All Forum Posts by: Chris B.

As stated, be very careful and keep the arrangement a separate business transaction from rent with a written agreement.  I've found transactions like this done over a handshake very frequently end up with different understandings of what the work was to deliver and what the landlord was to compensate.  Get a simple contract stating what will be painted, in exactly what color scheme with which paint and in what sheen.  Include what the compensation is and when.  Anything up front or all at the end?  Include time frames in which the work must be completed by and to what standard (Sounds like it should be a professional standard here).

Its not difficult to buy a ready to go property with no tenant and then hire a property manager to help get a tenant.  As such, never pay more than market rent for a property with an existing tenant.  In fact I would prefer to pick my own tenant or co-decide with a PM who my tenant will be rather than take a random person I know nothing about.  If the property did have a tenant, I would not be opposed, but I would make it my business to review the contract, view the background check, obtain estoppel information, and make sure I would be collecting appropriate deposit and rent.

It sounds like Will's comments clearly outline the options available but without a recommendation.  If the laundry unit in question is not attached to the tenant's residence... As in the residence needs a key to enter and the laundry area is not in this area, but rather outside and other residents don't need the same key to access, then I think you have some grounds to have it your way.  In hindsight, tenants spreading their stuff around in public areas are a red flag and need to be checked as this is now somewhat like a squatter situation where the tenant as formed an expectation that was not addressed.  They may now have a reasonable claim if they have continuously used the area as if it was their own then it should be their own.  In any kind of house hack or similar situation with shared areas, the allowed usage and responsibilities in these areas need to be clearly defined.  This goes for quiet hours, parking, and yard usage as well.

Based on my experiences, I find the credit score to be an extremely accurate indicator of whether or not a tenant is likely to pay rent on time and cause other issues like smoking / damage to the property. My minimum score is in the low 600s.  I'd consider each no credit situation individually, but no longer accept poor credit. Time after time, it was the tenants with poor credit that were headaches. The statement that poor credit is good due to leveraging credit for investments is something I’ve never seen in a tenant as a landlord. I’ll consider it if I ever come across it but I’m not expecting to encounter this. I rent in B+ neighborhoods. I have never encountered anything even close to 10 applicants where half have no credit and half have bad credit. If I did, it would mean I'm asking way too much for rent and I need to lower my rate.

If you have a nice place, consider adjusting your asking price. If I owed property in C / D or worse neighborhoods, I would expect worse credit, but I don't have experience with these locations.

I have a different view.  I would not suggest collecting a deposit on either the 1st of the month or upon occupancy.  Always collect a full deposit at the signing of the contract.  You can also collect rent at the signing of the contract or before you hand over the keys.  Regarding the rent for the portion of the 1st month, I would offer to pro-rate it to half a month's rent.  If I was feeling especially generous, I'd pro rate it to 14/31 of the monthly rent to if you wanted to be exact.  As they look to be potentially excellent tenants, I wouldn't want to loose them or start off bad over over  trying to squeeze out that extra half a month's rent (Aug 1 - 17).

Thanks for the additional information.  So say you get a 20% down payment, you might get something like almost $50K down and you would be charging the new buyer a higher interest rate and the difference would be profit.  I assume that means you have connections that would let you complete this deal which is the final piece.  You can profit and you can help a buyer would normally wouldn't qualify get a home.  Nice.

The tenant has become unreasonable.  The landlord has provided what I feel and I think a court would feel is more than satisfactory level of response here.  I would turn the phone to silent mode now and ignore the tenant tonight, try to get some sleep, and get the AC guy out Monday to fix it.  Then deal with the tenant who won't be living there any more once the current contract expires.  Serious about that last part.  People think being a landlord is easy :)  

If the AC isn't fixed by Monday when the tech comes, I as a landlord, would rescind my cash offer in this case and purchase a window mount unit and get at least one room cold for the tenant until the issue is resolved.

I actually had the AC die on a tenant last year.  It was a Friday also.  I arranged to have a AC tech come and fix it on the following Monday, offered the tenant $100, and everyone was happy.

I'm curious why someone would pay $15K more than the property is worth when you can buy the next property down the street for actual market value?  Is the subject to / sell with owner financing option that makes this the more attractive deal somehow?  How hard would it be for you to flip it and find a buyer to purchase it from you with this type of financing?

Your sister's ask doesn't directly align with the RE investing that you likely would be able to participate in. Syndication might be what she is looking for? If she wants to know when she will reach a certain monetary goal, that type of thinking applies to different investing such as bonds and annuities and not to something as dynamic as hands on RE investing or stocks. Here's an example. One person can invest $300k cash in a SFH bought outright and receive say $1500 rent per month It would take 55 years to earn 1 million before expenses. Another person can start with $100K, fix and flip 10 houses and end up with 1 million in 5 years or less. The rate of return is based on active decisions and can not be guesstimated. She may be asking you to provide a specific offer on a specific property were you can work out all of the numbers and therefore estimate a profit on that one project. It probably won't provide a million dollars in the first transaction and you can't predict how many deals exactly it will take to get there.

$1M in the bank isn't going to be nearly enough to provide your sister's family with the lifestyle they have gotten used to.  However, if they are making $500k a year, they can easily have their 1 million savings after 3 years with a financial advisor directing them and some discipline.  That is going to be hard for you to turn around that kind of profit share for them in 3 years through RE starting from zero.

You certainly need to build your connections which you are doing right now.  To win over any partners, you have to have a real, quantifiable deal on the table for your partners to look over and see if the numbers work for them.  Get a list of possible partners.  Determine what your partners need out of a deal.  Then find that deal that meets the requirements and present it to them.  I believe you feel you have amazing tenants, but an investor is going to be looking at the profit potential.