All Forum Posts by: Carlos M.

@Michael Eastland I appreciate the moral support ... good luck to you as well.

Huy,

Thanks ... the "landlord horror stories" is a great idea! ... any idea on how to go about getting this done?

Carlos

Hey BP hope all is well,

I went through a terrible experience this past week and wanted to share it with the BP community in the hopes that some people may learn from it.

I say this with much regret but over the weekend one of my tenants committed suicide. To add to this terrible situation and make matters worse I was the person who discovered the body. Now I won’t get into specific details into how the act was committed and what is believed to be the motive. But I do want to touch on the Landlord side of the situation and the damage control measures that should be done when something like this occurs.

Initial shock – after discovering the tenant I went into shock and had no idea what to do. I felt scared, nervous, surprised. A ton of emotions and thoughts began racing through my mind. After a few minutes I immediately called Law Enforcement who responded to the scene pretty quickly. Because I was the landlord and made the discovery I was briefly considered a suspect, wasn’t allowed to leave the scene, and had to answer questions to police officers and detectives. Eventually within a few hours I was released from the suspect list and detectives found that it was a suicide and no foul play was involved.

Now because I had other tenants in the unit and throughout the building I was unsure if I should disclose what occurred or if I was legally required to disclose. Although legally disclosure isn’t required I made a moral decision and decide to inform the other tenants within the property. I understood that with disclosure I risked losing tenants but I felt it was the right thing to do.

After informing the tenants some tenants made request to be let out their lease. Now in the situation I wasn’t sure what textbook protocol was or if legally I was required to do so. I made a few calls to other real estate professionals and was informed that legally there was no law or rule stating that the tenants had to be released, so I had a judgment call to make. Putting myself in their position I decided to release the tenants although financially it would place a burden. I knew that if I were in their shoes I wouldn’t want to stay either. So I bit the bullet and let them go.

In regards to the area where the suicide is committed I had no idea what the rules where in terms of cleaning up the space. So after more research I learned that because deceased bodies are considered bio hazardous waste I had to hire a professional bio hazardous cleaning company. They had to cut and remove any surface or areas where bodily waste was found, clean the area with special cleaning liquids, and filter the air with o-zone machines.

Some of you may be thinking what about the tenants possession? Because the tenant had no family I was informed that his possessions could be trashed. I felt very bad because I was hoping he had some family around who may want his belongings but that wasn’t the case so I had it disposed.

My plans moving forward are unclear I’m considering selling the property but in the event that I am unable to I will have to resort to finding more tenants.

This scenario is a scenario I wouldn’t wish on any landlord I would rather go through a thousand evictions before going through this process again. As members of BP we hear a lot of success stories but there are scenarios where being a landlord can be difficult. If there is anyone who has been through a similar situation I would like to hear how you responded to the matter and how you bounced back from the situation. Was the property sold? Were new tenants found or did you leave the business altogether?

Thanks,
Carlos

3 months $3500

Hello BP,

I ran across a potential flipping opportunity and I wanted to run the numbers by everyone to see if I should pursue.

List Price: $70K

Purchase Cost: $5K

Construction: $70K*

Selling Cost: $15K

ARV: $200K

Gross Profit: 40K

*construction cost is based on worst case scenario so that figure maybe lower.

I know the post isn't very descriptive in regards to property information, location etc but I just want to get some thoughts solely based on figures.

Let me know your thoughts.

Thanks in Advance.

Carlos

Hi @Manny Cirino I appreciate the insight.... you make a good point when mentioning one's end goal. It's very important to figure out the end goal and then back track from that point. Also you make a good point about an investor's vision and how it can impact and completely transform communities, it’s something that wasn’t discussed when my friend and I were having the discussion - good point!

Hello @Kimberly T. thanks for your input I see tenant quality is very important to you –How big of a decision driver is it on the kinds or properties/locations you invest in?

@Walt Payne how do you mention someone in the forum (I can't figure it out? Lol) but back to the discussion glad to hear that your expansion into Florida is working out for you. So you are from the PA area? What part of Montgomery County are you from? my office is located in Elkins Park ... Kudos to the guy you worked with for having the foresight to see a need and taking advantage of it .... that would be a move I'm sure any one of us would like to me ... Kudos to you on your West Philly flip as well how long has it been since your last investment in that area?

@Christopher Dumelle you hit the nail on the head “quality of the tenant matters greatly, but great management and tenant screening are just as important.” What are you plans for the late paying tenant are you going to evict her?

@Dusty Corning I agree with you there are a lot of positives in WCNs my only concern and maybe you could help me here … how would WCNs react in a down market when jobs become stagnant? And how would you react? Any backup plans? That is a big concern of mine economists and financial analysts are screaming that job growth is increasing but that’s actually fair from the truth.

@Michael Siekerka ... I comepletely agree with you bigtime! I also prefer mid to high end rentals. Having experience with all three spectrums of the rental market, to me it just seems like there is more benefits and upside with mid and high end ... with low end there defintely is a market for it and you're correct a fourtune can be made there but like you also mentioned the big problem with low end market is when trying to sale the inventory its takes alot more effort to find buys that are willing to pay a fair price.

@WaltPayne ... looks like we both agree on the same markets ... how long have you been a reinvestor? Is the florida market treating you well? I know a few people who didnt fair to well down there once the crash occured.

Walt,

Thanks for your reponse ... I agree with your statement there is defintely alot more details to this scenario then orginally included .. I just tried to keep it some what short ... you can go into details for weeks haha. But point #4 is a very valid point tenant selection is very important ...

which is your prefence high en,d mid grade, or low end markets?

Hell Everyone,

I hope all is well and everyone is making progress in all your real estate goals.

The reason why I am writing this post is because a good friend of mine and I have been debating two schools of thoughts (SOTs) regarding "buy and hold" properties and I decided to see what everyone on BP thinks.

Before I go into the scenario I want to state - The schools of thoughts are based largely other traditional theories and some generalizations.

Here is some background on the Investor before we move forward with the SOTs. The Investor is someone with ok real estate experience who works a fulltime job and has some liquid capital but by no means is well off or has access to tons of cash. The investor is looking to utilize real estate as a vehicle for a lifestyle change (become a real estate investor full time and quit day job.)

Ok so now the SOTs .... thun thun thunnnnnnnnn ......

SCHOOL OF THOUGHT #1

The Investor should target duplexes and triplexes in low end neighborhoods.

THE PROS:

This market has low barriers to entry and lots of opportunity due to low investor desirability within the market. Additionally because property value is low in this market, cash flow profit margins tend to be higher the normal and can be utilized to help the investor achieve the life style change faster. Also payments can be hedged/secured by way of Section-8 programs.

THE CONS:

Tenant quality is not as good, so on the property management front the investor could expect to encounter more problems with property management, repairs, and cash collections. Secondly, low end markets do not appreciate as well. Properties in the low end market can even depreciate over the years. Properties tend to be a bit more run down so initial upfront costs to make the property rent ready are typically higher.

SCHOOL OF THOUGHT #2

The investor should target Single Family or Multi-Family properties in midgrade neighborhoods that have future positive outlook.

THE PROS:

Quality of tenants tends to be better so property management issues and cash collection should occur less frequently. Desirability is higher thus demand is stronger which increases rent prices overtime. Additionally aside from rent roll, value can be achieved on the investment by way of appreciation. Properties values for midgrade market properties tend to increase overtime. So for an investor who is doing buy and holds, the possibility for long term increases in rental cash flow and home values tend to be higher.

THE CONS:

The negatives in this scenario are higher barriers to entry, less opportunity to frequently find deals and more investor competition. Additionally, profit margins are not as high initially because of the higher purchase price.

So there you have it, please add your thoughts based on what “school of thought” you would select or recommend ... if you would like to add another SCHOOL OF THOUGHT please feel free!

Thanks for all your feedback Everyone!
Carlos

@Wade I appreciate your 2 cents. Just trying to figure at this point what’s the best way to go about the structuring the finance deal. If it were just a financial decision I would go personal but when factoring in the liability element and credit borrowing profile its make the decision a bit more difficult.