All Forum Posts by: Alicia Gates

Could you share with me as well?  Thanks!

@Michael Kistner we are not under contract yet, but almost.  The seller came back with a 2 week window in which we can decide if we're going to ask the seller to give a 30 day notice, and then we close, or if we are going to keep the tenant.  During that timeframe they will give us the lease and we will meet with the tenant (thanks @Janett Lewis for that suggestion).  

We would be under contract now if they had put the right address on the counter offer, so hopefully that will happen today!  :)

It sounds like the general consensus is to try to have the tenant removed before purchasing the home.  Right now our offer states that we're reserving the right to make the final decision on keeping or not keeping the tenant, and if we choose not to that the seller has to remove the tenant before we can close.  Which is of course what's holding up them accepting our offer. 

@Janett Lewis an Estopple Cert is a great idea!  I was just learning about that last night after making this post, so should I keep them, I will definitely do that. 

My fear right now is that it seems like the sellers are anxious to close soon, and we're in a very hot market.  On the one hand I would hate to lose the house because of the time needed for the seller to remove the tenant, but on the other hand, I don't want to inherit someone who could cause significant damage to the house!  I think our market is hot enough (both for sellers and renters), that I don't think we would have an issue getting it rented, even at this odd time of the year.  

I sent my agent a list of questions to find out more about the tenant before I make my final decision.  At our offer price, even at $650 we're almost hitting the 1% rule, so if they take care of the property like it appears and I can slowly bring them to market rent (or even close the gap by 50%, maybe through 6 month increases of 10% each time), they may be worth keeping.  The estopple cert is a must, and I'd want to run my own background check, too.  Right now I'm praying for a month-to-month lease situation, so that at least if I take them on I can kick them out if need be. 

Once I have more info I will post again!

We're looking at purchasing a SFH in our area, and it currently rents for $650, but market rents are $850-900 in the area. The house looks to be in decent shape, but there does seem to be some cosmetic items to be fixed.

The sellers want to close quickly and want to know if we plan to keep the tenant or ask the seller to give them notice to leave.  I don't have any information on the tenant other than they "might" pay more in rent.  The sellers want us to have a meeting with the tenant to see if we would keep them. 

What questions should I ask or things should I consider if I think about keeping the tenant?  Some things I'm thinking: 

• How long have they been a tenant? 
• What was the screening process?  Is there a background check?
• Do they pay timely - every month? 
• Who pays utilities? 
• Who does yard maintenance? 
• Do they have pets ?
• Do they smoke? 
• What are the lease terms?  (I've read elsewhere that month-to-month is what I would wish for, so I could remove them myself if need be.)
• Last, since it's fall, is it better to keep a decent tenant at well below market through the winter and then remove next year during a more favorable leasing season (assuming lease terms allow for this)?

I'm leaning towards telling the seller to ask the tenant to leave so we have a clean slate, but I don't want to shoot myself in the foot either.  This will be my first rental.  Thanks!

Welcome to BP @Account Closed!  I'm in TN, and also lived in KY.  Rich Dad was a great book, and there are many books written by BP that are pretty great, too.  Just let the community know how they can help!

We have 2 properties nearby that are in a working class neighborhood, safe, and in a growing part of town. We took our bikes and went up and down all of the streets today, waived at people as we went, and felt safe the whole time.

This area of town has mostly older homes (1920s), between 800-1,1200 sqft, and varies between 2-3 bedroom, 1-2 bath. Most homes are selling non-rehabbed at around $47k, and rehabbed between $60-80k, depending on the sqft. These homes are renting anywhere from $650-900/mo, and median income is around $36k. This area also happens to be inside one of the TOP school districts in the area, and it's about 1.5 miles from the elementary, middle, and high schools.  This entire town (including this neighborhood) is HOT right now, so finding anything to purchase is a miracle.  While biking we saw at least several other similar houses under active rehab and even some new construction. 

Okay, so the first property is a REO listed for $30k (Cash only), 2 br/1ba ranch, 800sqft, no cooling/heating, etc. There's 3 different roof types, warped "wood" wall paneling, old single pane windows, etc.

I peeked in the windows today, saw 3 prong outlets, an electric panel outside that looked like it had current wiring, and I saw PVC pipe in the crawl space.  Aside from that, I have absolutely no idea what or how to estimate the total repairs.  A rough dirty estimate/calculator online showed that for a complete gut/rehab, it would be about $15k in materials and $15k in labor. 

For the second house, it's a FSBO that we saw just biking down the road - can't find it listed anywhere online (no MLS, Facebook, Craigslist, etc.). Did some sleuthing online, and it looks like the owner passed away in early 2018, and I'm guessing one of the kids is selling it. Looks to be in better condition than the REO, not sure on BR/BA, but Zillow says it's build 1915 and 880sqft.

So, while I'd like to go see both properties and potentially make offers on 1 or both (Note: we have the cash to purchase the REO and do repairs, though we would be interested in trying to get a loan for the rehab - I hear people talk about FHA 203k maybe?), walking through with my realtor is going to get me nowhere closer to knowing WHAT I should offer for either of these. Peeking in the windows already told me alot - they both need repairs, the REO more than the FSBO.

I'm completely new to the game, so while I have been to a few REIA meetings in the past month or so, I don't have any connections currently that are GC or otherwise that I could "tap" to try to help me estimate repairs. So at this point, should I just start calling GC in my area, ask them for a 2 hr consulting gig that I would pay for, and ask them to walk through the house, estimate the repairs, and teach me as they go? Or would paying an inspector to walkthrough it with me be better? Or should I just make offers, get them accepted, and then wait to have an inspection done during due diligence? I'm just so green at this that a walkthrough by myself would be me going "yep, that has to be replaced - no idea at what cost".

Thanks BP friends for your advice!

@Brenda Mize did you become a member or are you planning to become one? My husband and I haven't had a chance to attend the Knox REIA meeting yet (been out of town as of late), but are wanting to go to check it out. Thanks!

Great post Caleb!  It's very encouraging to hear a story like yours when someone like myself is treading the waters of trying to figure out where to invest and how to go about it.  Thanks again for sharing your story and keep going on your journey!

@Michaela G. So it's on a slope.  The downstairs is at the bottom of the hill, and the upstairs as rooms coming off of the 1k built directly on the basement apartment.  It's a strange configuration, and I haven't gone to see the house yet, only saw pictures online. 

I found what I think might be a good deal (it's a duplex in TN), but when I asked my agent to contact the other agent with questions, she sent back a seller's disclosure form that indicates there's a sinkhole on the property.  I don't know where it is, how big it is, or if it's been repaired, but just a quick good search seems to indicate this could be a $25k repair. 

Even if it IS repaired, I also read that just having the repaired sinkhole automatically reduces the value of the house by at least 10%.  

I haven't pulled comps official comps yet, but just doing some self-assessment via Zillow with similarish homes sold in the last 6 months, this house already priced $25k lower than what those sold for (I say "similarish" because they were remodeled, had garages instead of being a duplex, etc.), which makes me think the sinkhole is NOT already fixed (this is a question I have out to my agent). 

Other concerns - I know many people don't want to be investors in houses in flood zones b/c insurance expense is so high for the investor (while it's much more affordable for a owner occupied property) - is it similar for a sinkhole? 

Other facts about the house: 

Sales price $125k

Built in 1974, but burned down in a fire in 1995, so foundation is 40 yrs old, but house is about 20 yrs old. 

Duplex - upstairs about 1,600 sq ft, downstairs about 1k sq ft.  Upstairs was owner occupied, downstairs rented for $550, but with updates and a growing area, I think we could rent for $800 at least.  Upstairs we could rent for $1,200.  

Is it still worth pursuing or should I just walk away?  Thanks!