All Forum Posts by: Chris Rose

Hey @Davin Ramage, welcome to BP! I'm located in western KY as well and I have just started my investment journey and look forward to working together with others like you.

Thanks for all the responses! @Nathan Seltzer, your recommendation on how to handle the tenants as the new owner by being firm, polite, and professional is what I intend to do.  @Account Closed, After working through the numbers on the property, 2 rented units will cover the mortgage and monthly expenses that the tenants don't have to pay (insurance, taxes, and water). The 4 plex is in a B-/C+ neighborhood and after some remodeling of the units and the exterior (roof and paint), I feel like I get another $100 per unit with better quality of tenant willing to live in a nicer home. The property will cash flow positive even if I only have the 4 units leased at the current price, and will come close to breaking even on all expenses with only 3 units leased and paying. I don't know if it matters to this discussion, but I will have this unit on a 10 year note. I'm considering changing to a 20 year note to make the mortgage payment lower in case I need force some evictions or tenants decide to leave and I have 4 empty units to rehab and get rented.

Thanks again to all who have commented!

Chris R.

I am about a week from closing on my first rental property, a 4 plex apartment with 1 vacant apartment and 3 apartments rented on a month by month lease. The current owner inherited the 4 plex from his dad after he passed away. The owner's dad was apparently an old school landlord who would take a tenant if he had a vacancy with little or no screening. The new owner has no estoppel agreements or prior leases on file (I don't think his dad used them). I requested the new owner have all tenants complete estoppel agreements so I would know where they all stand when I buy the building and take over. 

I get an email from my real estate agent today saying that: Tenant 1 is $150 behind because they had to buy school clothes, Tenant 2 is 2 months $900 behind, and Tenant 3 was behind but has paid up the owed $640. 

When I started the purchase process, all 4 units were leased, then after a couple weeks into the process, only 3 units. A couple weeks ago, the tenant that was 2 months behind was given a pay/quit letter but eventually paid up. Now 2 (and maybe the 3rd) tenants are behind. When my agent gave me this information today, I asked if the seller was going to handle his business or leave it for me to handle? The agent then spoke with the seller who stated that "he tries to work with his tenants as they don't always have it as easy as we do."

I was intending to remodel the vacant unit, raise the rent on it with the new tenant lease. I intended to get the 3 inherited tenants to sign a new 1 year lease keeping their rent rates the same as they have been, then as tenants move out, remodel again until I have all 4 units in good shape and the building in better shape. With every tenant either behind or just not paying, I may end up with 4 empty units right off the bat. It was my plan to keep enough units leased to cover the cost/expenses of the building while I complete renovations, but now it doesn't look like that may work out.

I know this is a long post and I appreciate you experienced landlords reading and giving me some newbie advice.

Thanks,

Chris

Does anyone have any experience with Cozy Property Management software? https://cozy.co/

@Mary Ann Seek advice from your own personal attorney and not just from my response. But, having said that, I purchased a property about a year and a half ago because it had a storage building on it that I wanted. The property also had a SFH on it that I decided I would fix up and rent out and thought that any rent I received I would use toward the mortgage on the storage building (This is all before I discovered BiggerPockets and had any idea that real estate is a path to financial freedom). My attorney recommended that I incorporate as an LLC to protect my personal property and assets in the event that I get into legal trouble from a tenant. Because of the LLC all business and personal assets MUST be kept separate (bank accounts, property, expenses, etc.). This is some extra work and expense on your part but in my area, it's not very expensive compared to what it could cost you in the future without it.

I'm sure you will get different opinions about this topic. I know I have read many different opinions on the subject here on BP. But for my own peace of mind, it made sense to me to incorporate. 

@James Thiel, @Pratik P. I would like to add to this discussion if I may? I did the very same thing yesterday, driving for dollars, and I found a vacant property in my area. I happened to find out the owner's name and mailing address. My question is now that I have a property and an owner's name, how would contact be made to discuss offers. It appears that the owners just walked away from the property, so catching them at home or contacting them by mail isn't an option.

 The house is vacant, the roof shingles are bad and it leaks, so the sheet rock in the ceiling has been wet and is moldy. So, knowing this, the attic insulation is bad and the flooring on the first floor may have had some water damage. It smells bad (I've been told) and it hasn't been updated in probably the last 25 years. All that being said, it's a 5 bed 2 bath two story brick with an attached 2 car garage in a lakeside community. I belive there is a good solid structure to work with, I just want to be very cautious. I tend to over-analyze things and be cautiously conservative to the point of analysis paralysis. 

 Yes ma'am, you and I are thinking alike on the inspection. I wouldn't dare put an offer in on something without knowing what was getting into first. That is why I thought the listing agent might be trying to "scare" me into making an offer and foregoing the inspection just to move a property.

It seems that any potential buyer would want to have an inspection as part of their due diligence. I would also think that a lender would want a current inspection and appraisal before even considering financing a purchase.

I apologize for not being clear, yes sir, the home is listed on the MLS. I have been trying to get into the property and look at it and either buy it and rehab/flip or BRRRR but because my realtor and my schedules have not worked out, we haven't had a chance to meet for a showing. This is the information that the realtor sent me in an email this evening. I had as many questions as answers.