All Forum Posts by: Bob Hines

I'm a big fan of the one at a time approach.  It cuts down on trying to return money to people and if you have a tenant's $40, that may limit their applying to other places as they may not have another $40 to put out for another application fee.  Also, I feel that it helps by eliminating the possibility of a discrimination lawsuit because you chose someone else.  You just turned down an applicant who met your requirements.  Was it because of race?  Was it because of gender?  Was it because of family status?  The applicant can now sue you in court for housing discrimination because they met your requirements and you refused to rent to them.  You may have chosen the other person based solely on income but they can still sue you and you would have costs defending that suit even if it is so baseless it's thrown out the first time it's in front of a judge.  Even if you did base it on income, you better hope there was no difference in a protected class between the two applicants, you could be in a real tough spot with that.  There is no reason to take on that risk when you can easily avoid it by running one at a time.  If you get two at once, make the determination based on income at that point in time and tell the other applicant.  Hold the second application and prescreen if you want, but don't take their money yet.

Normally I only take one application at a time but I had this situation come up where one person told me they were going to turn in the application (I'm told that many times and people don't show), another person called to say they were going to show up and they both did within 30 minutes of each other.  Then I notice that somebody left their application in the mailbox without telling me.  I prescreened them all and ultimately picked the one with the highest income and ran it first.  I called and explained the situation to the other two applicants, let them know what order they were in based on income and asked if the other people were approved, if the address on the application was a good one to mail their money back to.  Everybody was fine with that situation.

I had a situation last week where an unmarried couple filled out two applications and paid two fees and when I prescreened on Casenet, found out that they were evicted in December and now looking for a place for September.  I called them back and said they weren't approved and could meet me at a time when I was going to be at the property anyway and get their money back since I didn't need to screen them.  It wasn't the best of terms but I avoided bad terms by giving their money back.

Use Casenet and Facebook to prescreen and only collect money from one tenant at a time.  If you have a bad feeling about somebody, or are hoping somebody else comes back to apply, you can always say you have a pending application to buy some time.  I say give the $40 back and eat the cost.

Definitely switch to non-locking doorknobs.  They are cheaper AND save you the headache.  I was turned on to this via my locksmith.  He said there was an apartment complex that was having a lot of break-ins.  He suggested to the owner to switch to non-locking knobs and wouldn't you know it, the break-ins completely stopped?  From some tenant's perspective it is much cheaper to convert their problem of calling and paying for a locksmith into a bigger problem (and expense) for the landlord by kicking in their own door to re-gain entry and claiming a break-in.

Add a provision in your lease too, but in 7 years I've not had a single lock out with non-locking knobs.

Last August in the midst of 105* heat wave a tenant called me concerned that his furnace didn't work.  

Me: "Do you mean your air conditioner isn't working?" 

T: "No.  The AC is fine.  I don't think the furnace is working."  

Me: "Last winter was the coldest winter in like 25 years.  You never called with any problems then.  Why wouldn't it work this year?"

T: "I can't stand cold.  I want to make sure it works."

Me: "Ok.  I will send somebody out to check out the furnace before it gets cold."  Thinking I will do this late Sept or Oct.

2 days later

T: "When are they going to fix our furnace?"

Me: "Before it gets cold.  Fall"

T:  "What!?  I need to make sure it will be warm.  I hate the cold!"

Me: "You do realize it's over 100* today right?"

T: "Yea.  But I don't want to be cold.  Can you get somebody over here today?"

Me: "No."

Unfortunately this went on for like 6 phone calls complaining about a furnace in 90*+ heat.  I finally sent over an HVAC guy to make sure things were ok.  HVAC guy calls me, "The AC is working fine and everything checks out but the tenant is wanting me to check the furnace?  What's up with that?"

Me: "Yes I know.  He has been calling for weeks about the furnace not working.  He is a special kind of dumb."

Finally the HVAC explained to the tenant that the furnace won't kick on if you have the thermostat set on 65* for AC and switch it from cool to heat.  If you want the furnace to kick on, you will have to set the thermostat to 80* for the furnace to kick on.

T: "Wait!  Why would you do that?!  I don't want it that hot in here!"

At least I got a discount on the service call as the HVAC guy had a pretty good laugh.

My guess is that if it's a foreclosure, it was already winterized so somebody broke in and stole the copper water pipes and damaged the shutoff or broke the shutoff off.  That had happened once when I was looking at a property but it was draining out the floor drain.  So if it's clear,  something is probably clogging the drain and you can't hear the water coming in it because the source is now underwater.  If this just happened, you might need to wait awhile for the bank to fully understand that they now have a bigger problem and that the value of the property just dropped as they are missing water pipes (makes the property uninhabitable and very few lenders will loan on the property) and they have a potential mold issue.  Water pipes are cheap and easy to fix (install PEX so they won't be stolen again).  I replace most of mine myself but if you have a broken/missing shutoff, you will likely need a plumber that will work without pulling a permit unless you are lucky and there is already a new copper line coming into the property.  If you're not lucky and it's not copper coming in, with the age of the building, it's possible/probable you have a malleable soft metal water pipe that you're not exactly sure what it is when it comes to legal disclosures (thus the non-permit work, City would make you replace the malleable metal water line if you pulled a permit).

The only inspection rider that I do when making offers is a sewer camera inspection as I can't see it.  That cast iron pre-1900 sewer pipe is past the end of its useful life so it's good to know if you are going to need to replace that right away or not.  There could be a clog, or it could be a collapsed sewer pipe.  Make sure you camera the sewer so you know what you are dealing with and possibly have another bargaining chip.  Every property that you're willing to buy in St. Louis, do a sewer camera inspection because of the age.  It's the best $150 you'll spend.

As mentioned above, I would make sure that the seller has the bad tenant out before you close as there could be damage that you would either want the seller to repair or get a credit for at closing.  If the seller can't get the tenant out by offering $500 or whatever to move so they can get the sale closed, think about what it will take for you to get the tenant out.

Reel Big Fish & Less Than Jake at the Pagent that night.  Can't make it :-)

I think it depends on what you are buying and when you are buying it.  Menard's has some good sales and rebates on items that you don't see as much of at HD or Lowe's (drywall is on sale right now at Menard's).  But do you need it when it is on sale?  Can you wait until the sale to buy it?  

There is also a different product mix at each of the stores.  Menard's just came to our area and I am super excited about their 3 bulb dome lights.  The older homes I invest in have larger rooms with tall ceilings.  2 bulb lights leave the rooms dim and dingy looking.  The only 3 bulb lights I could find at HD or Lowe's were 'designer' styles starting at $50 each.  Menard's has basic 3 bulb dome lights 2 for $25.  That solved a big problem for me and saved me money.  It seems to me that Menard's has a larger selection of the lower priced items than the other two.

I don't like the electrical section at Menard's at all.  It's overwhelming and I can't seem to find things as easily as I can at HD or Lowe's so I won't waste my time in that section.  But their plumbing section is easier to navigate and has 2 packs of pex parts comparable to what HD and Lowe's charge for 1 packs.  HD has the best electrical panel to meet my needs as I upgrade all of my properties.  HD also has better light switch and outlet covers.  I like Lowe's over HD for non-basic lighting selection.  Lowe's also has better lumber than HD.  I've heard good things about Menard's lumber but haven't purchased any from there yet.

Half of my properties are closer to Lowe's than HD with the other half closer to HD than Lowe's so that determines where I go most of the time.  Menard's is building a new store that I pass on my way to work so I will stop at any of the three depending on when and where I need something.  Although I have noticed that some of the newer stores (Lowe's and Menard's in my area) are located in TIF areas and charge an extra 1%-2% sales tax to finance the TIF.  If it's something that I need right away, it's not worth saving 1%-2% to spend the time to go to a different store.  If it's a big order, I keep in mind the extra tax when comparing prices or will purchase at a different Lowe's or Menard's that doesn't have a TIF tax.

Make note of where the properties they show you are located and then check on the MLS for an idea of what the actual market values are. I don't speak to everybody, but the "wholesalers" and turnkey operators that I have encountered in my market are advertising properties for $5k-$15k or more over listed MLS prices. Be wary of "cash only" deals. From my experience, that means "Won't appraise out for a loan" instead of "Screaming Deal". If you overpay at the beginning and things don't work out, you have to list at a lower price and pay an agent to sell it unless you know how to find another out of area sucker investor on your own.  

Again, I'm not lumping everybody together but it is what I have found in my market so I assume this happens in other markets as well.  Trust but verify.

How many beds/bath?  Can you give a better idea of the location?  If it's in a great area, and depending on the beds/bath, maybe try upping the rent to attract higher level tenants.  I get $700-$800/month for 2/1s east of Grand.  I'm getting $1050 for a 3/1 (technically 2/1 as it doesn't offer a dining room to technically be a 3/1 per the city) that is on Kingshighway down near Gravois.  I had a good number of showings for it with it listed for $1100/month, did $1050 as it was a med student who wanted to sign a 2 year lease.  

Although you would still be cash flow negative if $700-$800 is just the PITI. I know lots of people hold rentals west of Kingshighway and west of Hampton that don't cash flow for long term savings/investment. I'm not saying it's the best way to go but it's common in that area. Look at how much time/effort/money you want to put into this. If it's something you want to do and view the extra time and money as a 'hobby' or 'entertainment' as those other landlords do; it could be ok for you if you look at it from a 30 year mortgage paid off by tenants point of view. If you want to do more real estate to make money or don't want to deal with it or don't want to do things yourself (meaning if you would hire a PM for this) you would most likely be better off selling it and purchasing something else that will make money.

Feel free to message me if you don't want to post specifics here.

There is a website you can advertise your Section 8 rental on if you are going that route.  I haven't done Sect 8 yet so I originally forgot about it and I don't know the site but it should be an easy Google find.