All Forum Posts by: Carl Millsap

Tim Callahan...I'm not a lawyer but.....

1. Does your lease state the tenant is responsible for any fees you incur to include legal fees? If not I'd update the lease for future tenants. 

2. I found this articlehttps://www.hemlane.com/resources/maine-security-deposit-law...

3. Wait until she moves, do a thorough walk through. Get estimates for all repairs that are above fair wear and tear in advance. Video and/or take pictures of everything in case you have to pursue her in small claims.  

@Samantha Stephens my experience is the property is only available for those will OO to bid on during this period. If the home sits for a period w/o a viable bid from a prospective OO then it'll be opened to investors. Just my experience.

I think you'll have to sign an affidavit stating you plan to occupy it. 

As for the time of OO yes I think it's a year but I've never seen anything that states you have to move in immediately, just simply you intend to OO not flip or rent it.

Your realtor should be able to confirm or deny the above. 

Itay, 

In my experience Section 8 is based on the persons voucher/ situation. Although max rent maybe $2k they may only give $1k on the tenant's behalf, the tenant would pay the difference in your case $300-$400 it depends on their specific case. 

I've had properties listed for more than what section 8 wanted to pay, we had to provide comps that their estimate was wrong / out of date for similar apartments. 

I would contact the housing authority who manages the S8 program in your area to get an accurate ideal of how they determine what they'll pay on the tenant's behalf. I would also ask for the inspection checklist so you can ensure your place will pass inspection. 

Hope this helps.

Kevin, 

Congrats sounds like a great find.  Here's what has worked for me:

1. Intro letter to tenants requesting updated contact information, maintenance problems, how to pay rent / contact our office etc.

2. Fix the outstanding maintenance issues. 

3. Send each tenant a letter letting them know you need them to sign a new lease that will contain a rent increase schedule.  Give a deadline for notification of their intent to sign a new lease or their plan to move. 

Consider a $200 a month increase every 3 months may not be doable for most tenants. Depends on the class of property. 

Talk w/ each tenant, work with them if necessary on an increase schedule that won't cause them a financial hardship but helps you achieve the increase. Be prepared to work with them on a plan to move.

You can make the argument the cost of moving is more than the cost of the increase. Most tenants in my experience don't calculate the cost of a move. 

Calculate what it would cost you to evict them if they won't or don't move willingly, that's a very real possibility.

4. What if they all decide to leave, can you carry the mortgage, etc. while renovations happen? A way to protect against this is to stagger the new leases / rent increases. 

5. Consider holding 1-2 units slightly below market ie. $50-$100 a month. While I want to maximize profit, I also want to keep my properties stable. Think about your renovation and turnover cost. 

If it takes you $8-10k to renovate a unit, not including cost and time to find a new qualified tenant etc. a $50 -$100 a month difference in rent for a known / stable tenant in my opinion outweighs the the full turn prospect.  

Hope this helps.

Mitchell, 

I always encourage people to take action BUT I also try to ensure they count the cost before they move forward. 

Some things to consider:

1. If you refinance at 80% value ($365,000 *.80) = $292,000 - $258k balance = $34k net before refinance closing cost. Do you have something in mind to purchase that a $30k downpayment will make sense?

2. Can you make the payment on the $292,000 loan for your primary if the tenants don't pay rent? 

3. Can you pay all of your bills, mortgage for the rental and potential maintenance bills for a rental if the tenants don't pay their rent or if the place is vacant and needs rehab after the tenants destroyed it? i.e. deductible for a roof replacement or replacing an HVAC unit or replacing a hot water heater? 

You can always put in sweat equity to do repairs / renovations but you still have to pay for supplies and other associated bills.

4. Do you plan to manage the rental yourself or will you have a property manager? 

 Work through the questions above and figure out HOW to do it. This business is a thinking man's game...solving problems is what we do, this is just the first of many. 

A. I wouldn't put my personal residence at jeopardy that's just me. Keep the 3% rate.

B. What can you do to save / get the money to buy your first investment property? Work a 2nd job, cut back on current expenses?

C. Owner financing on a deal? Creative financing options, partner w/ someone?

There are options, some will take more thought but it can be done.

Hope this helps...

Pramod, 

There are a couple options we use.

1. Double deposit. If you're going to take the risk they have to pay for it. If it's allowed in your area collect a double deposit to offset the possibility they're going to default. When they miss the first payment take your regular action steps. Don't delay because you have a double deposit.

Double deposit, plus first month (prorated rent) and any other move-in cost before they get the keys in certified funds, no checks or promises to pay.  

2. A good program we use is LEAP. It's an insurance policy that borderline applicants have to get if everything else checks out. LEAP will do their own underwriting on the applicants. The applicant applies and pays for the coverage, we're listed on the policy as the insured. We've only had to collect from LEAP once, it was a smooth process. I don't think your applicant will qualify for LEAP but it's worth looking into.  If they can't get LEAP coverage then we default to #1.

Hope this helps 

GP, 

1. You have a PM company let them solve the problem, that's what they are paid to do.

a. The PM should notify the tenant of the violation and give them 3 days to cure or whatever the lease says.

b. If the tenant doesn't cure the issue w/in the timeframe then the PM should cure the issue I.e send someone over to clean the yard, and tow the vehicle if necessary. The notice they send should state that is what will happen if the tenant doesn't do it at the tenant's expense.

2. What does the lease say about inoperable cars, appearance of the property? Our lease says no inoperable cars are allowed on the property. We tag them w/ a notice that says they'll be towed if tires aren't inflated or if they've sat for long periods of time w/o movement, invalid tags etc. 

3. Ask your PM how often they drive by properties under management. In theory they should've seen / known about the violations before the city got involved. Not all PMs do this but it's something to ask / think about. 

4. Ask the PM if they're going to contact the City or if you need to about the citation. Follow up and ensure the loop is closed quickly.

When you call the city ask what triggered the visit. Cobb county isn't a small place the inspector isn't just driving around looking for violations. Oftentimes tenants will call to report an issue i.e. mold thinking it'll save them from eviction which triggers an inspection and results in these violations.  

Good luck, easy problem to solve. Communicate w/ your PM, the City and follow up until it's resolved quickly.

Nicholas, 

There are a lot of ways to skin a cat, the important thing is you take action. Both options are viable. 

1. A duplex / triplex where you house hack w/ the VA loan is a good option if the numbers work.

2. Buying a single family below market, living in it then refinancing and renting is a good option.

Do the research...do you have the skills to renovate a house? Do you know how to negotiate and hold contractors accountable for renovations you can't do? Do you know what to look for? 

All of this is doable, don't let the questions above stop you those are just things to consider which thousands of people have figured out and you can as well. 

Pick an option then execute. This is a good business, it can and will change your life if you Execute!

Deja, 

In my experience a landlord who is exiting the business or wants to flip their SFH to level up to multifamily may offer a package deal.

1. Check Crexi, Loopnet etc. sometimes a package of homes will list there. 

2. Research the County Clerk / PVA office for LLC, and individual names that have a bunch of properties listed under their names good way to identify landlords w/ multiple properties.

Just a couple of ways to find package deals. #2 is also a good way to find off market deals which is where you can save the most even if it's just buying a house direct from the owner w/o an agent.  

Mike, 

This has worked for me:

Hello Seller, 

My name is Mike, I'm interested in buying your property at 123 Main Street. I know it's not on the market right now but if you're interested in selling please call / text me at 716.555.1234.

Respectfully,

Mike

I've sent this letter to the same owners 2-3 times. A couple will call if they're interested. You can't create the desire to sell but if they were considering it they might call. 

The key is when you meet with them:

1. Ask questions, uncover why they want to sell. Let them talk.

2. Treat them like a friend...they need to know, like and trust you. 

3. Make a reasonable offer on the spot. Do your homework, know what the property is worth before you show up. If the place is worth $150k and you offer $100k explain the reasons why...

a. They would have to pay a commission if they sold w/ a realtor.

b. The place needs a roof or whatever....

4. If they don't agree on the spot, thank them for their time, then follow up within 30-45 days. 

Keep it simple.