All Forum Posts by: Ben Rodriguez

Hey @Matt Bov,

My information may not be super useful, but I have had to give longer term tenants notice of sale in Nashville.

My lease was pretty clear about potential sale, but I gave lots of notice of my intent to sell, I also gave the tenants the opportunity to purchase which almost happened.

In the end, the hardest part is really doing showings while you have tenants because there can be state restrictions on how frequently you do that.  I came to an agreement with my tenants as to when showings could happen and the expectation of the state of the house while the showings happened.  The only issue there was a dirty litter box in a half bath which was somewhat regularly dirty.  In the end I was able to sell with tenants in place and the new owner was able to utilize the tenants to help him hold the house before move in (he is military).  

So the short answer and only advice I can give is, open communication, try and be friendly, know what concessions you're able and willing to make if the tenants need anything.  Give them a good chance to get their deposit back (it just shows good will and no hard feelings).  As for forms or template, just make it a nicely worded formal letter that is sent via certified mail (if needed by the state).  

I hope this helps.

Hi @Mark Gall,

Here's my semi-horror story.  I say semi because in the end we got what we wanted, the process was just less than perfect and it will change how I approach contractors in the future.

First let me say that for small jobs that I'm really just trying to save my own time, I don't worry about heavy research I go with referrals from trusted friends though.

I got my first home from a contractor that was already building in the neighborhood we looked at in Nashville.  He had actually built the same house we did, just down the street and we got to look at it the day before those owners moved in.  We loved the layout and he was willing to work with us on custom touches since we didn't want to change anything structural we got to really make it ours.

That main house was built from start to finish in 3 months... for a 2400 sqft craftsman, we were impressed.

A few years later we decided to build a garage with loft apartment that we could Airbnb.  Everything was pretty easy when it came to working out the design and all, he was great right at the beginning but that project which only ended up being about 750sq ft took 9 MONTHS.  The biggest issue was him dealing with the electrical which was just delay after delay.  It also ended up costing about (if I remember correctly) somewhere around 10-15k more than his original estimate, me being dumb did not have him lock in a quote, just just gave an estimate.

As hokey as it may sound I have learned a lot from watching the various Holmes shows on HGTV and DIY network when it comes to dealing with contractors and I will always remember from now on, for any large job.

Detailed plans and contract which outline expected progress after certain amounts of time, a payment schedule, whatever else I can put in play to protect me and my money.  Also, if I've never worked with the contractor or if I don't have a solid referral from someone I trust, then I will be sure to research references, check on insurance standing and valid licensing, everything that will give me peace of mind, as well as show that I'm serious and I won't be taken advantage of.

The other thing I will do is make sure they don't have an opportunity to put a builders lien on my property.

From what I've learned recently this can be avoided in some instances.  Certain states require a filing for the right to issue a builders lien before work starts.

Anyway, I know I'm long winded, but I hope this helps with finding the right contractor.

Hi @Kathy R.,

You definitely have a tricky situation with that level of income.  The thing I will always suggest since I am not a professional in the mortgage world is find yourself a mortgage broker who is patient and can talk openly with you.  The reason I say that, sometimes when you talk directly with a lender they will just give you cold facts, ("this is your money, this is your debt, this is what you want...No") they may give you reasons, but they may not offer any strategy for solving your dilemma.  

I worked with one here in Nashville a few times and he was so great I've used him on the three houses I've purchased.  He gave me bad news a few times, but he gave me solutions like, "you need lower debt" or "can you find a co-signer", etc. These options made it possible for me to trade up on every purchase, I went from a 650sq ft apartment in midtown Nashville 8 years ago, to now over 3000sqft house in the country outside of town with 15 acres of land.  On our next move, we expect to be able to do a custom build and possibly a small vacation cabin with the proceeds from the sale. 

I'm not trying to boast, just illustrating that there are solutions out there if you have people you can trust who are willing to help you figure out your unique situation to get you started.

Also, if the lender didn't mention it, they will often need an income history to consider your second job a viable source of cash.  So if you get a second job, you will need it to keep it for no less than 6 months before they will start to consider it as part of your regular income.

Here is the strategy I would start with:

1. land that second job, even if only part time to have the extra cash coming in.

2. eliminate all debt you can.

3. get a credit karma account or something like that to track your credit score and keep tabs on it.

4. save as much as you can.

5. find a great lending pro in your area who is interested in helping you figure out the best option for you.

hope this helps.

@Logan Ward

Hey Logan, For sure, if you haven't started the Due Diligence portion of the process, then be proactive and get that all done quick (inspections, radon, termite) all of it.  Even if it doesn't turn out the way you expected, you'll have a better view of the future.  

Go to your government websites and make sure you are well aware of the laws governing landlords.  For instance, I live outside Nashville and there are landlord registrations and fees associated with being a landlord (not a lot of money, like $10 a year) but it's something to remember.  Then you want to have a solid lease agreement that protects you, but you will need to know what the state will and will not allow in a lease agreement, for this, definitely consult a lawyer if you don't already have a strong knowledge of contracts.  Also, hopefully you won't need it, but be aware of the rules governing tenant problems, (late payment, notification, entrance for repairs, eviction), all these things usually have a specific process to be successful in your state, so seek it out and get familiar.  Lastly, be meticulous with your documents, buy a filing cabinet if you need to, but keep everything organized so that you can references it for whatever reason.

Hope this helps.

@Rick Oaks

In my limited experience, even with a new construction, it wouldn't hurt to put some aside just in case. With how volatile the world has become, even if you just put it in a mixture of high interest savings or roth IRA, you'll still have access to those funds and they can make you some money at the same time. Perhaps just get a loan for half of the building costs and pay off the rest to give you a modest mortgage which could probably be refinanced in a couple of years to bring it down even further. Hope this helps.

 Both our first primary and our first rental were new construction meaning we met with builders rather than average sellers.  These builders were working on developing the areas we purchased.  On our primary we were able to get in with him before he had even started building so we had the chance to make some custom choices (floors, door styles, countertops, appliances, light fixtures, paint colors) basically anything he would let us choose we did, and it got rolled into the price which didn't really increase it much and where we could, we would purchase items and just have them do the install (which they were going to do anyway so no extra labor).  

The rental was already built, but being the first owners also gives you a builders warranty which is usually around a year where if anything goes wrong with the property they come out and fix it (of course if you didn't break it).

From what I've learned about the building from scratch process, there are a great deal more steps than we went through.  I found a great website http://www.builtbyadams.com/ they have a whole section on custom builds and their process and why you need to take all those steps.  Worth the quick read.

@Daniel Molina

I mention long term has it's challenges because, well, it can.  I was fortunate to have a new construction for my long term.  Since I was the go-to for all repairs and such, I had to remove glass from a garbage disposal, I had to get part of a carpet repaired things like that.  Then on top of it there is being aware of your states laws you have to follow being a landlord.  It was not quite the "set it and forget it" I guess I sort of thought it would be before I ended up doing it.

I will definitely get back to it somewhere down the road, depending on where I am at that time will determine whether or not I will manage it myself.

Like I said, it provides a great education, so doing it at least for a while is a great way to get a handle on what is required and what you would want out of a management company down the road.

Hey @James Munoz,

I have primarily worked with local and national banks. I had a local bank (First Tennessee, now First Horizon) for holding Escrow on a long term rental deposit and the same bank to manage finances for STR in the same house. It was kind of nice to have things separate from my primary bank (Bank of America). Depending on what you need I think they're all going to provide approximately the same services. Not all small/local banks will have robust online or app interface, so depending on how much you want to do your banking online, that would be something to consider.

I read a pretty cool book called Profit First by Mike Michalowicz, one thing he points out is to possibly find multiple banks to accomplish the methods in the book.  I have not gone so far as to employ these methods myself, but it is a cool way to look at managing business financials.

Another thing I've found is regional or local banks may have more agreeable operating hours for going in to talk with people or doing in person transactions.  For instance, BofA in my town closes at 4pm every day and only open till 1pm on Saturdays.  However, a local bank (Reliant) is open till 4:30pm every day and till 5 on Fridays, which helps with those end of week deposits getting in on time.  

Hope this helps.

Hey @Daniel Molina, 

I have only had two properties at one time, once. My wife and I were taking advantage of the Airbnb boom in Nashville a few years back and got a second property to double our income (which was not very much it turns out).  Whatever you end up doing, talk to folks in your area who have done or are doing it. 

Long term has its own challenges, do you use a management company or try to do it all yourself.  I went with the latter and it provided a great education in the process.

My most valuable insight I can provide is make friends, people who are professionals in the areas you need professionals, mortgage lending, real estate sales, legal (I had a friend going to law school who double checked my lease agreement for me).  Finding these friends can help you overcome the unknown parts, or give you insight into the next steps in whatever path you choose.

Hope this helps.

Hey Mitchell,

I would definitely say find yourself a mortgage broker who you can have an open, low stress conversation with.  I did this same thing in the past in Nashville and the primary reason we had our first house in my name alone was because I had the better credit and income at the time.  The way they look at co-borrowers was that whoever had the lower credit score would be who the lender would look at for making the call which could sour the deal.  Perhaps it would be better to have the second property in just her name because they won't be looking at debt to Income ratio on you in that transaction.  

I have also found that hypothetical income won't cut it.  Just because you are going to ask for a certain amount on your rental doesn't mean it will sustain when it comes to risk assessment, lenders (from what I understand) really like to see a history of income.

These are just the lessons I've learned which may or may not apply to you wherever you are looking to purchase.  

We were very happy with our broker and realtor, I always recommend developing a solid relationship with a few of your own, they will give you all the details of your situation and what will work for you at that point in time.  Hope this helps.