All Forum Posts by: Chris Merchant

Like Eric said, I would try to find a local handyman that is willing to work with you and as money becomes available do preventive things so down the road lower cost solutions now don't turn into major expenses later.  Let the handyman know your situation have them go through and prioritize any repairs they think are needed or things that could prevent future problems.

Awesome idea.  I myself have a criminal record, and like you said in your post have learned my lesson and after spending almost 5 years surrounded by only people with criminal records now I realized that most of them are not bad people, they made a mistake and have learned from it.  Yes while recidivism rates are high I believe it is the "system" that is the cause for most of the recidivism due to the stigma put on otherwise good people, and as humans we're going to do what we need to do to survive and provide for our families and if that means never getting an opportunity solely based off the fact of a mistake that was made and the debt paid than those are the ones that resort back to crime to survive.  Just my two cents, but thank you for what you're doing for the community because that is who actually benefits it's not just the people you're opening your services to.

This is also why, I do a background check but if it comes back with a criminal history I do not just automatically deny the applicant.  It is then that I will talk to the person and go off their character before making a decision.

Well, first off welcome to the BP community. Congratulations on deciding to get into Real Estate Investing, I personally like the idea of HELOC's but make sure you get the best one you can as far as % of equity they give you and interest rate. I am not sure what you know about the HELOC's but what makes them so appealing to me is it is like a credit card, you are generally only responsible for the interest on money you actually use. There is usually a term that the you have to pay off the principle by but it's not like a loan where you have a principle and interest payment, so it makes it a bit easier on the pocket to only have to pay back interest and anything extra goes towards the principle and than that amount is available to be used again.

Example: you say you have 200,000 in equity if a bank gives you a 75% HELOC you now have access to 150,000 whenever you need it. You go buy a rental property for say 100,000 you have 50,000 left over for any repairs and you say (just for easy math) your interest payment is 750 a month which you can swing without income from the rental so its not a big deal so until you get the unit rented you pay the 750 and then once you rent the unit for say 2000 a month you now start paying 1750 to the bank and then after that first 1750 payment your available balance is now 51,000 and so on. Me personally I love HELOC's though some people don't.

As far as what to do with the house or buy a separate property, I'd say run the numbers on all scenarios and see what makes the most sense for you. I personally would probably try to locate an additional property but again you need to run the numbers for your area and do what best fits your end goals and lifestyle. Is the STR market hot in your area now? Or are LTR prices up right now due to the lack of availability?

Quote from @Carter Knobloch:

Yes, biggest thing as long as the deal works for both parties than it is a win/win.  He is most likely valuing the property as a commercial property and valuing it by it's income potential just as a bank would a 30 unit apartment building.  That does make perfect sense from his standpoint, and the fact he owns it outright like you said definitely opens many possibilities as far as financing goes.  I am sure he has an accountant or tax attorney already but you may want to mention that buying it as a lump sum payment would cause him to have to pay CG taxes on the amount, where if he doesn't need that all right now spreading the amount out over time will help his tax liability and he would most likely end up getting more for the property in the long run, generally when the seller acts as the bank they charge interest and or a higher buying price.

Quote from @Linda Thomas:

Hello all,

I decided to not renew a lease with a tenant that has been very problematic in the past. The lease expires on 6/30. They owe over 500 bucks in water and sewer bills and will owe even more with the final water bill. And now they are telling me that they do not have the rent for June which is the final rental payment. I asked if they can pay even a portion of the rent? Tenant states that she got injured at work and out on work comp awaiting payments. Would you file for eviction at this point? or not even worth it? Hoping they actually do move out on 6/30. I only have 1 month SD in the amount of $775.00 how would you handle this? 

 File now, also I would never have the tenant be responsible for ANY municipality utility (water & sewer) as failure of them to pay could result in the municipality placing a lien on your property which the debt can then be sold at a lien auction.  Pay those utilities yourself and just figure it into the rent when you set your rent price it is generally easy to determine a rough average of the cost per month.  Example: if you want 1,000.00 a month and you know that on average the water bill is 200.00 a month and sewer is 150.00 a month than you offer the unit at 1350.00/month water and sewer included!

Another important thing to add is: Do you have any questions/concerns? and allow them to interact as well, this may reduce future headaches or confusion.  In person would be good if you're comfortable doing so but be sure to bring a flyer/pamphlet with you with all the pertinent information, this allows you to potentially see how they are living in your new property.  

Me personally, I would organize them and place them where and how you want during the remodel it will save future issues and headaches.  And there is always the risk that if you just patch over them future tenants may take it upon themselves to try to install them.  You will probably only need 1 ethernet connection I'd guess, as most people will just have a wireless Wi-Fi network anyways and wherever you place the ethernet connection I'd also place a phone jack and cable coax in the same place along with an electrical outlet and try to get it as close to the center of the unit as possible.  Is it a single or multiunit building?  We want to try and make our units as accommodating as we can, and in todays age cable and ethernet is essential. 

Quote from @Amir P.:

Quote from @Richard F.:

Aloha,

Did you make sure she understood that the SD needed to be increased, and why? If so, depending on the terms of the existing Rental Agreement and local law, fund the SD out of Rent Payment first, then invoice her for short rent and late fee, with a deadline of X days to "cure" the breach of contract. If she does not make the deadline, start the eviction process.

Conversations, calls and texts are largely useless as evidence, everything should be done in writing, either snail mail (Certified, Return Receipt Requested) or if she has email, that provides a clear record. We always give a deadline for document signing and initial payment/SD.

 Thanks for the advice, Richard! She paid the security deposit on the last day of the month, before her new lease started.

Yes, she understands what is needed. Along with her lease renewal, I provided a cover letter detailing what needs to be done in a couple bullet points including deadline to returned signed documents along with SD payment. 

That is a good way to approach this to first fund the SD and then rent, never thought of it as a possibility.

She ultimately said the contract wasn't in effect until June 1st, so that is why she paid a day before that. We have a 10 days grace period for rent in CT, she also pays her rent on the 9th every month.

Noted about creating a paper trail. I am pretty good about that though, any phone conversations is followed with a written summary letter or email. 

Wow, she seems to be one of them people that knows the laws better than some attorneys, and is going to purposely push the envelope knowing what she can get by with legally.  At least she paid though and does pay before the grace period ends, which though it is annoying it is better than lost revenue all together.

Sometimes spending a little bit now to keep a good tenant happy pays off huge in the future.  I have a strict policy in my leases that changing room colors is strictly prohibited, however I have a family that has been in my first duplex I ever purchased, they are great tenants and they contacted me and asked if it would be okay to paint their sons room a light blue instead of the standard white all my rooms are painted at first I wanted to say no until my mentor told me to rethink my answer, like he said I will need to repaint the room either way if/when they move out so what will it hurt if they paint it now and it keeps them and their 9 year old son happy?  So I went ahead and agreed to allow them to paint the bedroom and realized I was at least grateful they had the respect for me and my property to at least ask first.  The family used the paint I supplied and did the work themselves, so a few dollars out of pocket for me made great tenants extremely happy and it wasn't like it was an outlandish request.  We as landlords and investors need to be problem solvers.

I used a family friend who is a retired corporate attorney, he did me a favor when I purchased my first duplex because he could see I was up a creek without a paddle from the get go.  I am sure there are several on here, check the "build your team" tab at the top of the page, I do know BiggerPockets vetted all people they recommend.