company
5825 Glenridge Dr.,Bld. 4,Suite 106
Atlanta, GA 30328
Office: (678) 244-5416
Cell: (404) 803-1300
steve.friedman@prospectmtg.com

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Jan 21 2009

Bixler and Snellville Updates

Published by under 2116 Bixler

Okay so I went back to Atlanta for thanksgiving. Put a new property manager in place for Bixler and Lenora Church. Moved someone into Bixler, had a handful of issues. Apparently the tenant Homevestors had in place for me not only had to be evicted, but had been ripping off Georgia Power as well. So they removed the housing for the electric box. Had to get an electrician to put in the box. Lovely. 

New tenant is absolutely fabulous. Found her with one of my craigslist ads, and a link to Bixler.

The duplex in Snellville has taken a bit longer to rent out. Had to get creative pricing, and will have someone move in for the beginning of February. I heard the news on January 2nd, of course my property manager will take his first months cut, you know, for opening the doors and having the paperwork. Hey, it is tough work being a property manager.

I’ve also cut some personal expenses, so I should be able to get to March without busting heavily into the reserves. I need more cash flowing properties and have been keeping an eye on the Bay for something that fits my needs.

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Nov 21 2008

Bixler hits Hard times

Published by under 2116 Bixler

Ouch.

Well, this property has now been vacant for two months. I wound up having to have the tenant evicted after failing to pay back in September. Times are tough and they’ve hit pretty hard, I may have to let this one go which ofcourse will tank my credit. Viranni did cover the eviction expenses and recommended a property manager, but I’m afraid I can only float this one for another month or so before having to let it slip away.

But I’m not about to go gentle into that good night. I’ve got Silas Frazier in charge of marketing this and my other properties. Today I fly into ATL personally to do whatever I can. Wish me luck.

Plus we’re having a grandieous Thanksgiving. Always good to get the family back together, get the spirits up atleast.

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Sep 20 2008

What a sell to close stock stop order does

Published by under General

Okay expensive lesson learned today. My PCL Options (.pcljj) sky-rocketed from yesterdays purchase at 2.20 to close at 5.7. I placed a stop order to close at 5.5, and a limit sell of 6.5, selling off two thirds of the purchase. The option won’t come due for about thirty days and I expected and still expect the timber reit’s stock price will continue to climb, so I figured cash if it rises sharply and protect myself with the stop order at 5.5 and hold a third no matter what for expected monthly gains.

However opening price to day was 2.65, which triggered my sale. Ouch. Team Bush/Paulson, tauting economic stability, threw a curve ball by agreeing to purchase all illiquid assets held by the financial companies. Serious? We’ll help the economy by purchasing things that are worthless with your tax dollar? I suspect that was why the sudden decrease from closing price of PCL at 56 to current flat line at 51. Taking the price of my options with it. But its all an illusion. Financial stocks C, GS, MS, SNV are up today 24% to 18%.

Lessons learned. Capitalize when you can. Put a limit order when the value has doubled, as soon as you buy the stock. (One triggers other?) As for security? Stop limit orders should end at close of day.

Clearly I’m still learning things. Just as I see a philosophy, it gets turned. Yesterday they announced no fed rate cut, and my silver and commodities increased, contrary to what should have happened. Today they announce a huge spending of the American Tax dollar, which should push up silver, yet it only increased .5 points (5%).

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Sep 17 2008

market watch

Published by under Stocks

So okay the US financials market is in turmoil. I’ve got my eye on a few things, and am trying to figure how to profit. For that I need to journal my wins, losses, and reasonings.

Feds announced yesterday that they will not be cutting the rates, which should restore some faith to the dollar. But that will take some time, silver and gold on the other hand increased 14 and 11 percent today while the rest of the market dropped. Makes sense, with all the news has stirred fears, making some cling to commodities. Though long term, should strengthen the dollar. How long a term is that? Twenty years?

In two days the options market will be active as all September options will expire then. That should mean there will be some movement. Can’t say I’ll know exactly up or down, but I’ll place some calls when the market opens, in my favorite timber reit, PCL. Also taking calls on DBA, a commodities futures fund.

The dow is down to 10,609, a small 4% from yesterday, well off from monday mornings open at 11,121. Sunday night you’ll recall a bailout deal fell apart for Lehman Brothers, creating panic and the downward spiral. Would have been great to see that coming.

Oddly the money gains I made this month were early in the month, calls on CitiGroup, and Puts in BUCY and EXM all of which had seen big hype over the past few months. Lost money on Puts in AIG placed on monday, and Puts in Joyg (trying to replicate my wins on BUCY.) Also lost on EQUINIX Puts, which had appeared to be dropping. It continued to, but unless there is a 4point drop between now and end tomorrow, the puts will be worthless. I cashed out when it lost over half the value.

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Jul 14 2008

2116 Refinanced

Published by under 2116 Bixler

Whew. Okay so I finally got the refinance loan done on my homevestors rehab deal.
I am sad to report though that after taxes and insurance, this property will have a negative cashflow of about $140/mo. So it’s in my interest to liquidate this one as soon as possible and see exactly how much of that $30k in equity is real. 

All in all, it has been a simple, relatively stress free transaction.
$  500 down
$2,700 loan payments
$  693 refi closing costs

$3,893 –   Total Costs
$122,500 –   Outstanding Loan
 

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Jun 22 2008

16% Return – Cash Flowing Quad in California

Published by under Homes For Sale

THIS DEAL IS BACK ON THE MARKET!

Join the mailing list at sanjoserehabdeals.com to be notified as soon as the next property becomes available.

$4,753 per month income (includes a 2% vacancy)

$3,310 per month expenses (includes PITI plus repair savings)

$1,443 monthly income

Get your fourth of this with a Downpayment = $26,235 = ROI 16.5%

The Deal.

A cash-flowing four-unit residential in the Bay Area. Anyone who invests in property in the California Bay Area is no doubt aware that positive cash flowing, investment property, priced below $500,000 is in a word, rare.

Contact.

Interested parties should not hesitate to contact Eric at 510-289-8906.

I just checked, there is another quad with a 3bdroom right down the street renting for $1600/mo.


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Jun 16 2008

Bixler Update

Published by under 2116 Bixler

Happy Day. I just got the first checks on the Bixler Project yesterday! Thank you Virani. Always good to get a cash flow positive property for $500 out of pocket. Thats roughly a 72% return on investment… I am quite the numbers geek… gotta go with your strengths right?

Anyhow, Bixler the ongoing Investment Property Rehab Deal through Raheel Virani and Homevestors, has had some movement. Money is good. As of the 15th of June, I have a tenant buyer for the Atlanta Property. The refinance loan is not done yet. That has been a bit of an undertaking due to the current housing market conditions. There just haven’t been that many “true” house sales to comp against. I imagine a lot of other rehab deals have found this to be true? I’m sure thats the case here in Oakland as foreclosures especially in investment property are increasing in number.

In other news, I’ve been dealing with a lot of rehab… no not yet here in Oakland, but building a stronger site. The average reader won’t notice, but its been in a marketing effort so that there will be a few more of you, so thats good. For fun, go ahead and click on a Google Adsense down there on the left, it’ll make you feel good. Promise.

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