All Forum Posts by: Carl Millsap

@Marisa Alvarez did you turn the utilities off in your name?

I would let the tenant move their stuff in as they may have to pay a fee to the previous landlord if they don’t turn in the keys by the first.

Our lease says if you still have the keys or your stuff is still In the place on the 1st you owe for the month. We don’t prorate.

We have utilities turned off in our name as soon as we qualify someone and sign the lease. We tell them the utilities are set to turn off.

We also have our utility accounts password protected so no one can call and try to keep them in in our name.

@Mary St.Clair tile throughout, carpet only in the bedrooms. Initial cost is higher but in our market I get higher rent than comparable units because of the tile.

@Gino Colucci yes you should be able to sell the home with the tenants. Things to do:

1. Ensure you provide the tenants 60-90 days notice or whatever your State law is that you won’t renew their lease.

2. Make it known to any interested / potential buyers you will be 100% responsible for ensuring the tenants are out. Put that note in the real estate listing once you have an agent. No one wants to buy a potential problem.

@William Zomro Can you cover the mortgage on both if it takes longer to sell the current home? Can the other person (you said we) apply and qualify for the condo on their own?

It will come down to debt to income, savings etc., and relationship with your bank in my experience. 

Is it possible to get a contingency on the condo i.e. we will close once we sell our home to lock the property up? The bank can / may approve you with this contingency if the debt to income is too close for their comfort.

@Kevin Merlander Looking at the deal:

1. Can you get the current owner to do the repairs or provide you the $5k allowance to do them?

2. What is the value add? How much will it increase rent? How long will it take to recover the cost of adding that value?

@Steve J. I haven't had units sub-metered but I've looked into it. I would get 3 estimates from plumbers, electricians, and the electric company who'll place the electric meter once you have everything in place.

I would also check w/ companies who supply water meters, and reach out to anyone who owns a mobile home park to see if they've had sub-meters installed to get an ideal of pitfalls with billing etc.

Also, ensure your lease clearly spells out how utility billing will work i.e. up to a portion included with rent (if that's the case) and anything over that threshold being due within 5 days or something to that effect. 

Which brings up another thought....I would see if the units are split can the new meters report directly to the water & Electric company and the tenant be responsible for their own utilities. 

@Sami Gren Two things you can do: 

1. If you want the person to stay, qualify them as a new tenant, do a credit / background check, income verification etc. Since they work for the current owner will their income support paying market rent once they no longer have this perk? If the answer is no then......

2. Get it in writing that the current owner will be responsible for ensuring the person is moved out. I sold a property in Nov. 2019 where the closing was going to happen before the tenants had to be out. As a condition I wrote in the contract that I would handle / be responsible for the tenants until they moved to include eviction proceedings if it came to that. This gave the buyer peace of mind and one less thing to worry about with the new purchase. 

@Jason Leak can you get financing for the property from a bank? If so I'd offer what the current value is and use the bank's money unless the owner is willing to finance w/ less $ down, but at a slightly higher interest rate which would serve as his "bonus" for carrying the note.

So $412k with 10% down, at 5.5% or something to that effect. Last rates I was quoted for bank $ is 4.5-5%. 

The most powerful thing you can do is walk away from a deal if the owner doesn't want to negotiate. 

I had a contract on an 8 unit building, appraisal came back $45k short of the contract price, no way I was paying $45k more than the appraised value. 

Moral of the story....you make your money when you buy, if you overpay you'll be digging yourself out of that hole for a long time. 

@Andrew Torres your tenant is essentially asking you to loan him money. If he's paid why is he requesting the money back?

My answer would be no, I'm not returning the money if it is rightly due as a payment. 

Just a couple thoughts / observations:

1. Check Venmo terms and conditions for commercial payments. Cashapp and some others don't "allow" rent payments and he could challenge the payment if that is the case with Venmo. At least the is my understanding....you should verify for your own understanding.

2. If your pay or vacate notice is on the 5th then why does the late fee start on the 10th? Our rent is due on the 1st, grace period to the 3rd on the 4th late fees start. Just something to consider.....if he is going to pay on the 6th the thought maybe you're giving him 6 days to pay so why pay now, he can do something else with the money.

@Jason Ben  A good credit report and $ in the bank will go along way when you buy your second property as your primary residence.

The bank should count the income from the 1st as income, but yes your debt to income will increase. 

Financing the second as a primary residence is a good way to go because of the lower $ down, and lower rates. if you're house hacking your way to multiple units this is a good way to do it but is a slower path for growth.

It all comes down to the numbers and having a contingency plan. Do you have enough $ to cover debt and repairs on the first if tenants don't pay, and still make your obligations on the 2nd? If you have that covered I can't imagine a bank denying you.