All Forum Posts by: Adam M.

Thank you all for the comments and guidance here.

Update: we served notice and was received with no problems-- they will be vacating in July. Noise was brought up once in a warning and we have not heard anything since then. Unfortunate situation but learned our lesson with up front rent payments!

Thanks again all!

Yep, 100%. People tend to forget syndications are an advanced structure for experienced investors and it absolutely comes down to what we're seeing on social media or any other quick entry points to CRE.

"millions will find you if a have a good deal" I think you're missing the rest of that sentence which is "buy my course to learn how". 

@Bruce Woodruff thank you so much for taking the time reply! Yes, I must admit this is actually the first time I have ever taken rent up front and will probably be my last-- lesson learned!

Great idea on the email. I think it's awkward also because July is still a ways away to involve an attorney just yet? You are right though I do have a right to at least know what's going on seeing as it is technically my property at the end of the day (all personal problems aside). 

Howdy BP,

Right so this is a bit of a long one but I will try to keep it brief! 

We have been very fortunate in our RE careers to not have any serious issues with tenants at our properties. That being said, we have now run into a strange situation where I am not quite sure how to proceed.

The tenant in question funnily enough happens to be my neighbor, as I own several units on the lot and for this reason, I have managed it personally over the years unlike other assets in our portfolio. I have generally had no problems managing it myself until our long term tenant moved out 15th of December (typically a slow month to find leads for leasing in our market) and our new tenant moved in on New Year's Eve after a slog of hardcore interviews and showings.

Let's call this new tenant Kevin. Kevin moves in with his girlfriend and is extremely communicative from day 1, proactively keeping me updated with his move plans and the like. I do my due diligence on Kevin (and his girlfriend) and he has zero evictions, zero criminal history, great credit score, referrals etc... ticks all the boxes. The only quirk was that he wanted to pay for the year up front. He showed me his cash statements and had a quarter of a million dollars in his checking from a recent inheritance of a deceased family member. We negotiated a 7 month lease (his request... which I thought was fine seeing as if he chose not to renew, it would be easy to find a tenant in Summer) with a condition in the lease that if wanted to extend to the end of the year, he would need to let me know by the end of February. He paid for the security deposit and the 7 months up front no issues.

Kevin typically is a great neighbor, even doing (approved) home improvements to the unit (he repaired a fence that was damaged due to weather conditions for example) as he was moving around a lot beforehand and was excited to settle down somewhere and call a place "home". 

A few weeks into the tenancy something strange begins to happen-- I am suddenly hearing very alarming arguments between the two of them from next door (which is saying something as noise does not find its way into my house easily). These arguments happened several times to the point where we almost considered calling the police as there was clearly violence involved. Since these arguments ensued, Kevin has not replied back to any of my texts, deadlines, or anything else that relates to letting me know he wants to extend his lease agreement to the end of the year. He has already paid until July when his lease is over, but is now completely avoiding me. I know having been a landlord for many years that this is not right, but clearly, may be a sensitive issue. Whenever I send a message regarding rent terms or lease information, it is a given that  we hear arguments next door.

I am considering soon placing a penalty notice on his door for "failing to communicate by the deadline I had provided him with (end of Feb)." What would you do in this situation?

Assumptions:

1. I am either thinking that the arguments between the two are sadly making them rethink extending the lease together which is why he is avoiding speaking with me about the matter.

2. Since he has moved in, there has been a myriad of sports cars and expensive motorcycles that have adorned the driveway. I am not one to assume personal finances but perhaps he is worried about extending due to financial constraints? I failed to mention he doesn't have a job, he is solely living off this lump sum which I thought was fine considering all the great references I received. 

Any help or advice would be much appreciated as always and hope you are all having a great Tuesday so far.

Many thanks,

A

 @Nathan Gesner Haha, fair enough! Looking forward to pre-ordering sir Nathan!

@Nathan Gesner Nathan, you are in a different dimension. I am wowwed! Just curious what does the written notice say? Failure to communicate by this date will have consequences? Also how much is the notice fee? I think we will need to do this sadly..

I agree with @Ko Kashiwagi here.

@Corinne Faivre, so sorry to hear about the terrible property manager; that is always stressful. Seeing as it is well located and owned outright, I would look at refinancing as an option but I personally would go with renting! Guessing for a 3/2 @ 1400sqft could pull in $1,100ish a month on the rent? You can control prospective tenants "trashing" the place with a strict contract and higher up front deposit. 

If your goal is to invest in rental properties for passive income and you own this outright, why not start with what you already have? This could be an exciting challenge to overcome the hurdles you have been through with bad property management and asset damage. Perhaps you are eager to move on from this property (emotionally) given the history, but given the facts you have outlined-- it seems like a fortuitous asset to stand by :)

Hope this helpful and good luck!

@Nathan Gesner Great tip on the month-to-month basis with a 25% increase. I think I may have to take that going forward! At the moment we have a tenant who is being quite difficult... communication completely eradicated. It's truly difficult being in these scenarios  @Jay Dave keep us updated!

Ah hold-- on problem here. OOS investor doing 45k worth of rehab. I would tread very carefully-- personally I would pass given the numbers and that you are doing it out of state. Work with local wholesalers and keep underwriting until you find something with a larger spread. Sometimes the best deals are the ones we walk away from.

Oh ok-- so if the PITI is $1000 that's much better. I would try and cut out the PM it's only a SFH to increase your cash flow. Also is it in a good area? If so then it's looking better