All Forum Posts by: Adam Martin

I have accepted tenants, quite a few actually that had previous bankrupcies and it has always worked out for me.  The trick is asking them what happened, usually it is for medical which I get.  If it is consumer spending or they lost a job and didn't figure stuff out that's a no go as I would be in the same boat if they lose their job again but I get medical.  I ask them what and when and then check their credit history.  I use Rentprep since it gives a full report that shows their monthly payments and if they have been on time for everything for the last year or 2 we are good.  I ask them to verify nothing has been late and more often than not the prospect lies and was late this year on a car payment or CC which disqualifies them but sometimes it was just an unfortunate circumstance medically that I don't know if I could dig myself out of either.  I'm not looking for perfection just reasonableness.  

The more popular posts and youtube videos talking about investors killing it and sitting back for mailbox money should be looked at with skepticism.  I explain this is not a get rich quick scheme but a build wealth exponentially yet slowly.  As others have stated that 500 cash flow is nice but as you realized you are going to spend some of that on expenses.  Where you are building your wealth is the appreciation and don't forget rents tend to go up over time so as time goes on the unit gets more profitable from a cash flow perspective.  Where the real money and wealth comes in though is as the properties appreciate cash out refinancing to recycle that money into the next one rinse and repeat over time.  This constant leverage at least in the beginning is your friend and was how I built my wealth.  

I think realistically everyone here is right that if they don’t pay the deposit they need to go but based on your follow up post I’m not sure that’s the route I would take.  Part of this is on you you allowed them to move in and stay 5 years without it and trained them their behavior is acceptable.  I think most of us myself included assumed they were below mkt rent but in your follow up you said they weren’t.  Tenants are a gamble and so is court but you have a 5 year tenant that paid during covid when courts were closed so I’d give that some credit.  You didn’t mention they weren’t so I’m assuming they are taking care of the property but this is something I’d probably let slide, your time to take a stand was 5 years ago.  Lesson learned until you have deposit and first month they don’t get keys or a lease and this will never happen again. 

What do you plan to do with your rental income?  If you are house hacking to have someone else pay your mortgage what would be the point of a separate account if you are just going to switch it over to your checking or directly into your mortgage.  If you however are keeping this extra money on the side to fund future investments and don't plan to touch it a separate account would make sense.  For me personally I have 3 accounts for my 5 rentals but all the money is pooled together.  I have my basic checking where my money goes when rent is collected and where the mortgages and bills are drawn from.  I have 2 separate brokerage accounts, one basic money market account that I use as my emergency fund since the interest is higher than the bank so I keep very little in the bank, just enough to pay the mortgages.  The other brokerage is where I invest some of the money in stocks to help it grow faster.  

Even though you are only living here for a year you are going to want to paint it again before you rent it out. Is the paint so bad you can't live with it for a year and then decide this next year.  To actually answer your question though painting is not hard but you will not get the same results as a pro, and I argue you don't need to.  Take your time, buy nice brushes and go for a 14 inch roller and this is fairly easy to do.  You have 2 assets and they both have limits though so you really have to ask yourself which is worth more your money or your time.  For me it is the money and I paint myself but think hard about that in your situation.  I feel like it is highway robbery what painters charge and I cannot fathom ever spending 1700 in materials in such a small property, probably closer to 500 absolutely tops and that's if you need new painting equipment.  

Keep things simple and vague.  Let the one who is paying 2k know that they got the place assuming they qualify and collect the move in funds on Monday.  Assuming you get the money just let the other person know though text that you appreciate them reaching out however you have accepted another applicant and leave it at that.  You say they are trying to negotiate so it sounds like they are trying to get a discount.  Based on your other applicant it sounds like you are priced correctly but when people start asking for discounts up front which is fairly common I see that as a bad sign and move on. I operate on the more you tell a rejected applicant the more they can use against you but once you say you have collected move in funds from another tenant it is pretty much over and if not I just ghost.  

My biggest question is where is the money going.  You say you don't want to sell because you are cash flowing so well however you can't make your mortgages which does not make sense to me.  My assumption is you are in overages on renovations which may need to be drastically cut back.  Assuming you are able to save this cash what is going to change in the next 2-3 months of not making payments that is going to put yourself in a much better financial state.  Absent a really good answer I'd sell a couple of the higher equity properties and honor your debts.  What are your plans on cash, are you pouring them back into the business, planning to sit on a pile of cash just in case, or are you siphoning money out of the business hoping to draw income that just can't be supported at the moment. 

This isn't something I would be willing to do because there is no way they pass my screening criteria and everyone must pass no exceptions.  The guaranteed rent for a year is nice but what are you going to do when the year is up, they are already here illegally in the US so I would be hesitant to believe they would follow the law on property rights and voluntarily leaving when the time comes.  I agree with @Nathan Gesner that the migrant issue is fueling the fire on the affordable housing crisis, more people needing them has to drive scarcity.  I read another article about squatters recently and this is what really worries me.  Just wait until they figure out adverse possession laws and how long you can drag those out with really no consequences at the end other than having to just move onto the next victim.  

I agree it can be hard but it does get easier with time and I like to think I'm a better judge of character as time progresses.  I prescreen over the phone before we meet and you get to see the home so I weed out a lot of people before we even meet but there have been a few families I really liked and was routing for that did not work out.  I'll never know if they were lying or just uninformed of their credit but I believe they were trying to get one over me which is why I pass but I wish them well.  Just remember that you have nothing to do with how they got themselves into their current situation but unlike the stock market in credit situations past performance does predict and sometimes almost guarantee future results.  While they are getting a no, some other deserving family is getting a yes.  Whatever you do stick with your qualifications and remember you have them for a reason, your primary responsibility is to yourself and your family not these strangers.  While it is tough they can't rent due to their collections it may very well be tougher for the landlord that got burnt.  Also if you look at most posts here asking about collections most will advise to just let it go and focus on other things so if they burnt 1 person there is a high chance they burnt many.  If you don't think you can or want to do this then you may be right about the property manager.