All Forum Posts by: Andrew Kleiner

Thank you all. Without having seen Ryan's post, that is what I did.  She is locked in a new 12 month lease at $1200, with a clause that rent will go to full market value, around $1600, and if she finds something sooner, she can break the lease.  This way I am still paying down the mortgage and preparing for my rehab when she moves out in a year.

Bruce, I am definitely not running a charity, but the stability of a steady tenant over the years was acted liked blinders. When I found BP podcast and started educating myself I realized I am only hurting myself.  This lady is a nice lady, but she has no business renting a property she cannot afford anymore.  She needs to downsize.

This is sound advice, thank you.

Investment Info:

Townhouse buy & hold investment.

Purchase price: $93,500
Cash invested: $6,800

I bought this property when my wife and I got married. Moved to CA for grad school and have rented it out for 14 years. Just did a cashout refi to pull out my original investment and the rest to get into other properties.

What made you interested in investing in this type of deal?

An old guy I would fish with told me not to kill the golden goose and rent out my property while in grad school. Best advice I was ever given.

How did you finance this deal?

Conventional 30 year with $6800 down.

Lessons learned? Challenges?

First two tenants were garbage, wrecked some things, had to evict one. Background checks and income verification are key!

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I had a property manager for the first year and we did not see eye to eye. His concept of a qualified tenant and mine turned out to be very different.

I own one rental property in Mesa, AZ. (1120 s/ft, 3Br/2.5Bath, townhome). I have had the same tenant in my unit for 13 years. I have been charging her below market rent because she has been there for so long and in 2009 she had a reduction in income. If I let her, she will live there until she dies. I have been educating myself more about REI and want to get more units, get into BRRRR, etc. I recently did a cash out refi on the property to pull out my original investment, to get some cash to go get my next property and to rehab it and rent it out at market rates. I need to spend about $10k to get my unit in top shape so I can attract other high quality tenants. I have been renting for $850 but can rent the unit for $1600 or $1700 a month. I made decision to tell my tenant that I am raising rent to market rates and if she cannot afford it, then I will be terminating our relationship (she is month to month right now).

Tenant is losing it, crying, desperate to stay and after she thought for a couple of days, said she could pay $1200 a month if I let her stay another year. At $1200 a month I am still making $200 a month in cashflow (not including CapEx, Maint.). I have managed this unit myself and and my mortgage payment used to be so low that at $850 I still cashflowed and made money to set aside for CapEx so that I have never come out of pocket for when I replaced the AC and appliances.

I really want to lease my unit at market rate (looking at $300 a month in pure cashflow), but tenant said she will live in the unit in the same condition and pay $1200.  

I need your thoughts. Keep a tenant for one more year, or take chances with market rent and tenant who may only stay for 2 years.