All Forum Posts by: Adam Martin

I noticed in your post you said specifically you need to upgrade vs. repair your windows, doors, bathroom, and kitchen.  This leads me to believe that they are functioning now just dated.  With that being said I understand wanting to upgrade and enjoy your home however make sure you are really looking at needs vs. wants.  If instead of doing the whole 50k at once are you able to prioritize what you would like done and do a bit at a time as finances permit.  I'm all for leverage for buying properties however this level of consumer debt later in life on a fixed income can present a problem.  I'm not going to say to go either way but I do urge you to really think about if this is the best use of your money or even if you could get some of these things done but scale it down some.  

For someone that is undocumented you are really just going off of their word if you choose to rent to them.  I choose not to since they failed my criteria in 2 ways up front so no point in going further.  If I can't run a credit and background check they can't possibly pass it.  I also run a criminal background check and being here illegally is going to also violate that even if not convicted.  I know local laws in certain cities vary and these people have to live somewhere but it is not something I'm going to take the chance on.  If you are going to rent to them I'd go for a higher deposit if allowed and also work on getting a qualified cosigner.  

I never intend to sell but instead transition from self managing to more passive management to buy my time back when I retire. I have 6 SFH rentals now and would like to get to 10. As I am nearing or into retirement I plan on paying down mortgages so that I can own them free and clear, benefit from the cashflow, and leave my kids with paid off houses when I die. I'm split and will see when I get there but part of me says I am dead at that point who cares what the kids do with them. They can sell with the stepped up basis and follow their passions or continue being landlords to follow in my footsteps. I have also toyed with the idea of building true generational wealth and ruling from the grave where I scale to a larger amount of houses in a family trust and pass the income to my heirs in perpetuity. I had considered maintaining a certain dollar amount in reserves and semi annually diverting 75% of the income to the beneficiaries and the other 25% into a separate account designed for expansion so that the pool does not get too watered down as the family grows. We'll see how things are when I get there but I have a long way to go but real estate has certainly boosted my net worth and should help me retire early.

It is all based on perspective.  It could also be considered Grinchy to take the income from rent money from your family.  I don’t have a lot of flexibility however once I catch you lying to me that some turns into none.  Also evictions aren’t immediate so you didn’t kick them out during Christmas you just gave them a stern warning.  Sleep well and know even if you do need to kick this one out there is someone out there needing a good home you will provide for once you get rid of this problematic one.  

I think you may have some misunderstandings of what insurance covers.

The renters insurance covers their personal belongings and accidental damage.  I was able to file a renters insurance claim when they disconnected their washing machine on move out and it flooded and their company paid for it.  Had it not been the tenants fault and it was just a leak I'd be on the hook.

Landlord insurance is similar to homeowners insurance but less expensive since it does not cover as much.  I only have 5k in personal property on my policy to cover appliances so the insurance company has less risk property wise but they are also covering my liability.  If you intend to finance the property there is no way you aren't going to be forced to buy this.  If you are paying cash but don't feel like you can afford insurance you are not in a position to afford not to have it.  If you do not have this you are at risk where if your property is damaged through natural disasters such as hail and tornado's, household issues like electrical fires, or vandalism in many if not most policies as well as liability issues.

A umbrella policy is built to supplement your landlord policy.  My landlord policy covers the first 500k in claims and if it goes over this the umbrella kicks in for another 1.5 Mil.  These are inexpensive policies since they are just a supplement to your regular insurance and I have to assume rarely used.  

I hope this helps clear things up for you, insurance is confusing but necessary to have the proper understanding to protect yourself.  

I have refinanced several times and it is pretty much the same financials as the original loan.  The only difference is they are also going to want a copy of the lease and proof the tenant is paying.  I just highlighted it on a statement to make it easy.  It seems no matter what you send they need more and newer so anytime you get a new statement just go ahead and send it in before they ask because they will.  

Mine are conventional but I sent 

All bank statements

Brokerage and retirement account statements

Last 3 paystubs and I sent a new one every 2 weeks

Lease and proof of payment

Copy of my drivers license

Tons of random forms they kept having me sign

I also have a good relationship with my loan officer so she just texts me to look at my portal anytime they need something so there aren’t delays.  Once you get started they will walk you through and they will probably have a checklist for you.  

The most important part of your post is your manager turned them down the rest doesn’t matter.  It sounds like you hired someone to do your screening and make a recommendation so I suggest listening to what they say.  It is a slower time of year and vacancy eats into profits but it is important to stay patient.  In a couple years you won’t remember this vacancy but choosing the wrong tenant can leave you with bad memories you may wish you could forget.  

To be quite clear I see this person as more of a predator than friend and I am highly skeptical that this was an accident.  You are never going to see the money that you are out but I'd offer my friend a clean break where you are both going to benefit.  You will forgive the past due payments however the house has to be signed back over to you where you can move back in and have this behind you.  You aren't going to see the money anyway and this may be the incentive they need.  Submit an offer of this in writing with an end date of next Wednesday and be extremely clear that failure to do so is going to result in a lawsuit filed that afternoon for both past due funds and also for the misappropriation of funds to his company.  

 A more nuclear option is this is one of the few situations where I'm not opposed to you drilling out the locks, moving in, and squatting.  you are paying the mortgage anyway so you may as well benefit.  

That's some nice virtue signaling but as already mentioned it is not going to happen.  If it did though I would have to assume that rents would skyrocket like never before as inventory is drastically lowered.  Not all of these renters are going to magically become buyers by either choice or underwriting.  If anything this may make the homeless situation even worse by kicking renters out of their homes due to a forced sale.  Actions have consequences and while this may sound great on paper to certain people as in anything there would be winners and losers.  I see this as more politicking and trying to pander to their base than realistically trying to pass a bill.  

I don't do any flipping so this is just for ltr.  I like to buy a house that structurally is sound just dated and I agree in my area I'm looking for houses built in the 80's and newer.  I don't want to have to deal with lead paint or asbestos plus I stay in the b+ to A- range and in my area that is pretty much the date range of those houses.  I'm going to paint all the walls anyway and at some point lay down lvp so if the house needs work I smell a discount.  I'm looking for one that has been sitting for a bit and if there are some ugly chandeliers or fixtures I just see that as a bonus to lower my competition.  

1. I don't usually see popcorn ceilings but texture is common.  I don't love it but I don't think I'm losing any prospects having it so I see no reason to remove it.  

2. For a fence it is standard here to have a wood 3 rail fence with the wiring.  I have tried renting a house before that did not have one and it was significantly harder.  I allow dogs and like them due to the additional deposit of 600 plus 35/month/pet.  Ideally I'm buying with a fence already installed but if not one is getting built if practical.

3. For paint all walls are Behr flat scuff defense in accessible beige which is a greyish beige.  I use flat because it is significantly easier to touch up since I don't have to worry about the sheen fading.  I've touched up walls that were 3 years old but in otherwise good shape outside of a couple nail holes.

4. I do all lvp everywhere except the steps where I install carpet myself.  Carpet is just gross and tends to get damaged.  I'm trying to turn vacant units quickly so if I buy and the carpet is in good shape I may leave it but when it is past it's useful life it has to go.  I do like carpet on the steps though for extra grip to help tenants not fall and it is really cheap.  

5. I have never replaced what is in there so no clue on the countertops.  Generally as long as it is useable and in good shape leave it alone.