All Forum Posts by: Alex Forest

@Michael Smythe
lools like it did not advance and is shelved until next year. It was the third try. https://virginiamercury.com/2024/02/12/virginia-bills-to-cap...

@Gus Delgado I messaged you a good contact.

@Michael Smythe.  Thanks for the heads up.

This doesn't sound like it would pass in Virginia, but then again, it is moving forward still. This part seems to impact broad authority in the Dillon rule state.

Any locality that adopts the ordinance

5. Is empowered to take any other action that is necessary and proper to effectuate the purposes of its local anti-rent gouging ordinance.

Quote from @Conner Hitchcock:

Hey all, 

I’ll try and keep this post as concise as I can!

My wife and I bought a townhouse in 2020 with the goal of moving from it and turning it into a rental as quickly as possible!  We were able to do that within about two years and bought ourselves our own single family home in the country for us.

The townhome profits very well and is in a desired area, we love it and plan on holding it forever! You can’t beat a 2.5% interest rate!

The problem is the single family home we have moved to, it was made in the 1950’s and was flipped by some really terrible flippers.  They really put lipstick on a pig and sold it to us and our long time home inspector retired so we didn’t catch the problems ourselves. We’re sitting at 6.78% interest comparatively.

Since moving in, we’ve had to totally repair the custom chimney (a couple of grand), get a new roof (had to get a 26k loan at 10%….. kill me now) and have discovered the crawl space ventilation needs to be addressed, our old cast iron pipes are blocking the plumbing up, and we need to change the pipes from Poly b in some places.  

If we sold the house we’re in for a minor profit, we could cover the costs of my roof loan, selling costs, expenses for fixing it up to sell etc. we’d essentially loose most of our down payment to get out of this deal.  we would have to move back into the town home and start saving again for another day.   that being said, we wouldn’t have the high interest debt and wouldn’t have to worry about paying for all of the big repairs.

We have our first baby on the way and are worried that the house is going to keep giving us problems and become a money pit. Would you keep the SFH with the big loan for the roof and just fix as it goes to hopefully maintain the long term (hoping no more major problems arise) or sell, cut my losses, reduce my high interest debt, and start over.


there’s always more to the story including personal reasons but hopefully this paints a picture, feel free to ask questions so I can clarify!

🙏🏼 
Conner

Hey Connor,
not sure where you are at with this, but I agree with Brandon's comments.  Take stock of where things are now so you know what you might expect as far as needs (and to reassess the others you mentioned in your post). His contact sounds like it would be a $150 very well spent.  
How were these other repairs identified, the crawl space ventilation , iron pipes, poly, etc.?  I would recommend getting some other opinions, I had to replace some iron cast due to clogging, but it was mostly only a small lateral portion (not all). I could share that plumber contact if you like (I'm also in Richmond area).  Agree with the other comment also about DIY, if and wherever possible.  The roof repair replacement sounds very expensive, not sure what it involoved but again recommend reaching out to more contractors to get not just estimates but insights as they look at it (I understand that one is completed), t's surprising how wildly cost estimates can vary. Replacements and roof repairs have been more around $4k to $8k for ones I've experienced.
If you were to move back into the townhouse, you would also lose that profit, how much is it and can that cover the roof loan on your primary for a period of time?   Rates have been coming down already to date, maybe early 2024 you can look at refi this place at a slightly lower rate, get what's left of that roof loan incorporated into it plus a little more to cover other expenses.

@Eric Rosiello

As far as financials, you can inquire with local property managers if you have a sense of a couple places you are interested in, to see if they'd be willing to share. I worked with one that gave detailed statements for dozens of units in West Virginia. Also, if a place is for sale and has been used as a STR, the realtor too may have income expense statements for the last year or two.
one thing that surprised me was the HOA fees, and the management fees. The management fee was around 25% and cleaning 10% of gross. Add to that HOA fees, and it was a lot of growe income. But, it would have come close to breaking even or slightly under. If you would enjoy it on the off season, it could be nice. This was in WV, so not familiar with the str in New England.

Quote from @Marcus Auerbach:

Quote from @Alex Forest:

@Marcus Auerbach

I use Innago and really like it. You link your bank account(s) to a property and then enter theTenant information and it sends them an invitation to set it up. The Tenant then enters their bank account info. You can adjust rent schedules for each month for the year if needed (pro rate first month) and on the first of each month, it automatically sends them a professional looking email(from your property name, such as X, LLC). On the fifth, it sends a reminder due notice/late fee (if setup for a late fee) automatically, each time with a big button to click on for them to pay.

There is a dashboard to monitor all properties, income and expense history.  It's free, but you can select to pay a $2 fee on behalf of the tenant (or let them pay).  Also, if there are any other expenses besides the rent (ie for a multi) to be billed back, it can easily accommodate that. it can be configured for a number of setups and can do a decent amount on auto pilot once setup.

Interesting! I have to check that out! It sounds really good, but I am a little reluctant to just put my whole business on a platform that of a small start up company that could be sold tomorrow and leave me in a massive chaos. I'd have more trust in Zelle or Venmo.

 Yes, I do think they will eventually be bought. Many others are too, like cozy to apartments, etc.  Seems like it would be easy enough to switch folks to Venmo if they were to sell (assuming you didn't like the platform it moved to)?   Venmo doesn't seem as professional to me, but just my 2 cents. Also, Iwouldn't think you'd want a lot of units to use with Venmo. But it's intetering  reading how many here useit.

@Marcus Auerbach

I use Innago and really like it. You link your bank account(s) to a property and then enter theTenant information and it sends them an invitation to set it up. The Tenant then enters their bank account info. You can adjust rent schedules for each month for the year if needed (pro rate first month) and on the first of each month, it automatically sends them a professional looking email(from your property name, such as X, LLC). On the fifth, it sends a reminder due notice/late fee (if setup for a late fee) automatically, each time with a big button to click on for them to pay.

There is a dashboard to monitor all properties, income and expense history.  It's free, but you can select to pay a $2 fee on behalf of the tenant (or let them pay).  Also, if there are any other expenses besides the rent (ie for a multi) to be billed back, it can easily accommodate that. it can be configured for a number of setups and can do a decent amount on auto pilot once setup.

@Kuriakos Mellos  What Mike D said, is what went through my head. You are leading and speaking the self management role and language sir. Let go of this pm.

@Kuriakos Mellos

Quote from @Sami Gren:

HI,

my tenant has asked me to rent the garage in back of my multifamily property, I want him to use it only for storage, does anyone have any suggestions how to structure such a lease, or has such a lease form?

Thank you

Hey Sami, 
I guess since I took some mild liberties to slightly hijack your thread by inquiring further with one of the responders :), I'll try to contribute something to your original post inquiry.  I'm looking to do something similar, but not with the existing tenant.  With an existing tenant, it may be easier/shorter agreement perhaps.  I'm also considering expanding storage space since this is a bigger 2 acre lot with space and has permissible zoning, so figure I'll put some time in upfront to get a relatively solid agreement and setup together.   I originally intended to visit a nearby self storage unit to see what type of lease agreement and terms they utilized.  I ultimately discovered a few sample lease agreements online.  There was even a Lease posted to https://www.scribd.com/home  for the exact nearby storage facility of interest. You might search the forms on this site. For instance, here is one for Extra Space Storage in New Jersey dated 2021: https://www.scribd.com/documen...   Here is another online form from Virginia: 
storage_contract.pdf (pack-itinn.com)

Quote from @John Mocker:

Alex,

This is a question for your agent/Insurance company.  I would check with them (and get in writing that it is ok).  My guess is that the personal/hobby use would be ok but you need to verify it.  Each insurance company has to file their forms and guidelines with the state that they are doing business.  Those can vary between companies so you will not know until you ask yours.  If they will not cover that use, also check if that use will cause a cancellation of the policy.

On the questions of duplicate coverage there are two aspects that you should ask about:

1. Property

2. Liability

If your homeowners/Dwelling Fire policy covers the exposure to the rental for the classic car/personal use car then you may not need a second policy.  If the Homeowner/Dwelling Fire policy excludes that use, then you need a second policy because it is not covered.  

 Ok thanks for your feedback. I have been discussing with my insurance agent, but I don't feel clear on it. This below is a semblance of the back and forth discussion.  I'll need to follow up because it's not entirely clear to me.  In general, I understand the occupant would need to cover their personal property (vehicles) with their own policy. I think where there is confusion is the agent seems to imply if they are working on the vehicle, there wouldn't be liability coverage if something should happen like an injury, but maybe this is my misunderstanding. Also, the business policy reads like coverage for a restaurant owner occupying a commercial building...instead of coverage for the building owner. And that would make 3 insurance policies (rental residential, umbrella, business) 

Discussion: 

Question: I would like to rent out a garage on the rental property that has an existing policy. Use the example of an individual that would use it to store a classic vehicle, and to do some renovation work on their own second personal vehicle (ie it is not a business for them but personal hobby to work on their own vehicle). Are there any changes that would be needed to the policy?

Response 1: Renting out the garage would require a business policy for you. We really would need to clarify if it was for storage only or repair work was being completed? In terms of coverage for the stored vehicles, that would be a depends type answer. The owner of the vehicle would have to insure the vehicle and the business policy you have would give you liability protection if something happened to the vehicle, but depends on the classification of the business.

Question: It seems the existing rental residential policy has coverage of the garage as a detached structure. In addition, there is an umbrella policy. Would these not cover the use if fixing the car is a non-business use for personal hobby?

Reponse: As for the coverage on the garage itself, your current policy covers this structure under the Dwelling Extension coverage. This covers all detached structures on the property. The base limit is 10% of the limit on the main house. Even if we get a business policy for you on the garage, it would not change the current policy because you can’t go below the base limit of 10%.

With this example, I can see about what kind of policy you would need for the garage so you are protected. It would not cover the other person’s car or liability exposure from working on the car.

Follow up w/ quote for business policy: This quote is subject to final underwriting approval. This would provide coverage on the garage and liability protection for you.

If the other business you were discussing were just using it for storage, this quote would apply to that, as well.