All Forum Posts by: Chris B.

Rent goes up over time for just about everyone. "Security" (Not "Rent") deposits do not go up over time with my rentals. If I have a tenant that is good enough to stay / keep around for long enough for rents to go up, which happens frequently, then I don’t penalize them by asking for additional deposit. For example, if I have a tenet who has lived in a rental for 3 years, and then I raise the rent $100 or even $500, I'm not going to increase the security deposit. Why don’t I raise it? I don’t out of respect for the tenant and also, they have rented with me for years at this point and I feel grateful for the mutual success. I am willing to take the risk to be out some cash if things turn around and go south after years of success.

If I were to purchase a rental house with an existing tenant, I would require a new contract I approve (after the current contract expires) and sufficient security deposit upon signing it most likely. I’d consider the case though.

Sorry if you already know this part... But security deposits and rent deposits are not the same. A rent deposit implies a month of rent and it’s meant to be used for that. It sounds like this is what you have. A security deposit can be used for anything including repairs. I don’t charge rent deposits at all. I do charge security deposits which are worth exactly what was paid when accepted regardless of what rent currently is. It is intended to be held for repairs but can be applied to anything legitimately owed including toward rent due at move out. If you are not already aware, I suggest you reconsider how it is worded in your contract.

As you mentioned, you need to step up your screening process. Definitely look for credit scores you deem acceptable, such as 620 in my case and look for past court cases & convictions. I'm non-scientifically estimating the vast majority of drug users and dealers won't pass one if not both of these requirements. And of the very few that pass, they are likely to cooperate with you to keep their record clean.

My requirements haven’t changed. However I have recently more strictly enforced my requirements and become less lenient. I require 620 minimum credit, current income that is at minimum 3X rent, and my other requirements still exist with no exceptions. Previously I had rented to those with lower credit scores. I have been burned too many times in the past doing this; showing compassion for those with less than my required standard. I guess it wasn’t really required at the time as I chose to rent to them, but now it really is a requirement. Those without sufficient income 5 years ago or today will both put me in the same position if I’m not gaining income to pay my bills. If I had a hard time finding a renter, I would rather lower rent until I find a reliable renter over having a renter (at a higher rate) who will not pay.

My family has also directly taken a sizable work income hit due to the Covid situation so we have less income. It’s definitely not a time when I have the flexibility to be extra generous. No way am I going to provide free housing while paying a mortgage to someone else for an unknown period of time.

I feel for those who lost jobs, but people have options, even if not preferred and can move in together until they get back on their feet. I shared a house with 11 people who I didn’t know earlier in life as that was all I could afford. I didn’t like it much and eventually worked my way out of the situation.

I had my last new tenant move in in June and I found them about a week after posting and they met all of my needs.  Contract was signed a week later after screening was complete.

$11K in taxes per year? really? Wow! That’s 10X higher than a similarly valued home here in AZ. With taxes like that, I imagine it would be difficult to rent and make much profit. Definitely sell it. Taxes aside, the family problems will never be resolved so do yourself a favor and enjoy the rest of your life without it and invest elsewhere. BTW, if you invest elsewhere, you can leverage your funds and make even more profit.

A couple of thoughts: Check to verify if current going rental for the unit is it higher than the $1500 collected and how much? This may change your equation. If it’s an inherited property you may not owe much or anything in tax on the sale. You did mention it’s gifted so I'm not sure exactly what that means. Typically a gift like this will incur taxes for the giver above a certain value. You will also provide a percentage of the sale to a real estate agent and possibly at closing so you may bring in even less. If you are investing long term, it’s not a bad idea to hold it. On the other hand if you are in a municipality that has a terrible track record with blindly siding with tenants in a time of crisis, I’d prefer to leave the unfriendly jurisdiction. Renting out of state has rewards but is also challenging finding a good team to help you acquire and manage property efficiently. As mentioned, values may level off or drop in the near future so now is a good time to sell if that’s the choice.

Seriously, if you real estate agent is advising this might even possibly be a wise choice, you should look for anther agent. A $300 inspection is for a professional to spend a few hours looking through each and every aspect of the home looking for problems. I have never seen an inspection report with no findings. Even if I did, it would be worth every penny confirming this is a solid property. $300 is a miniscule fraction of the price of the home that can cost hundreds of thousands of dollars. It's at minimum cheap insurance considering the benefits. (True, it's not literally the same as insurance.) Here's some info the inspection can provide: Is the HOA actually doing a good job or is the building in need of repairs with a possibly incompetent HOA at the helm? If there are structural repairs needed on your home, then are they needed on multiple homes, and does this mean you may see a $20k assessment surprise in the next year or two? The HOA doesn't inspect or cover the AC, heater, appliances, outlets, pluming, internal structure, or anything else. Do they really cover the structure of the property and windows? Your real estate agent isn't trained to look for these things and honestly should not be vouching for any of it for liability reasons. As a seller with a skillful handyman it's easy to patch and hide problems. Sometimes even an inspection won't find everything. If you are not greatly skilled in home repairs yourself, you certainly won't find the issues. In the big picture, you get a lot of comfort knowing what is right and wrong with the property and also the leverage to walk away or demand concessions if issues are revealed. The cost in minimal compared to closing costs on your loan and taxes for example and we can't even avoid those things.

Your proposal would put a hard money lender in second mortgage position which is not preferred. The hard money lender would need to see enough current equity in the property to cover the primary loan & new hard money loan, and still have buffer to cover costs in case you defaulted. In addition, the hard money lender has other issues to deal with like a primary bank loan, which has the most leverage here so they might skip it all together. If there is no equity, you may need alternative sources of cash not based on equity like partnering with family or others who will want a share. The 302K loan may work, but it may be challenging to find a contractor who will jump through the hoops of the program for you without excessive markup. However with the margins you are projecting, you may still do well with this loan.

I work in tech and can appreciate the latest Ethernet wiring for gaming and file transfers. With that said, in the past 12 years of renting SFHs to numerous families and students, I've never had a family ask about high speed internet. Only on one occasion has one even asked about internet as he wanted to make sure the throughput was sufficient enough to do basic streaming and work from home. And yes, basic Cox service can more than handle that. What I have had, on multiple occasions, was tenants (or the provider installer) poke holes between walls and to the outside of the home to pull satellite and cable in rooms that were already wired with good, new coaxial connections, but the jack wasn't in the location they preferred or they simply didn't want to be bothered hooking the satellite into the existing system. On all occasions, the work was improperly done, with no weathering. They simply poked a big hole, pulled a cable through, and let it be. Occasionally they would screw a wall plate into the drywall providing the appearance it maybe was done correctly.

My advice is a) yes, absolutely install coax & b) make sure you have something in the contract explicitly stating any holes they make in the wall will be repaired at their cost.

My thoughts on your situation are borderline political but I’ll try to keep it clean. I lived in SF for ten years and I know the environment you cherish so much. Certainly no need for a car if you live in town. I've met more people from San Francisco than anywhere else in the US that truly believe it’s amazing and would never consider moving away, no matter what the substantial lost opportunity cost is. I even know a small few adults in SF that have never left the area throughout their entire lifetime; even to travel. It’s this mindset and excessive amount of disposable money (and other factors) here that have allowed the city to diverge into its own world with its own reality. The term “I reject your reality and substitute my own” was made famous by one such resident.

You are entirely correct summarizing housing prices are not in line with most of the rest of the country. It is a personal choice to stay and contribute to the struggle there or consider alternatives. The suburbs you considered are a partial transition and offer some savings without giving up everything SF has to offer. Going out farther provides greater opportunities, but more change. If someone can overcome their comfort zone and adapt; they will open the door to these new opportunities. Owning a car, light remodeling of a house, & sharing a kitchen may be significant hurdles for some people who have difficulty adapting even considering it may mean losing the opportunity to have others pay your mortgage which can easily be $4k a month. On the other hand, some may feel these "inconveniences" are nothing at all for this kind of financial opportunity. Some in the US may see this discussion as insane as they would house hack in a split second if it meant the difference of that kind of money every month.

We have substantial appreciation here in AZ because so many people are moving here yet costs are still affordable. Other parts of the mid-west have dirt cheap property because so many people have moved away in the past yet still have good rental income. These both are real opportunities, but take someone willing to be proactive and aggressive to capitalize on.

It’s up to each individual to determine for themselves what they want in life, are comfortable with, and what they are willing to sacrifice to get what they want. If you happen to consider house hacking outside your comfort zone, I think you may grow to be surprised with how happy you can be especially when you come to see your sacrifices early in life pay off later.

I've read Ozone generating machines can help, but have no personal experience with them.  Can you expand on how much it helped after many hours?  For example, would it only work on a light smell from an occasional smoker compared to a heavy smoker?  Also from what I read, you may need a larger ozone unith than whay $85 will typically get you.  We used Killz to paint the floor under the carpet after a tenant snuck a dog in that urinated everywhere and it seemed to help.