All Forum Posts by: Ashley B.

You guys are spot on. I’m going to move forward with getting everyone out. The sooner I do the easier my life will be. Thank you for the comments and advice!

@Bob B. Thank you for your reply! I just wanted to make sure I wasn’t being too harsh. Looks like this will be a good learning experience.

I closed on my first property, a SFH, at the end of last summer. I made repairs/improvements, defined my qualifications, thoroughly screened tenants, stuck to my guns, and got a good tenant in the fall. He pays rent on time, is low maintenance and passed the first home inspection with flying colors. I just closed on a 4-plex on Friday with D tenants that has been mismanaged for the last 20 years to put it nicely. The tenants' "Rental Agreements" are a 1.5 page document that states their name, family members, SS #'s, previous landlords, rent and deposit amount, that rent must be paid on time starting the day the contract is signed, that if they don't pay they need to evict themselves, that if they want to move they need to give 30 days notice, that if landlord wants them out they get an eviction letter, no loud parties and no pets (which has been violated). I knew going in that dealing with these tenants was going to be extremely tough and I've been mentally preparing myself for it for the past 4 weeks. The only reason I bought the property is because all tenants were on month-to-month leases, hence I could make changes within 30 days, making them a short term problem. However, now I see why many investors want multifamily properties delivered vacant at closing. Nevertheless, I didn't want 4 vacant units since 3 need a complete rehab so I thought I'd take it one tenant/unit at a time and move on to the next unit once I got the previous one rehabbed and rented. One tenant was 2 months behind in rent and had a clogged sink during the inspection that he didn't want to report because he was behind in rent so I determined that he's the first to go. I gave him a 30 day Notice to Quit right after closing on Friday. He called me on Saturday and had no clue what I gave him or what it meant. We had a nice, friendly conversation where I explained it to him but said nothing about him not paying rent on time or being behind with the previous landlord and not once did he ever ask if that was the issue. He said he was hurt that I wasn't giving him the option to sign a new lease like that the other tenants and I told him it was strictly a business decision. He asked if I had any other vacancies and I said no. Didn't phase him why I was not giving him the option to sign a new month-to-month Rental Agreement. A couple of hours later I got a call from Tenant B - single mom with 2 young kids who parks on the grass right by the front door which gets her about 10 feet closer to the door than if she just parked on the street like normal people do. I had a feeling I'd be dealing with an entitled tenant who was going to play the single mom card and boy, was I right. The entire phone conversation she was swearing and yelling at her kids and dropping the f-bomb in every sentence. She started the conversation with the fact that she's a single mom who has kids and she doesn't know what to do. She's apparently never seen a standard lease before in her life because she had no idea what quiet hours meant or what quiet enjoyment meant. She said she didn't understand any of the language and doesn't have time to look through that much paperwork. I gave her 49 days notice of not renewing her month-to-month Rental Agreement and gave her the option of signing a new month-to-month Rental Agreement with market rent ($150 increase) hoping she'd leave. She's saying 49 days is not near enough time to find a second job or find a new place to live because she has kids. Three of the four tenants have all known each other for many years and she kept saying that they are all "freakin' out" over this and have no idea what to do. There's one other tenant that I'm hoping will leave that I haven't heard from yet. I gave them the option of signing a new month-to-month Rental Agreement increasing their rent from $650/month (although they've been getting away with paying $625/month for the last 5 years) to $715/month and gave them 33 days notice to either sign or vacate. I wanted to give them a minimum of 45 days notice but these tenants refused to sign my Estoppel Agreement during the due diligence phase, have trashed their apartment in the last 5 years and are one month behind in rent so I decided on 33 days notice vs. 63 days notice. At this point I'm regretting just not giving both Tenants B and C 30-60 days notice to vacate with no option to sign a new month-to-month Rental Agreement. I feel bad turning their lives upside down in such a short period of time but I've given them more than the minimum notice required by the law. They have no respect for the property and had no respect for the previous landlord. I treat this as a business and realize that my tenants will make or break it. I listened compassionately, spoke professionally and stood my ground but it's definitely been eating at me over the last 24 hours. Am I handling this correctly? Any and all advice or support would be greatly appreciated! Thank you!

@Sergio Aguinaga I had the same worry about renting it out in Nov/Dec. I just started advertising last week and will probably drop rent slightly since I’m not getting much interest from quality tenants. I might consider doing a 6 month lease to start out so my leases end in May/June. Good luck with finishing your rehab! I, too, hope my next deal will be 100% better!

@Nicole Ashey Good post! You always hear about people’s successes but you never hear about the failures that got them there! My worst deal is my only deal. I started educating myself, reading books, listening to podcasts, reading blogs etc. in December of last year and finally landed my first deal in July. It was a cute 2 bd 1 ba bungalow that needed no more than $4000 worth of work to get it rent ready. I HIRED A HIGHLY QUALIFIED INSPECTOR. Repeat - I HAD AN INSPECTION. The numbers looked good on this property - 13.1% COC with $213 cash flow/month after vacancy, repairs, CapEx etc. I hired a general contractor to take care of a leaking toilet that had ruined a couple of floor joists and that’s when things blew up. He discovered that the floor joists were not done properly, the floors were sagging and the house needed to be jacked up, the bathroom plumbing was done by a clown, the kitchen wall was floating, as in, there was no 2x4 on the floor anchoring the kitchen wall, the kitchen cabinets weren’t screwed into the studs, the floor under the furnace was sagging, and the pipes for the washer had been cut, which was not disclosed on the seller’s disclosure. Basically 50% of the house had to be gutted down to the crawl space with walls completely removed. I also had to replace the roof. The same roof that my inspector said had 5-6 years of life left. I had 4 people come out to look at the roof, one being third party who owed my realtor a favor, and every one of them said the roof was at end of life and had hail damage. I called my inspector to ask him what went wrong the day of the inspection. He went back out to look at the roof again and stood by his original assessment on everything. He said the roof had a few years left. He said he saw the floors/joists during the inspection but he said they were fine for a house built in 1957. He said I was taken advantage of but I’m confident I had a good, honest contractor. My contractor took pictutes of everything and once I pulled up the carpet there were obvious issues with the floors that absolutely needed to be addressed. I never expected recommended professionals to be on such opposite ends of the spectrum on everything. I had no clue who to believe but the dollar signs kept adding up. Everything was finally finished last week and I ended putting $29,500 into a $61,500 home that wouldn’t sell for more than $70,000 right now. I love real estate. It’s my passion and I’m not going to give up but it definitely gives me anxiety when I think about buying another property. @David Greene talks about expectations for beginning investors in one of the podcasts and it really hit home for me. My expectations were set too high. I thought I was going to knock it out of the park with my first deal but I was so wrong. David says to expect nothing more than a dog fight for the first deal and that’s pretty right on from my experience so far.

@Arlan Potter Thank you for your comments. I plan to talk to my plumber tomorrow about the plumbing for the washer/dryer hook-ups. I also had planned on replacing the hot water heater. I was just worried about water damage, but as someone suggested, it might not be as bad as I’m predicting. 

@Clifford Paul Thank you. I think you are absolutely right. It’s painful and discouraging now but those feelings will only be temporary. 

@Michaela G. I’ve discovered just that about contractors so I met with another contractor that does not sub out work. I picked up all the materials so he won’t be responsible for getting materials and marking them up 15%. I’m also calling in my plumber to do the plumbing work so I don’t have the additional costs of him managing that. There are definitely a couple of jobs I will be eliminating to bring the costs down a bit. Thank you for your comments.

@Ian Kee Thank you for the comments. I’ve spent so much time over the last 8 months learning how to effectively analyze deals, finance deals and manage rentals, but I obviously missed some things. My biggest mistake was not pushing my inspector. He had trouble getting into the crawl space so he wasn’t able to see everything. I shouldn’t have called the inspection complete and paid him until he figured out a way to get under there. He would have caught the flooring issue in the bedroom if he would have. The hot water heater....I’m honestly not sure how he missed that. He didn’t even look at the washer/dryer hook-ups. I should have asked him to. I just didn’t predict potential problems. I’ve definitely learned a lot in the last 9 days and I know I have a lot more to learn.

@Jim Walters Thank you for the recommendations and yes, I did have it inspected.