All Forum Posts by: Bob Willis

This is not my area of expertise but this sounds a bit weird, but I guess it depends on what kind of policy you had. We had a fire on a building we owned and it was a total loss. The insurance wrote me a check for the full replacement value with no strings on how the money was spent. We chose not to rebuild, paid off the small amount still owed on the property, donated the vacant lot to the local Economic Development Corporation and bought a new property in Scottsdale. But as I said I am guessing it depends on the type of policy you had. As @John Mocker said - talk to your agent.

Hey All,

I bought a small triplex in September 2020. Now because of personal circumstances I am selling.

I just accepted an offer. The buyers had an inspection done and are claiming roof needs to be replaced because of hail damage.

The buyers then had a roofing company come out and inspect the roof, the roofing company findings supported the conclusion that hail damage had degraded the roof.

There have been no hail storms in the two years I have owned it.

When I purchased the property the previous owner declared that a new roof had been installed in 2019. My inspector found no issues with the roof when I purchased it.

I am at a loss on how to proceed. Replacing the roof will cost me $12k.

Any ideas or am I just stuck.

Thanks,
Bob

One thing I would add is HVAC. Older units will go out and they are not cheap to replace. I have had the misfortune of replacing three units in the past 13 months, ouch. While older units may not be showing signs of failure their age should be taken into consideration when doing the inspection review.

Have you considered a Hard Money Lender? That could be an option...

You need to add in CapEx, Vacancy, Maintenance. Believe me there will be all of those things. Not a lot of meat on the bone here.

A few months ago I heard David Greene on the BP podcast start discussing this very point. I have listened to many many BP podcasts, but this was the first time I remember someone specifically taking potential appreciation into account when making real estate investing decisions. I happen to own properties in areas that have both great potential appreciation and have very little potential for appreciation. The funny thing is, the properties with little potential for appreciation cash-flow very well.

I guess the point I am trying to make defining what your investment goals are? Is it long-term appreciation vs short-term cash flow? I guess in the example given in the original post it would have been a more accurate comparison if you discussed the income that would have been thrown off over 40 years vs appreciation over 40 years... That's a more interesting analysis/conversation in my opinion.

This reply doesn't really address your question, but I think it is relevant. I live in a small town. I am friends with one of the largest landlords in town. His reputation is that of a slum lord. I will grant you that his units are generally D grade properties. He rents nearly all of them to college students. But in a recent conversation with him the topic of his slum lord reputation came up, and he made a very relevant point. Regarding the worst properties in town (regarding appearance and overall shabbiness of the properties) none of his units even made the top 10 of worst condition. As we talked through the various properties (we live in a small town so we know each street and neighborhood) all of the worst properties are owner/occupied. Maybe our town is the exception, maybe not. Seems like landlords are an easy target sometimes.

Eviction laws vary by state in the US, it looks like you are in Canada. I have no idea the laws you need to abide by. I would check that before you do anything suggested by folks here.

Congrats on getting started. When I first started down this path I thought being nice and friendly was the key to working with tenants. WRONG. I'm not saying you can't be nice and friendly, but that is NOT the key. The key is setting non-negotiable expectations. Make sure your tenants know that this is a business and what your expectations are around their performance related to your agreement. As I said you can be nice and friendly, but that is only if expectations are being fulfilled. As @Rick Albert said, this is the same as having a primary residence with a separate rental. Don't over think it. Good luck.

Congratulations! You have found the best place to start. Also, listen to the real estate podcasts by bigger pockets. If you do daily walks or workouts this is a great time to review. Put in the time. Things will come to you.