Starting Out as a Landlord of a 4-plex

[Jacob I Strauss]

Hey BP so I'm excited because it's looking like I'm going to be the proud owner of a 4-plex breaking my analysis paralysis buuuuuuut I could use some direction.

1. currently the water is paid by the land lord half the electric and gas also paid by the land lord as well as trash and sewer. Long story short the rents are heavily depressed and to be honest I am not sure how the current investor makes a profit so first order of business is to sub meter the property though I was curious to know whats the best way to go about this? Do I need a meter for the toilet and the sink if one unit is attached to the home? should I prioritize one utility over the other? Should I hire someone to install these or is this something I can DIY? Also any recommendations for meters would also be appreciated planning for wireless ones so I don't have to physically check the meter and it'll just send it to my email.

2. What systems worked best for you in terms of book keeping and automated pay collection? In my mind I know I need to track the bills for each tenant and I also need to collect rent as well as file any complaints or work orders for each unit any help here would be greatly appreciated.

3. Because these rents are so depressed I am pretty sure I will have to go the eviction route and I have accounted for this I mean here in Vista, CA a 1 BD 1BA is 1,500, they are going for 1,100 the main home 3 BD 2 BA should be around 3200-3500 currently 1,800 and hes paying most of the utilities. That aside I know whats required by law but what strategies work best for a peaceful move out?

4. What are musts in the screening process so I imagine Credit score has to be good the higher the better, income needs to be 50%-75% above rent, must provide a deposit "considering doing a non-refundable deposit instead of holding onto a deposit" Job/ income verification is it a steady job etc etc... what tools or services do you use to verify these aswell?

As always thank you BP community!!!

[Jacob I Strauss]

Gentleman,

Since last posting I have taken your advice and looked into a few more things such as minimum 3X income vice the rent IDK what i was thinking and it totally makes sense.

I looked into Quickbooks as well how do you like the mobile version? would you say it works smoothly? I haven't gotten in there just yet to really see what its all about but reading through reviews and seeing what it offers I see that it can and likely will be a simple yet powerful, and accurate way for me to account for my business.

As far as charging for utilities I was considering doing something like this:

1. The main home with JADU will be metered separately from the other 2 units and further the main home will pay 75% vice the 25% of the JADU for all water/ electrical / gas expenses.

2. I will have the 2 ADU's water metered as they already pay gas and electrical I would just need to add a water sub meter off the main line coming to the property.

3. I will pay for trash and sewer though leave a provision that if this is being abused like overfull trashcan fees, or disposing of waste or chemicals, electronics etc improperly will be billed to the tenant.

I think that should cover it but I was curious how all that works for these kinds of properties should I make the payment but charge my tenants on the back end or should I have them get it in their names.

Also do you usually make that a separate charge or do you include it with the rent payment and provide an itemized account of the charges?

I think I am going to go with Tenant Cloud for my software they seem to provide a nice streamlined service and I like that it keeps everything in one place it's all online and I can screen, accept applications, and list my property right from there. The price point seems appropriate though I think later when I can justify the price that I would move to a larger software provider.

I also did more research to what is offered in the area It seems like trash and water is pretty common so I went with trash and sewer since sewer is included in the property taxes its just easier for me to pay it and it's not that much.

As far as terminating a tenancy I can do so in CA by serving a 60 day pay or quit notice since they are on month to month leases I plan on having the current landlord serve this when we enter escrow so ill essentially have just a 30-day turnover if the new tenants do not wish to agree to the new terms. Would it be rude to ask them to do this or ask the question if he has notified his current tenants that they may be needing to find a new place to live? I am not sure the best way to approach this though cash for keys is an option I think I would try to give them time first while the property is in turnover on the land lord side of things.

What do you think of signing 1 or 2 year leases to lock in profit based on expenses associated with tenant turnover? As for rent control if I did a 2 year I could only raise rents 1 time vice the year annually at least though not much each year as a whole. It's not a big issue honestly because once I move out of from house hacking the property will make 2k after expenses but I also don't want to be way below market rents like the previous LL is.

Sorry for the rant but I wanted to reply to both as detailed as possible thank you both so much for your insight.