All Forum Posts by: Bill B.

Why wouldn’t you get an umbrella insurance policy instead? You are AT LEAST 10X more likely to do something personally to get yourself sued than your property is. (Car accident, dog bite, pool drowning, whatever.) If you are sued the person who gets your money and your property won’t care how you were holding it. In fact. I would go so far to say in that less than 10% time when your property causes the lawsuit, you’re going to get sued personally as well. Obviously anything that happens on your property was at least partially yoru fault. 

What’s the difference between 4 figures and 5 figures being locked up for 30 days until you close? It goes towards your downpayment. So you are literally losing one month’s interest. 

There’s a pretty easy way around this in 90% of the cases. If they want $10k, and you only want $5k. Tell them you agree the $5k is theirs, non-refundable to you. This proves you plan to close. Otherwise, as others have said you’re basically advertising you don’t plan to close. 

I've put down $20k EMD on $200k properties. What do I care, it's going to be the downpayment in 30 days and I get the deal over someone offering more but wants to put down $5k. It's 100% refundable if you find a problem so you're waving a huge red flag when you fight and die on this hill.

Are the properties empty or worst case on MTM leases you can end in 30 days?

You’re going to get a lower selling price for occupied properties just as you will get an even lower price for selling a portfolio of homes. (They both shrink your pool or buyers and combining them really shrinks the pool.)

Assuming you don’t plan to do a 1031 exchange you’ll also pay higher taxes if you can’t spread them over two calendar years, but not much. 

I’d list them each empty and individually. If you pool them you’ll be “guessing” at each individual value. Good luck. 

How would the bank even know the gross pay amount?

I don’t like it. 

Does your application ask what their work position is? Is it a position they could keep if they were in a different state than their employer? (Or maybe it’s big enough to have a TX branch?) Call them and verify employee status/account paychecks drawn on?

If you don’t want to hire a PM to manage your property I would at least hire one to do the screening.  Otherwise you have to pass. 

You especially need one side empty for any owner occupant buyers. The only thing a tenant does it prove the rent you can collect as opposed to a proforma of suggested rent. At least prepare solid rent history showing how much you collected and if it was paid on time. 

Assuming you paid $430k, put down 10% ($43k) so have a loan balance around $387k and $100k in equity means it’s worth $487k. After you sell you’ll probably net $457k? 

That's not a lot of tax savings but it does give you $68k so you can put down 10% on your $650k home. (I'd prefer you found a way to put down 20% and save the PMI as well as lower mortgage origination costs and on going interest costs. But if you don't have it, you don't have it.)

At least you made $25k tax free on your $43k in 2 years. 

I understand that for some reason you want to self manage. I do find it’s funny that you say managers are for people with more properties. I’d argue it’s the other way around. People who have more properties tend to eliminate the manager and bring it in house. Feel free to manage yourself and don’t consider thsi an argument against it, just things you may not have considered. 

1) You’re going to “guess” at the market rent.  You don’t have 500 or 1,000 other rentals in the area to judge market rent. There’s a 99% chance you’re going to ask to much and sit empty for an extra month or two. (Costing you more than hiring a PM.) or charge too little (Costing you more than hiring a PM.)

2) You are NOT going to know all the landlord laws. Do you have to keep the security deposit in a separate account? Do you have to pay interest? Is there a limit on how big it can be? Is there a limit on what you can charge as an application fee?  How much notice to raise rent, non-renew, post notices or start evictions?mDo you have to accept the first applicant that qualifies?

3) Are you going to face fines for fair housing violations? (Making judgements based on family status, number of kids, medical animals, etc etc..)

4) When you get that first repair call 10pm Saturday night for a leaking roof or water heater do you have a trusted/dependable guy to call and get it fixed that night?

I'm not saying you can't do it, I'm just saying it's not worth doing unless you're unemployed and like doing it or your rents are high and your maintenance is low. In which case I would hire a PM to screen and place the tenant and then self mange. I do this with my only out of state property. It's a townhome with $3,500/mo rent. The HOA takes care of everything outside of the studs and I save enough to just replace anything that breaks and skip the repairs.

A drain pan is a $50, maybe $100 piece of plastic that should have already been there unless they cracked it trying to install their washer. 

No chance the PM should go there ahead of time. But…the plumber should send picture of problem with an estimate to PM. If it’s over $250 they should call you for approval otherwise just fix it. Then they should send a picture of the fixed situation. 

As mentioned above. There wouldn’t be “a problem with the drain pan” unless the washer was overflowing. That’s its job. To protect the floor or more importantly the lower level ceiling in the case of a leak/overflow form the washer. 99% of them never do anything their entire life. i would have balked at a $500 estimate for that job.

Ps. This is just another argument for ALWAYS including appliances with a rental. You just paid more than buying a washer and dryer with delivery an installation. I wonder what it will cost you when they remove their washer dryer and damage the pan again. 

You need a new property manager tomorrow. 
 

1) They did a horrible job of screening tenants. (Couldn’t really afford the place, didn’t have good enough credit to be worried about an eviction, etc etc..)

2) They should have posted a 5-7-10 (depending on local laws) to “pay or quit” as soon as the ent was late and started eviction. These people should have been out a month ago. 

3) They should have a procedure for repairs and evictions that would have prevented this last minute “We asked for repairs” defense. 

These are the reasons you are paying them. This kind of stuff should only happen when you self-manage (or maybe hire someone who’s primarily a real estate agent not an PM.) and would be a good example of why I don’t. It literally costs you more than paying a manager. The 3 non-paying months would have paid for 3 years of management. Please switch to a better manager today. They’ll probably even help you with the eviction. Good luck. 

Pretend they are telling the truth. They are either going to be financially strapped or leave the area, or both. Get the 30 days and re-list it while they are still there. Keep the deposit towards additional rent if allowed by law and wish them the best of luck solving their problems. 

If they ghost you and leave the state at the end of the month how much are you really going to collect? What will be left of the security deposit if they feel they have no choice but to leave the property as is. Leaving you to move and store their items if required by law, clean and repair, etc etc. Worse yet. They stay for a couple months without paying because they literally can’t pay. Assuming you can get another tenant you don’t win by making them stay. Good luck.