All Forum Posts by: Al D.

While I do not think it is a violation of the law to charge more rent for higher risk (if equally done to all such parties,) I think it’s simply nuts to hope that the person with bad credit will be able to make the future rent payments - without additional (security) deposit. I charge a larger deposit in such cases. But the prospective tenant should still have a recent history of “stability” in their use of credit - their score may be low, but there is a clear pattern of improvement in the use of credit. Otherwise, I deny them outright. You need to check the local/state regulations for what you can charge in deposits. In Ohio, for example, where I self-manage, I have to pay 5% annual interest on any deposit over one month’s-equivalent. If rent is $1,000/mo, and I charge a $2,000 deposit, I am ok with paying $50 a year in interest for the security. (That’s still a lot less than paying 10% of the monthly gross to a PM who is likely to put in a tenant with bad credit into that property at that slow time of year anyway - regardless of the “minimum standards” they tell you they adhere to.) And - after one year of on-time (or close to on-time for my mental comfort) payments - I return the additional deposit with the lease renewal.

I think that many of us are bilingual by the time we are teenagers. It’s just that the second language we know is not taught at schools, at least not by teachers. I am trilingual. You said that you are not bilingual, but did not specify what language they speak. If Russian, I’ll be happy to get on the phone when you are ready to go by there again - no charge. I can also help go over any lease agreements that may be in place, or those you’d like to implement - again, free. What others said about using technology and children in those households is also very useful. I’d hate for you to lose out on your first deal if that’s all there is to it.

@Omar Khan has a good practical approach. Otherwise, if both parties are on the rental agreement, I am not aware that whether they are the primary name on it would matter. (I could be wrong about this - I am not a lawyer, and have no properties in Texas.) Assuming you have the written agreement, take a look at where “Tenant” is described. My standard language is to also state “whether one or more.” But both of these unrelated-to-each-other parties should have been signatories (or at least the one who is staying behind, if you intend to go after them.) (While the following may be unrelated to this case, as it’s not a spouse who moved out leaving the other spouse behind: The above is not to be confused with both spouses needing to be signatories in a contract in Texas - they don’t; Texas is a community property state. So, if both of the couples were married at the time they signed the rental agreement, each spouse whose name may not be on the agreement may also be held liable for the debt. Again, I am not a lawyer. This is based on my own research. Do not take this as legal advice.)

I am not a lawyer, but I don’t think that you can get rid of this tenant without an eviction, or a cash incentive to have him move out. From what you are saying, I read that there is still a lease in effect. That lease would apply to all heirs - in this case, you, the new owner. Perhaps there is even such language in the lease. So, language like, "The Landlord must provide the Tenant 60 days written notice of any changes to the lease", in my (non-legal) opinion, does not apply to changing the Term of the lease (in this case, its expiration date.) If you decide to go the eviction route, consider the costs and likelihood of winning in your jurisdiction when a tenant has done nothing wrong. All of the above is moot if this is a month to month tenant.

Sorry, I just realized that I used the term "portfolio loan" out of place. I misspoke. As described in my previous post, I meant something along the lines of "private client" loans, where the bank would set its own qualification standards, independent of Fannie or Freddie guidelines. But, if you should be buying multiple properties at once, or may have existing properties that you may be looking to refinance along with the purchase(s), you should also ask each bank/CU about portfolio loans.

If conventional or conforming is not available, there are of course hard money lenders. Your local banks and credit unions should be your first stops to get conventional stuff. If under $50k is not unusual for your market, you should be able find a bank, may just take time knocking on doors. While you are talking to the local institutions, inquire about their portfolio loans (sometimes you may have to have certain minimums that you’d have to keep deposited/invested through the bank.) Same thing if you should go with @Russell Brazil’s suggestion, make sure that you have a lender lined up for that ahead of time.

To clarify: are you looking at turnkey SFRs going for $30k-$55k around you - where you can touch them - or somewhere else? 1. I know that you can buy properties in Jacksonville for less than $30k, but can’t imagine a real turnkey house going for that unless it’s in an extremely bad area of Jacksonville (even then I think it’s a stretch - but I don’t know all of Jacksonville.) If you may just be starting out, I’d absolutely advise against bad areas. 2. With the above in mind, I wonder if the seller’s desire for cash is not really an attempt to avoid a (lender-required)n appraisal, as well as also potentially swaying you away from getting an inspection. (I don’t know why I see potential liars everywhere - it’s either mental or much experience I’ve actually had with the issue. Hint: I’m going with the latter.) 3. While all of the above may be true, there are few conventional lenders that have the desire to do a loan for under $50k to begin with, so at 25% down, your purchase price should be over $60k just to get there. If I were the seller, I’d want you to have a pre-approval letter within days, not just a pre-qualification - unless you are buying with all cash (then proof of funds, which should be very easy for you to obtain.) In a hot market, I may not even consider your finance offer. Those who wrote above are correct, including @Russell Brazil. Just make sure that you know all the facts about the properties you are buying. I’ve seen the term “turnkey” mean too many things, including needing new roofs, leaky sewer mains, etc. And some of these sellers/agents are on this site (not in this thread - at least yet.)

I don’t mind leverage. I get 30 year, fixed rate loans. The “safety” approach I use is in the price/rent ratio - I look for at least 1% properties in no lower than B class areas. 1.5%+ in no lower than C class. I’ve also bought all-cash where a loan would have been too low to deal with - and I could get a better deal on the price paying cash. Same ratio approach still applies. My overall strategy is cash flow, not equity appreciation.

That depends on your lease agreement with the tenant. A lease is a contract that both parties agreed to follow. Follow what is in the lease agreement. I am assuming that your lease does not have a provision that allows for a potential increase in rent during the term of the lease with a 30-day notice - that would not be a typical lease, but anything is possible. So, you can’t - not until the term of the lease is up. I mean, you can give the notice of the higher rent any time *at least* 30 days prior - but it cannot be effective until after the expiration of the current lease term. I am also assuming that there are no local regulations specific to your question.

But your sister may still qualify for a “121 exchange:” https://www.nolo.com/legal-encyclopedia/the-250000500000-home-sale-tax-exclusion.html