All Forum Posts by: Brian Ellis

Quote from @Mike Lynch:

Hi,

A while back, we moved from a small Ranch Style home 7 miles from Holden Beach NC, ( 3 bed 2 bath ) which is worth around $240,000 today. We took out a loan for the price of $107,000 in 2001. It needs to have some big oak trees cut down, probably around $7000.00 due to the size of them. They are just too close to the home. We owe $40,000 on the home right now and are making monthly payments of $760.00.

We own the home that we live in now and do not have to make payments. We also own 2 small condo business rental units which bring in $2000.00 per month total. They are 1000 sq. ft. each....... We are trying to figure out what to do with the Ranch Style Home....... I am not sure that it can rent out for enough money per month to make it a good rental. People are used to paying around $1000.00 to $1200.00 for rent here, and I wouldn't want to pay $2000.00 plus per month for that house since it is only 1,350 sq. ft. ...... How much should the rent be right now, national median?

It is in a great location but I am not sure what to do with it..... I would like to have as many properties as possible before I retire, just like a lot of others. I don't want to have sellers remorse if I get rid of it....... What would you do in this situation?

Thanks

Given the facts here, you are paying around a 10% interest rate? There isn’t enough information for me to get an understanding of what your COC return would be. 

it would have been wise to do a cash out refi when rates were below 4%, if you were to keep it.

my guess is now would be the best time to sell before rates go even higher. That 200k could net you 2k a month on a different property. 

Quote from @Cheza M.:

Hi all,

I have a tenant who's in a month-to-month lease and I'm trying to raise the rent next month by $50 more ($1,200 to $1,250) which is, in my opinion, a reasonable price based on the comps around the area. My PM suggested the same thing. However, the tenant said in her email:

"I can barley afford 1200 why are you raising it 50$ I already pay water and sewer.. I honestly cannot afford 1250$ you’d at least have to give me to the end of next year to be able to afford an extra 50$ in all honesty this house in this neighborhood isn’t worth 1200 let alone 1250$ an the only ready I’m here is because I’ve already put so much money into this house just to leave .. if you can kindly give me a call at id appreciate it"

Am I charging the tenants a bit high based on the comps in the area? My SFH is located in Stanley Ave, Maple Heights Ohio, 44137.

Neighborhood Class: B
Square Footage: 1230
Bedrooms: 4
Bathroom: 1.5
Year Built: 1920
Rehabbed: 2021

I was already expecting complaints, because of course, tenants wouldn't just say nothing when you raise the rent. But I'm still wondering what do you guys usually do when they complain or refuse the rent increase aside from kicking them out? I feel like she's a good tenant, but at the same time, I don't want to just keep the rent as is when it needs to be increased. What are some ways to handle this based on your experience as a landlord who needs his/her rent increased? Should I show her the comps in the area? Or wait until next year to raise the rent like she wanted? What would you guys do? Thank you so much in advance for any suggestions!

 There are a couple things going on here:

1. The tenant doesn’t dictate what market rent is. You do, and every other landlord. You can charge whatever you want. 

2. A tenant should never “improve” your investment property. You should avoid that at all costs.

3. If $50 is going to make or break the bank then it’s only a matter of time before she stops paying.

I would raise the rent, and if it’s a problem she can leave. Simple decision if I were in your shoes.

Cap rate usually fluctuates as follows:

Lower cap rate = nicer area

Higher cap rate = crappier area

But either way you want value add.

But you shouldn’t be looking at this from a cap rate standpoint. It’s a 4 unit building. Cashflow and your return on investment is what you should be looking at. 

A clean and updated apartment 

Another option to consider:

Hard Money loan:

- Pay yourself as the general contractor, and make sure to include your own labor costs to help fund the monthly interest costs. 
- After the property is fixed up and fully rented out, use DSCR (asset based lender) to refinance the property (if you cannot refinance through traditional financing).

Keep in mind that DSCR loans will have a much higher interest rate.

Good luck!

Quote from @Greg M.:

Secret codes, date stamps, post dated checks, etc. You people are paranoid!

Do you have any reason to believe this tenant is trying to play games or is going to screw you over? If not, let her mail the check. If the check doesn't arrive by the due date, deal with it then. 

Also, check your local laws. You may have to accept certain ways of payment from tenants. 

 I have one section 8 tenant who mails money grams (hate the idea of money grams being mailed).

But she has paid her portion every time, for over 2 years now. Although it is a couple days late from the first, I don’t cause a stink. Likely she is receiving assistance the beginning of every month. 

It’s not ideal to me, but some people just don’t have the ways and means to use technology that’s given.

I just notice a few things:

1. HELOCs being thrown around. I see people spending insane money on renovations. Companies are charging 50k a bathroom, 120k+ on kitchens, and new construction is around $450-600 a square foot. I think we’ll see an issue in 5-10 years when principle/interest comes due over the years. 

2. Interest rates rising. Everything is less affordable, when things were already not affordable for a lot of people. 

3. Rental supply crisis. The government is trying to step in, this is a really big issue in my area, not sure about yours. 

4. The average joe is trying to invest in real estate. Everyone and their mother thinks buying anything is smart right now. Nobody is concerned about risk management. And this is what scares me the most, and to be honest a tell-tale sign we are heading in a bad direction relatively soon. Everyone who told me I was dumb for investing in real estate back in 2017 is now saying it’s a smart idea.

Quote from @Marcus Auerbach:

Quote from @Account Closed:

Quote from @Marcus Auerbach:

Ok so the daily wire is NOT a good/credible source of real estate industry infomation.

This is your classic opinion host blog post, very little data, and half of what they quote is just plain worng. Case in point rates have never been at 2% as quoted, just under 3% was the lowest.

The only metrics that really matter when you try to look for a housing bubble are affordability (still excellent in my market, yellow flags on the west coast) and inventory (all time low).

Supply and demand are the basic drivers, and yes higher rates should cool off the market. At the moment they just create more urgency with buyers to get something before they go even higher.

A better source of information is BP's market updates on YourTube (Dave is excellent!) or  my very own channel specifically for Milwaukee.

 That would put you in the "Denial" stage. ;-)

I know, "It's different this time".

Well, that's your opinion... ;-)

"In god we trust, all others bring data."

 The problem lies in HELOCs over the past 5 years. I see a BIG problem in 10 years.

keep in mind, the investor can afford higher prices. Multi family hasn’t even topped out yet imo. 

Section 8 where I’m from:

3 bedroom - $2800

2 bedroom - $2500

1 Bedroom - $1950

Studio - $1300

They are trying to force affordable housing.

Good evening BP

I had met with an off market seller a couple months back. During conversation he had mentioned that his motivation for his Ad was to light a fire under the towns butt, in order to get them to consider a low income housing deed restriction in exchange for cash.

After me giving him a LOI, he flaked on the deal. My guess is he did use it as a way of negotiating.

So I’m sitting here wondering if that is even possible, or whether or not it has been done by any of you in the past? 

To be honest, it seems pretty intelligent given the fact we are in a rental housing crisis where I live.

Congratulations on your success.. hard work pays off.

I would suggest taking some of that effort and put it into your personal life! There needs to be a balance IMO. 

Nothing good comes easy, but that applies to every area of your life. It all takes hard work.