All Forum Posts by: Andrew Halbert

Another first for us. We had a house under contract in Warren Mi. Cash offer, house was a SFR and listed as turn key. Long story short, the inspection found several big ticket items that were at end of life, roof, hvac, Windows. The reason we looked at it was because it is right one street over from one of our other properties and the inside was renovated nicely already. Anyway, we had a PA at 70k cash. Keep in mind in this particular market 70k houses don't need a roof, new hvac, new Windows. Ultimately I stuck to my numbers, stayed unemotional and walked away when they would even consider any concessions. It's the first time I lost a deal because of an inspection report. I probably could have done a few things differently when structuring the original offer, but overall it was a good learning experience.

I guess what I really want to know is it a valid reason to rehab to attract a better tenant?  I am unclear on that...

Guy/Gals I really need your help. Wife and I are seriously thinking we might be over-rehabbing the latest project. I am starting to wonder if we should just do the minimum needed to get the house rented out. (roof and paint). This rehab will cost 6,500

To do new kitchen, floors, is an extra 12K. I am not in an area that is going to appreciate. This is a cash flow market. My initial thoughts were to do the improvements to try and attract a better tenant, with a higher rent.  But I am second guessing that thought process.

What I am most concerned with now is the ability to get a return on the rehab investment. The roof and paint are really the only absolute necessary items to get a tenant in place. BUT I can't help but think some modern improvements might attract a better tenant??? HOWEVER, I really don't think an extra 12K in improvements will yield more than an extra 50-100 bucks a month to the rent roll. There is not a rental comp in this area going for more than 1050. So is it worth spending 12K to "maybe" get 950 a month vs 900? The previous owner of the house had it rented out for 950 in the condition that it is in now. I kind of think I am being stupid, but I really need someone to talk some sense into me.

This is the home.

http://www.zillow.com/homedetails/25893-Firwood-Ave-Warren-MI-48089/83490689_zpid/

Reason I ask is that in my market, most homes are on slabs.  If the property has a garage, rent roll is not affected much compared to the homes with basements.  

I find myself like the idea of not having to deal with a basement and all the potential issues that come with them. These are 850-1000/month SFR.

I'm sure it's market dependent but in SE Michigan I am not seeing the advantage.  

Completely depends on the house.  

What is the current condition on Roof, HWT, HVAC/AC, (any basement foundation issues), plumbing, sewer line to the street(this is a huge one in my market, all the clay pipes from homes built in the 50-60's need replaced) With a furnace you can get a good 20-25 years from a unit if it is properly maintained. 

I have two projects going on right now.  One is getting all the big stuff out of the way and is a 20K rehab.  So my capX is getting destroyed up front, which i like.  

Second project is in immaculate condition, needs nothing. HOWEVER, windows are original, albeit in great shape, they will need to be replaced at some point. The roof has about 10 years left.  So i take those capX items into play with cash reserves.

Most of the homes in my market do not have basements and do not have A/C.  Window AC units are king which is fine by me.  In fact a lot don't even have dishwashers, however I always put a dishwasher in to help give me that advantage over my competition. 

I digress,

You need to understand the typical lifespan of the big ticket items, and fully understand the current condition of the items in the property. 

No thanks,

I will leave that to the professionals. I have enough on my plate to deal with in my business and day job.  I'll spend the 185 bucks for a professional to do my inspections. 

Until the time comes that opening up my rentals to pets gives me a marketable advantage towards finding good tenants, I will never allow pets.  At least in my market I ask myself, why?  There is no shortage of tenants, so why open up my newly rehabbed property to an element of unknown?

Originally posted by @Roger Vi:

You are lucky, I wish I had that happen.

Once I rented to a guy who applied claiming to be single living alone. He came alone to sign the lease and get the key on day 1. On my drive home, I realized I forgot to leave him a copy of his signed lease. I called and texted him to tell him I was on the way to drop off a copy but no answer.

I get back to the rental about 30 minutes after we originally signed the lease. He opens the door and a full grown pitbull comes out of the house to sniff me. His son runs down the stairs yelling "Daddy! Daddy! I like the stairs!" His buddy that I have never met is drilling holes in the wall installing blinds.

He says "Oh, meet my son and my dog, they will stay with me from time to time. And that's my buddy Patrick. We work together and he's going to crash in the spare room."

 Wholyyy......

This is unbelievable.  Please tell me what you ended up doing???

I believe in fair and firm.  I have a hard time "waiving" a late fee, especially for a first time offender.  It is my opinion that this could set a precedence for the remainder of the lease.  I believe there is a grace period for a reason.  My lease states the rent is due on the 1st, I give my tenants a 5 day grace period.  They are already late after the 1st, but I am already being "nice" by not charging a late fee until day 6.  How much nicer and fairer do I need to be?  I believe in clear, honest and professional communication. Simply re-iterating the terms of the lease if need be with polite language, never threatening.  

I am actually about ready to have to send my first notice to quit tomorrow if my tenant does not come through this afternoon with payment.  She is a great tenant, keeps great care of the place.  But why does this mean that I deviate from my lease?   

I have two properties and am actively searching for # 3, which will be an all cash purchase to start my own BRRR strategy. I have researched this investment method rigorously here on BP and also had private messages with other BP'ers who are investing in this way. One thing you don't hear to much is that you really need to make sure your numbers are more than just estimates. The goal is to get ALL of your cash back out, so you need to really purchase correctly and really know your ARV. I also am going to make sure I have a conversation with several lenders so that I understand the Re-finance part. The last thing I want to happen is not be able to re-finance for some reason.

I guess my point is, like any investment strategy it requires research and understanding. It's not always as simple as it may seem.