All Forum Posts by: Ashley Shearer

Was just going to tag in from an accounting standpoint - Reserves are recorded on the balance sheet, not on the income statement (which mirrors the Schedule E). Therefore, just per accounting standards, I take reserves out after NOI like in your second example.

My confusion is around vacancy, which is taken on your example from gross rental income. Is that an actual vacancy expense, or a reserve account? I was accounting for vacancy reserves below NOI with my other reserves, and then I assumed when I had an ACTUAL vacancy, I would take it out of rental income. Not sure.

Maybe the accounting experts could tag in here? If you guys know Nicholas Aiola or Brian Schmelzlen could someone tag them or another known expert?

Hello! We also just bought a duplex with an inherited tenant in central PA. We'll be occupying one side and had a few of the same questions. UGI quoted us an average of about $75/month with winter bills reaching $120 at highest for the one side (3 small bedroom, 1 bath). When I called to set up my new account, I asked for the monthly averages from the last year and they gave them to me.

Garbage/water - Will be different for your area probably, but they send us a quarterly bill and has to go to owner's name. We will get 2 bills, one for each side of the house. The previous seller said he just made a copy and gave the tenant the exact bill which shows who/where to pay.

Have to honor existing lease (ours is up in one year). At the end of that year, you can decide to term the lease and they will have to leave, or if they're good tenants you can keep them.

We have a shared driveway. Seller told us that in the lease, it states that the tenants have the responsibility to have snow removed from sidewalk by a certain time (I think he said by 7am or something, whatever the local law states). He then told them that he will try to get it done but he works on-call sometimes, so they know that if he doesn't get it done, they have to shovel the sidewalk. I believe driveway doesn't technically matter - it's just sidewalks and public areas like that. And in that case, I think we're leaving it to tenants to essentially split the sidewalk & just shovel their half.

When we move out, we'll likely expect tenants to shovel.

@Joe Splitrock - Thank you! Not exactly what I meant...it's not only about him bringing us deals, it's his style versus our style. I've reviewed multiple contracts, forms, etc. that have had mistakes (not to say no one makes mistakes) but these are things that have been overlooked due to a lack of attention to detail. He got our settlement date wrong, twice. The first offer we ever tried to make he wrote up for us, without even asking us first (we thought it wasn't aggressive enough, in turn causing his broker to be up to midnight redoing all the paperwork). Lastly, towards the end of it all, he made comments about the other agent and sellers that made us question his loyalty to US. 

Like I said, he has been extremely helpful in most cases and very patient with us, but just not the best fit. He has already offered to help us along with land-lording for the first time as well which we very much appreciate. Just looking for some realtors' takes on how to approach the situation.

When we do find a realtor who is the best fit, I definitely plan to stick with them!

No worries @Chris T. - all good information! Same to all of you, thanks for the advice. 

@Jonathan Greene- If we do start finding our own deals (which is part of our plan), wouldn't we need an agent's help to write up a contract and settle? Or is that something it would make more sense to hire a lawyer to do until we learn most of those ropes ourselves? 

Thanks again to everyone!

Hello - my husband and I are closing on our first house this Friday (duplex, house hacking). We plan to buy many more houses over the years and build this business. We're using a realtor who has been very helpful and has taught us a lot throughout this process. The only problem is I feel like we don't "fit" with him. He is not as aggressive as we would like, and he's also a little disorganized. I keep thinking, "we are building a business, we need a solid team" and I just feel like he is not the right fit for our team. 

My question is - how do you quit your realtor when he's already expecting us to use him for the next house? We would still like to keep in contact with him for potential future deals as a part of our network, but would be more interested in using another realtor for the next one. Wouldn't that offend him?

Another question - many people on here talk about using multiple realtors or having realtor contacts who can offer deals before they even go to market. How do people do this without offending their other/first realtor? I'm not a realtor, but I'd think if my clients went with someone else for another deal, I'd be offended. Then we would worry that our realtor might not be trying to get us the best deal. 

Would appreciate any advice from the other side! 

@Fred Heller thanks for the estimate! Good to know. The lease also does say they can't paint or do any repairs, so that's a good thing. 

@Bart H. I agree!

Normally we would think not to, but our thoughts were based solely on how we wanted to start off with this tenant. We were worried if we said no, they might possibly be grumpy with us for their term, and/or potentially cause more problems. If we said yes, it could get us off to a great start, but worry they might start asking to do more and more. Guess it could go either way. 

Turns out... we found out they're on rent assist. So now we're REALLY not happy the sellers threw this family in there, and equally as unhappy that they seem to be demanding quality improvements when they didn't pay the deposit...etc. We'll see how this goes! We'll likely tell them that we're not painting. 

Wondering something similar... how do you find an insurance broker? I look them up, but the only thing that comes up are insurance agencies or agents with specific companies. I'm in the central PA area. I'd like to find a broker who will do the shopping around for me!

@Jason Bott - what is the difference in coverage from a commercial agent versus someone insuring their homes separately? I ask because we are buying our first property, but plan to buy many more. Would like to set it up right the first time. I was considering just buying home insurance for this first property, and in the future home insurance on each property as well as an umbrella policy (OR do an LLC). Where does commercial insurance come into play?

Wow thanks for all the responses! 

@Eddie Memphis - our purchase is contingent upon approving the lease and tenant.

@William Amiteye - thanks for putting it that way. I appreciate the perspective!

@Jill F. - we agree, definitely don't want them to paint. Like the wallpaper idea! When it pulls off does it ever leave any damage? 

@Patrick M. - great idea, thanks. We were also worried with them throwing a tenant in there last minute, and even though they just moved in, they decorated nicely. Hopefully a good sign that they just want a nice looking place. 

@Account Closed- just learned how to tag! 

Curious as we're just getting into this situation now... wondering what others are doing? 

I want to have a separate account set up to receive rental income from the one tenant, as well as pay for that side's repairs and the whole mortgage/insurance payment. But the rental income won't cover all of it. How do others do it? Do you just dump money into your real estate account each month? Do you pay your mortgage out of your own bank account instead? How do you handle finances when house hacking income doesn't cover it. 

My husband and I just had an offer accepted on a multi-unit (our first investment ever!). If all goes well, we'll be occupying one side, and the owner JUST got new tenants in a week ago, so we'll be inheriting them. We haven't' seen the lease yet.  While walking through the property, we did meet the new tenants (middle-aged couple and daughter ~15 years old). One of the first thing the man says is, "Now I know it's not completely settled yet, but I have to ask, are we going to be able to paint? Because there are lots of places that need it. I don't care if it's the same color, I'll even do it myself, but I'm picky and some of these walls really need it." 

Now it wasn't rude, but it wasn't nice. I'll say, it felt a TAD bit demanding actually. I really didn't like it. I assume, when he rented from the current owner he was accepting the rental as-is. If we settle on the house, we weren't expecting to do much to the other side until the tenants moved out (with the exception of necessary repairs). We want to "put our foot down" early, but we also want to have a good relationship with our tenants and not start off negatively.

We definitely don't want them to paint, but should we offer to paint? Should we just shut them down and say no way? We are planning on occupying for 1 year, maybe when we move out and paint our side, we'll suggest we can paint theirs too? 

Landlords - do you do any unnecessary updates during tenancy if your tenants request it? Or if say, the carpet starts really wearing down, even though your tenants don't plan to leave?  Thanks in advance!