All Forum Posts by: Carl Millsap

@Tosha Revere I would take every precaution I could with the showing, even if it meant waiting until she vacated to show it. Good call taking the pre-payment.

I wouldn't lower the rent and I wouldn't renew the lease. If you lower the rent to cover the mortgage and you have a maintenance issue now you're at a loss, and those losses will pile up with each maintenance call.

I would refund the deposit if and only if all of the conditions of the lease were followed. What does the lease say about who can live in the property? If it doesn't say specifically the process / procedure or who is allowed then refund the deposit if all other conditions are / were met.  Then update your lease /add the clause about who can live there and your process for adding people etc. for the next tenant.

Not sure what your City / County is doing about evictions but as soon as I could I'd file an eviction if she doesn't vacate by the end of the lease term. 

I understand hard times and I'm always willing to work with our tenants when they communicate, but I can't help someone if I have to chase you down for the information.

Post your notices on the door and then follow-up with the action that the notice says you're going to take. Again, follow city / county laws but in my area we just have to post the notice.

@Renee Vanhorn Here's a real life example:

I'm working on buying a 32 unit property. I don't have all of the money for the downpayment so I'm bringing on an investor to make up the difference. They are simply providing the money. 

I'll manage the property i.e. maintenance calls, rent collection etc. 

In this case I'm responsible for the mortgage. I'll return their investment in 2 years with the agreed on return rate.

Working with an investor should be a win-win. Learn how to structure a deal, how to make it beneficial for you and the investor. 

@Matthew Medhat like you said "current unknowns." If your numbers work and it was a good deal before this all started it's still a good deal. 

It's a condo so is there an association? If so have you read the by-laws? I've never owned a condo as a rental but I hear one or two "assessments" can wipe out cash flow. Again...I've never owned a condo...Due diligence.

I digress...your question was should I buy in a Pandemic? I say buy if the numbers work and you can cover the mortgage when / if things change. I'm in the process of buying a multi-family. The numbers work, it's a good deal so full steam ahead. 

@Cassie Jones What type of property are you buying? Single family, Duplex, Fourplex? 

What are you looking at for worst case scenario? 

I would imagine $500k per occurrence / $1M will cover most things. 

When you buy your next property set-up another LLC and get another $500K / $1M policy for that LLC. Assuming you want to buy a 2nd and that you used an LLC for this purchase.

@Matt Nico time to look at other options i.e. find properties with owner financing. 

I'm sure there will be a few people who recommend wholesaling to raise $, and then there's buying properties subject to. 

What banks are you approaching? Local / Regional / National banks? 

Develop a relationship with a portfolio lender bank they may count the rental income so it offsets the debt. 

Do you have a family member or friend you can partner with on the next deal?

Just a couple thoughts.

@Steve J. You're welcome.

@Keith Hague you're welcome.

@Amy Koch I’d ensure the tenants had renters insurance of $100k which is about $10-20 a month.

First to cover the repairs if they don’t maintain the filter system / cleaning etc. Also God forbid a kid falls into one.

I'd put the house in an LLC, get a $1m umbrella policy ($300 for the year) and ensure it covers the pond.

While the ponds are nice and a selling point for potential renters unfortunately we have to look at worst case scenario.

Even if you keep the front pond at 2” or is it 2’ it’s still a liability.

@Keith Hague Not sure of your experience level so....I would get a 2nd and 3rd opinion on the house to ensure my assumptions are correct.

I found a similar house where the flipper has replaced windows, HVACs and hot water heaters, got into the wiring and stopped. They uncovered some foundation issues that made it impossible to recoup the cost of finishing.

Listing didn’t have any information about the foundation, my lead guy saw it as he was standing at the corner of the house and happened to look down the back wall and noticed it was bowing out.

Why start at 8%, start 1/2 to 1 point above market and see what the owner is willing to do. Worst case scenario you end up at 8 best case you save a few points. 8% is high in my market.

Interest only @ 5% for six months, 5% down would be my starting point. Just enough skin in the game that if you walk the owner is compensated. Plus every $ I have available for repairs is a plus especially since the potential risk has increased with a lower ARV if the extension has to be torn off.

@Dominic Dominguez I was in the same boat at one point so here are my lessons learned.

1. I would start a fund now for CAP-EX / repairs....$100 per month so when you PCS you'll have $ set aside when those items come due.

2. Interview multiple property managers, get a copy of their agreement and then set a second meeting based on questions / research about their agreement.  

3. Set a limit on how much they can spend for repairs before it requires a call / authorization from you. I set mine at $100 because you don't want any surprises.

4. Don't be afraid to get a 2nd or 3rd quote independent of what the property manager gives you. My manager quoted me $4500 for repairs after a tenant moved out. I got the work done for $1200. I had everything done on the list they provided. 

5. It's possible to self manage but consider if deployment is a real possibility, and what you would need to do in that situation.

Since your property is renovated and others aren't I'd attempt to get more $ i.e. $100-$200 more per month. If it doesn't rent at the higher rate drop it $5-10 per week until it rents.