All Forum Posts by: Bart H.

 Generally you have to weigh whether its better to terminate a lease or hold someone to the lease.  If your tenant is having problems paying the lease, your best scenario might be to settle for a months rent.  Often tenants are coming to you because they are having financial trouble, do you really want to deal with a tenant who is unable to pay?

Dont allow the deposit to be used as the lease breaking fee.

By rights (I am not an attorney, nor is this legal advice), in Texas you are allowed to keep charging the tenant until you are able to find an acceptable new tenant.  But also remember the courts you will be walking into for the most part are pretty landlord friendly, and if the tenant has nothing, it might be nearly if not completely impossible to collect on any amount that they dont pay.

Also remember you ARE required by state law to minimize damages to the tenant who moves out, and you are not allowed to double dip, ie charge the tenant who is moving out and charge a new tenant at the same time.

Are you sure it will really take you 3 or 4 months to lease your property?  I know most places in Texas it usually takes only a few days, ESPECIALLY in the spring.

My advice is to work with your tenant to transition the place, keep at least a months rent.  We sometimes settle, or sometimes work with the tenant and tell them we will cancel the lease (with a termination fee) if they help us get it rented.  IE keep the house clean, let us show it etc.

If you work with the tenant, and treat them fairly, you often get a positive reaction from your tenant, you can end up minimizing the cost of turning the property, less damage, and you can get a new tenant (and you might even be able to raise the rent.

 The only discount on rent we will ever even consider is x amount/month applied on the last month of a lease.  Subject to all payments being made on time AND lease being completed.  

So say its $1,300/m rent, first 11 months at $1,300, Last month at $100.

 IF they are good tenants, I would slowly increase to get it closer to market.  If they move, that's when to renovate. You might be shocked and find out that you raised rents to market and ended up not needing to do any rehab.

Like others have mentioned, update what needs to be fixed on the outside, fix up your unit, and then rehab the other units as they become vacant.

We generally have a long term view and have a tendency to slightly over rehab.  But we would more or less ease into it between tenants in order to attract top tenants.

Can I also mention, in general we have had terrible luck with inherited tenants.  ALL of our issues with tenants seem to happen if we are 1) impatient with finding a tenant, 2) inheriting a tenant.

 It sounds like you got scammed, and the landlord/tenant rules are beyond terrible.  I would find a good attorney with a well connected Chicago law firm and see if there is any way you can go after the appraiser/lender since they might have committed fraud.  

If they aren't paying now, you might find that even the tenants had some ties to the sellers.

Maybe see if an insurance company will pay to make the issue go away etc.

The one saving grace is that the loan is non recourse (or should be), since it sits in an IRA. Check with an attorney to make sure, but I am pretty certain the bank cant come after you for the difference.

In fact if nothing else works, you might go to the bank and see if the lien holder will restructure the note. They basically have an unsecured note, with no other means to recover the shortage if you default. Don't let them talk you into personally securing the loan (in fact I think that messes up your IRA).

Personally I would figure out a way to sell the property.

Short Term Rental.  (Air Bnb etc) 

I think on a duplex, he will be competing with other investors and an FHA deal will be less likely to go thru as the seller will be more likely to go with all cash, or conventional financing.

I know if we are selling and had the choice of two different buyers, one with an FHA loan, and another with conventional financing, we would go with the conventional buyer.

I agree with you on going with a 5% down over an FHA loan if possible.

 the most important thing is getting started.

 Kenneth is one of the folks I was going to mention.  He showed us an off market duplex a year or so ago.  I thought he was a straight shooter, the seller just wanted a little bit more than we were willing to pay.  

But I think he would be a great choice.

We also have been working with @Megan King, she is an investor and real estate agent and we really like her.

Personally I Would avoid FHA financing, in Dallas, most sellers don't want to deal with buyers who have FHA financing. The inspections and hassle is bad.

I might talk to a mortgage broker, it used to be you could get an owner occupied mortgage for less than 20% down on a duplex. Doing it from memory but the mortgage we got in 2013 on our owner occupied duplex was a 90% or 95% loan with PMI.

I don't know if the guidelines have changed since then as all of our subsequent purchases have been SFH's.

My guess is you will be in the $400K price point give or take for a duplex.  So I think 50K would be possible.  Send me a note offline and I can recommend a mortgage broker that we like and have used a bunch.

BTW, we haven't worried that much about PMI. IF you want, save up the money you get from the tenants to pay down the mortgage early. IMO the more important thing is finding the right property. That might take a month, it might take a year.

Best of luck to you!!!

I don't know what your lease says, or what the law is in your state.

But outside of a couple of things that are emergencies, its really your best efforts to get it fixed and the tenant cant withhold rent.

I would go thru the steps toward eviction until they paid.  We wont mess around with crappy tenants.  Life is too short.

 Spot on, I agree with this 100%.

We did something similar, only in our case that not so great cash flow property skyrocketed in value and we pocketed 80K in just a couple of years.

For a house hackable duplex in the DFW/Dallas area, find a real estate agent, and go thru the MLS. Have them set up a search that shows you all of the duplexes that come on the market.

 Recognize right now at this part of the real estate market it wont have the greatest return, but imo the most important thing is finding a place you wouldn't mind living in for a couple of years while rents and property values go up. But if your goal is to get into real estate, then buying a duplex is the way to go.  

Are you set on Dallas specifically?  or one of the surrounding towns?

If Dallas, I might look in the area near Live Oak/Skillman to the M Streets over to 75..  Most of those are a little expensive, but its a good neighborhood worth living in, and I think the property values there will only go up over time.

I might also look near the Bishop arts district, there are some duplexes there.

I would stay away from wholesalers, honestly for the most part DFW is very picked over, and I don't see much if any discount on off market/wholesale properties in this market.

And unless you have some experience in rehab/construction, I would go with something that was more or less move in ready for your first property. It will be a lot less risk.   Most wholesale deals will involved some rehab.  

  IMO a first property/house hack is just getting you started, you don't need to hit a home run, a base hit is perfect.  you just don't want to strike out on your first at bat.

Let me know if I can help, I have some contacts, and have a couple of Bigger Pocket members that I might recommend for real estate agents.