All Forum Posts by: Audrey Ezeh

Good morning guys,

I just wanted to share a bit of my inherited tenant problems and to solicit advice as to more actions I should be taking.

Tenant 1: Has a Pitbull

Absolute no no by insurance company. I went to meet her after closing and I told her the dog has to go and she absolutely fell apart! I said, ok if there is an insurance company that will cover this dog, I will find it and we can go from there ok? She said ok. I hated to do that...I really wanted that dog to go even though she was the gentlest thing ever and never barks (but aren't they all?) but I was starting to feel like a monster which I know I shouldn't but anyway, I called a broker and he found one company that will insure the house but I have to sign a waiver excluding the dog...I said no thanks. I went back to her and I said I am sorry but you either have to get rid of the dog or you are going to have to move. She was much calmer but she did say whatever I'll just move. I said you can have a few days to decide but you'll have to let me know.

Next step: Send her a certified letter today reiterating that she has to move or get rid of the dog and she has 7 days to get back to me. (insurance gave me 30 days to take care of it).

Also thanks to Thomas S. for his answer here… https://www.biggerpockets.com/forums/311/topics/322540-the-dreaded-pitbull. Really helped me feel confident in my decision making.

Tenant 2: Has a propane tank in the house he has hooked up to some heating apparatus and using to heat his unit (I am assuming to save on his electric bill...house comes with an electric furnace).

I have not seen this thing. Just before closing the seller calls me and says hey so just so you know this guy is doing this again. He did it back in 2006 and we sat him down and made him sign a letter saying he will never do it again. We monitored him for a while and was confident he has straighten up but I went to tell him we are selling and there it was again. She told him to get rid of it otherwise I will evict him and he said absolutely, it is gone today. I sent a handyman to turn on his electric heater for the winter and he calls me and says ...'just so you know, there is a propane tank in the house!"

Background: he has brain damage and sometimes has difficulty understand complex things but he understands clearly this is a no no.

I went over to the fire department and they said sorry it is private property we can't do anything about it until something happens. I said you mean until the house blows up or he dies of carbon monoxide poisoning? and they laughed and said pretty much! Sheesh. Next, I called code enforcement and they said sorry we can't help you will have to talk to community development. I called them and she said I will do some research and get back to you. Bottom line, no agency will get involved since it is private property but all of them confirmed that as his landlord I have a right to tell him to cease and desist.

I went over and talked to him and I made it clear he will be evicted if I ever find that tank in the house (there was no sign of it when I was there).

Next step: Send him a certified letter saying I will be conducting unannounced visits and I will start the eviction process if I find that tank again.

We have a new judge who is very tenant friendly and for non rent payment related issues I have to send him a 7 day notice 2x before I can start the process.

Anyway, is there anything else I should have done or should do? I appreciate you guys taking the time to read this. 

I actually just completed a seller financed deal and even though I gave them a down payment, they required none. Or rather they changed their minds...The first time I met the couple (I told my handyman to keep an ear out for landlords that wanted to sell as he worked on other properties, he hooked me up with them and I called them and invited them to lunch), they told me they want to do seller financing (it was a relief not to have to convince/talk them into it. They already knew about it and had been on both sides of the transaction. They told me they would require a substantial down payment. I didn't panic, I came prepared. As we were finishing up, I took out my last 4 paystubs and handed it to them and pulled up my >800 credit score and I could tell they were blown away. They said well clearly you don't need the money so you will pay us. I said yes I make more than enough, I just love real estate and yes you will get your money first, always.

The next day she called me and said we can do the deal and since I'm a responsible borrower and make a good income, I don't have to give them any down payment at all! I thought YASSSS!!! I'm pretty low on cash (paid my cash for my 1st duplex...never doing that again) so I'm only looking for seller financed deals where they want little or no money down. Brandon Turner always talks about an unfair advantage and my income is probably mine. 

The thing to watch out for is that some think they are doing you a favor, they will ask you to pay a premium for the property and also want a high interest rate. This couple didn't but I see them on Craigslist all the time. Seller financing does not automatically make a deal good, it still has to pencil out.

 I told them from the get go that I don't pay market value and I expect a discount and they said sure be we won't "give them away." I said no problem. The next meeting at Starbucks, I took my laptop and pulled up the BP calculators (I believe in full transparency)  and we kept working until everyone was happy with the purchase price and terms. Actually, no one was happy but we were content and comfortable with the deal.

 I agree. The ones I screened, I placed on 12month lease, the ones I inherited, I had them sign month to month.

Here is how mine reads. 

 TERM: Tenant shall lease the Premises for the calendar period beginning___________________ and ending____________________. In the event that Landlord or Tenant does not elect to terminate this Lease at the ending date therein (with 30-day advanced written notice), then the term of this Lease shall continue on a month-to-month basis.

They do not sign every month. I have them sign a lease beginning 1st of the month and ending on the 31st then continues month to month thereafter until they or I terminate the lease with 30 days notice. 

 This was debated extensively here... https://www.biggerpockets.com/forums/61/topics/269...

At some point my eyes started glazing over lol. I was researching the same topic last night and found that thread. Seems a handful of people were pro and a multitude of people against it. I still have not found anyone who actually did it and was successful. 

*Edit : Looks like I misunderstood your question (sorry about that). Yes it certainly smells like shenanigans*

That is generally how Section 8 works. HUD will only pay up to a certain amount for the number of bedrooms (including utilities) and the tenant pays the rest out of pocket. How much they qualify for determines what percentage of the rent comes out of their pocket.

Here is a guide to the fair market rents HUD will pay. Again the number includes utilities.

https://www.huduser.gov/portal/datasets/fmr/fmrs/F...

The more important question is, do you want to rent to Section 8? Take some time to read of on the hundreds of forum posts and some blog posts on the topic. Educate yourself on the pros and cons then decide if you want to do it or would rather have market tenants. You are going to get very strong opinions on either side so you have to decide for yourself. 

They peel and 'curl up.' If you must, don't install them in kitchen or bathrooms. You are better off with the interlocking ones. 

Also look into getting a clause on the portfolio loan to make sure you can sell each one if you want to and not have to sell all 15 at once because they are on one loan.

If I read your post correctly, using $425/month x 19 that's $8075/month in income for $220k. Anytime you have numbers like that it is definitely worth taking a closer look. 

Can you get the address of all 15? Drive the neighborhoods and see if you feel comfortable there? What kind of tenants will you have and do you have the skill set to manage them?

You don't have to buy all of them, you can certainly cherry pick only the ones you want and if he insists on all or nothing maybe you take them and fire sale the ones in rougher condition/areas? 

Make sure you check comps to ensure you are not overpaying for any of them. I don't know your area but those numbers are killer and may be the norm for you guys (you'd be working extra hard to get a 1% deal in my neck of the woods).

Can you get an experienced partner to do this deal with? I would consider giving up part of the deal if it gives you a better chance of success. 

Best of luck and keep us posted....

I'd go with the platinum for sure. Those bonus miles are usually less...all credit cards do this i.e they run a promotion once or 2x a year and increase the sign up bonus significantly. I usually wait for that and jump on it when I see that increase. Right now the platinum has a incredibly generous bonus for a limited time,  more than the Reserve and it only has a $195 annual fee vs the hefty $450 for the Reserve. Also after 3 months you get $100 back so you get all of that for $95 the first year. That's where the value is to me. The medallion upgrade is really nice. I got bumped to first class for free at the gate many times and that never got old :)

I pay $450 annual fee for my Chase Signature Reserve (personal card) but i get $300 back yearly in travel credits and I got 100,000 points during the promotion so a hefty annual fee is not terrible if it comes with other perks. No such luck with the Reserve. With my Business Ink i pay $95/yr and got 80k bonus points. (Ok i promise no more trying to get you to jump ship lol.) 

 That's great. Here's my final point. Like I mentioned earlier, if your end goal is to covert the points to miles then you are better served with a Delta platinum. You get the same bonus but much less spending requirement. Also you get the medallion upgrades which is very valuable. ATL is Delta's major hub .. they control all of the southern terminal and flights from ATL are always at a great price. (I lived in ATL for 8yrs). 

If you are keeping AMEX points to use at SPG @1:1 or coverting to cash ( don't do that) then the Amex Plantinum is the way up go.