All Forum Posts by: Alissa Engel

@Eli Altman

Personally, I do not rent to roommates. They are not a protected class, and they are typically too much drama. Basically, these two are roommates. So, I wouldn’t allow him to move her in. If this costs me a tenant; so be it. Not worth the drama.

If you are okay with roommates; I would do the following:

1. Get twice the deposit from the current tenant. He can collect it from the partner on the back-end, but this ensures that you have only accepted money from the person on the lease.

2. Do NOT put the new partner on the lease.

3. Make it very clear that your tenant is solely responsible for the rent and any damages (regardless of who caused them). Also, make it clear that dividing up the deposit, whenever and however that occurs, is between them. AND no portion will be returned until all parties vacate the property.

Also consider that the chances of this relationship also ending is high. Do you want to set the precedent that he can move his “partner of the week” in any time he wants? It’s added stress and work for you.

@RJ Haugen

Dude. Don’t fall into that trap. Yes, it would be great to live in sunny California, AND you can do that after graduating with as few loans as possible.

I have been in college for 14 years...finally finishing up my PhD now. No one has EVER really cared what school I went to. And if anything, they care about your graduate degree. Unless you go to an Ivy League; the school doesn’t mean much in the real world.

Dave Ramsey recently wrote a book on how to go to college without taking any loans. He studied if the school matters....it doesn’t.

If you want to be an investor; you will be much better off finishing school with as little debt as possible.

Don’t be the guy that can’t get started, because he has 100K in student loans. Even if you make good money at graduation; you could be putting it toward your first property!

@Mike Huerta

Are you as aggressive of a buyer as you are expecting her to be?

How many houses have you asked her to “rush over and view” without making an offer?

Only asking because I’ve witnessed this with a few of my husband’s clients. They contact him, let him know they are an investor, and tell him that they are “hungry” and ready to go.

They call. He literally drops everything, rushes over, takes a video, sends video, and offers his assessment as a long-term investor himself....all within 1-2 hours.

Client drags their feet, asks a million questions, asks for another video.....then wants to “sleep on it.” They wake up the next day and want “to show it to their mom before deciding.” Client looses the property.

After doing this 5-10 times; my husband is no-longer going to drop everything to rush over. They may believe they are ready, but they aren’t.

Now client is mad and wants him to “do things faster.” It’s easier to blame the realtor for being slow than examine their own indecisiveness.

I have no idea if this applies to your situation at all, but something to consider.

Some history and perspective from a 3rd generation Montanan, and someone who has been investing here for 18 years:

There are a few markets (Bozeman, the Flathead Valley, and Missoula) that are volatile. I bought a condo in Bozeman in 2007 for 164K .  It seemed like a steal, because I'd spent the previous five years in So Cal with the military.  I did not do my homework, and compared to LA prices, that condo seemed affordable.  If this isn't obvious...I am warning people coming into the Montana markets from more expensive states or states with better job markets.  Montana is it's own beast.  By 2008, that condo value tanked to 115K.   I graduated from my Masters program at MSU in 2009, and had to leave Bozeman due to the dismal job market.  I could get a job, but positions in Bozeman were paying half of what the exact same job was paying in Great Falls. Why?  Bozeman is awesome and many people are willing to work for min wage WITH a graduate degree just to stay there.  Bozeman overbuilt so badly, that rents also decreased sharply and rapidly.  I was able to rent that condo for $1300 when I bought and $800 when I left two years later.  I broke even ONLY because I put down 20%.

I broke even for 8 years (when I was making more than the 1% rule in more stable markets)!  Fast forward to the present....in the past 2-3 years, the value of this condo shot up to 235K!  It has well-surpassed the pre-recession value.  I currently rent that condo for $1450.  The wages in Bozeman are NOT equivalent to the cost of housing and living.  There's a reason us natives call it Bozangeles.

I am 1031 exchanging this condo for two properties (a tri-plex and a duplex) in Great Falls in the spring. People who don't understand Montana and the history think I'm crazy.  They think Bozeman will continue to appreciate. In my opinion, the markets in these areas are not sustainable, and they will take the biggest "hits" when the market corrects.  Only invest here if you can afford to ride out a market correction for the next 10 years.  Seriously.

I am an advocate for more stable Montana markets.  They aren't as "trendy" but they are where the money is at.  It will be very difficult to make the 1% rule in Bozeman, Missoula, or the Flathead Valley, but it is obtainable in other Montana markets.  During the last recession, values in Great Falls "dipped" a little.  My rents decreased by $50 a month.  Also, the values and rents recovered much more quickly.  

Remember, a good rule of thumb is: "The best predictor of future behaviors is past behavior".  

My husband and I are planning to do our second 1031 this spring.  We just found a potential seller.  It's in a partnership.  The first partner is 79 and wants to retire.  The second partner is a long-distance LL who is strapped for cash.  The property that they own together is a tri-plex.  Problem is that the tri-plex isn't worth enough, so we will need to find a second property.  

The 79 year old seller (not in a partnership) has another duplex that he also wants to sell, but he doesn't want to sell two properties in the same tax year.  We like both properties, the two combined fall in the correct price range, and we have financing for both properties.

We need to do the exchange this Spring, because the condo we are exchanging is in a volatile market that I believe is at its peak.

Both potential properties are owned free-and-clear.

How can we do the exchange with both properties, but help the seller avoid paying taxes on two properties in the same tax year?

@Caleb Heimsoth That’s fine. I’ll risk being blocked vs. doing nothing, because I can’t find an address or phone number.

I’ve done this a couple times and have always received respectful responses. It hasn’t produced a deal yet, but people respond.

I’ve made a couple investor contacts this way. I ask about a property, they are not interested in selling, but we keep in contact after realizing we are both investors. One of these people HAS contacted me about a year later to use my husband as an agent when he wanted to invest in our town.

@Deangelo Mack

Do you NEED the phone number? Or are you just looking for a way to make contact?

Go through your state/county tax records (we have a simple website in MT) to find the owner’s mailing address. Contact them via mail. Also, once you have their name, you can search for them on Facebook and message them. Finally, some people actually list their phone number on Facebook.

@Chris Hanisco I was raised by a single mom who managed a lending company. Often, we went with her to repo cars for nonpayment. We sat in the car while she helped the Sheriff and the tow truck driver identify the vehicle. It was a bit scary as a child....it was alway late at night and people would often come flying out their front doors yelling, cussing, and very angry!

On several occasions, she came back to the car in tears. I remember her telling us that it’s important to pay your bills and not borrow money. She let us know that she felt sad for the people, and that it was important for her to do her job and take care of her family.

Talk to your son; let him know that you have sadness about the choice. And explain why you need to make the tough choice. It will be a good life (and business) lesson for him. You need to take care of your family and set strong boundaries around your business. That being said, there’s a ton of research on emotional intelligence. Emotions are not bad, and can actually help you in business.

@Jen W.

I purposely obtained an homeowners insurance policy with breed restrictions. First, insurance companies make their money by assessing for increased liability and charging appropriately or setting restrictions. I believe I am limiting my liability by adhering to the breeds they restrict. Secondly, people love to give sob stories, lie about the breed, give lengthy monologues about how “well-behaved” their particular dog is, or not disclosing initially then calling it an ESA after lease signing. My insurance gives me an easy way out of renting to people with these breeds.

If you do allow them: make sure you have a vet certify the age, breed, and current vaccinations. This keeps people from calling every bully breed a “lab mix”, and further covers you Incase something happens.

Next, I “require” they carry renters insurance with dog bite coverage. I only look at their initial policy, so they could cancel it the second after signing the lease. But I still think this limits my liability should something happen.

Finally, I have an addendum that asks questions about past behavior (past behavior is the best predictor of future behavior). Has your dog ever bit anyone? Has your dog ever acted aggressively? Has anyone ever filed a complaint against your dog with any formal agency? Again, they could lie, but it would help you in court if anything happened.

Finally, I would NEVER allow two of these breeds. They can form a pack mentality and gang up on other dogs/humans. And personally, I’ve never been desperate enough to rent to a bully breed. It’s too much liability. It also makes me question the type of person who gets a breed that makes it very difficult to find a home when they are still renting ... seems like an impulsive and irresponsible choice.

@Cam Jimmy

I am military, and have been through several shut-downs in my 18-year career. It sucks that POS politicians get to hold paychecks hostage to serve their political agenda. AND this is not a new thing....I learned to always have a large savings account by the time I was 20. I would never expect to NOT pay my bills during one of these shutdowns.

That being said, I wouldn’t evict one of these people. BUT I would be proactive about letting them know that I expect to be paid the day they get paid. I would make it very clear that I will start eviction proceedings the day after they are paid if I am not immediately contacted. If they have a history of late payments or poor financial planning, I would work with them to set-up an auto payroll deduction NOW.

But I don’t want the government telling me how to run my business either. Not all landlords are in the position to float their mortgages until tenants get paid. So, overall, this bill really angers me - more than the shutdown does!