All Forum Posts by: Chris Sweeney

Kenneth & anyone else with awesome returns at 30+%, do you find that you're also investing a lot of *time* to get those returns?

That's fantastic! I dunno if my skin's thick enough to dip into C & D neighborhoods, but perhaps if I want better returns, that's where I'd get them.

For garages or multifamilies? If multifamilies, what sort of neighborhoods are you talking about?

Do any of you look for some minimum ROI requirement when shopping for rentals? I know, I know, "IT DEPENDS". But give me an idea of a range that perhaps you look for, and in what scenarios.

I have an off-market batch of 10+ garages that I have the opportunity to buy. The owner currently owns them free-and-clear. If I were to pay cash, my cash-on-cash return would be about 7.6% annually. I say no way to that; I could do that in the stock market with more liquidity, less risk, and no time spent. If, however, I were to finance with 25% down, my cash-on-cash return would be right around 11%, and 15.31% if you factor in the principal payoff. It's not phenomenal, but it's not bad. I figure (perhaps naively!) that garages are probably easier to manage than the residential multifamily houses I have, and I'd perhaps be willing to settle for less of an ROI for that reason.

So is a 15% ROI reasonable for garages? How about for multifamilies? What kind of ROI do *YOU* look for? Any other thoughts on the ROI, and any creative ideas for structuring this garage deal? Ideally I'd get the seller to finance and I'd put down an even smaller down payments and increase my ROI, but the seller doesn't want to do that. They don't want to be involved with the garages in any way after the sale.

Thank you!

Well..... I thought I had the tenant selection thing down pat. Since starting my journey as a landlord in 2011, I've never had any issues (let alone major issues) with any tenants that I've found/placed in my units, but I guess nobody's perfect!

LONG STORY SHORT: Great tenant gone bad. The guy turns out to be a major alcoholic and needs serious help! He's causing damage to his unit and the one below. He was recently hospitalized for alcohol-related seizures, and refused to go to rehab. Any suggestions? Can I just force him into rehab somehow? Then force him out of my unit and into a recovery house?

FULL STORY:

This past December/January, I did a nice remodel to a second-floor 1-bedroom unit in a duplex in Abington, PA. I listed the unit, got a ton of interest immediately, and found a great tenant on my first showing. This guy checked all the boxes: good job of 6 years with income over 3x the monthly rent, good credit, barely any debt, no criminal history, no judgements, no evictions, paid first/last/security with no issues, got renters insurance, pays on time each month automatically through Cozy, etc. Just a super-nice, happy, and healthy-looking guy.

Well this all changed two Fridays ago (Friday 7/12). I got a text from the first floor tenant saying that there is water leaking into the first floor unit and also down into the basement. He said it sounded like the water had been on up on the second floor for a few days. He also mentioned that he noticed excessive trash and beer cans around the second floor tenant's trash cans, piling up for weeks without being taken out. I called the second floor tenant and got no answer, and his voicemail was full. I figured I'd better go over there to check on things. Pounded on his door, no answer, let myself in. The whole place was humid as can be and I could hear the shower running. I shouted his name and got no answer. "Crap, he's dead", I thought to myself. Let myself into the bathroom, shower curtain closed but not properly lapped into the tub (which is why water was leaking out). All I saw were two feet up on the tub ledge, and I really thought he was dead. So I shouted his name again a couple times, and he finally woke up.

Had him meet me outside to talk. I [diplomatically] told him to get cleaned up and I'd check back with him in a few days. In between time, his ex-girlfriend texted me to tell me she'd taken him to the hospital because he was having seizures (July 15th). The doctors said the seizures were caused by his drinking. An MRI showed brain atrophy and scarring from the alcoholism. The goal was to get him into rehab and then into a recovery house. Last night (July 22nd) he was discharged from the hospital and denied his opportunity to go to rehab. So now he's back in his apartment, and likely drinking.

Apparently, according to the first floor tenants, the guy on the second floor never made much noise up there, and never bothered anybody. But he's definitely done some damage to the floors in and around the bathroom, and well as to the drywall in several spots in the first floor unit.

"WHAT DOES YOUR LEASE SAY?" - Don Beck's lease - 16-D - "Tenant agrees to keep the leased property safe against fire and water damage." and 45A - "If tenant breaks this lease agreement, landlord has the right to: 1) end this lease agreement." and 49 - "Tenant agrees to give up his right of a notice to quit". So he broke his lease. His negligence has caused a fair amount of water-related damage, and I'm afraid things will keep getting worse if he's not removed from the property.

Honestly, this guy's in a downward spiral and needs help. If he went from being an all-around great guy to a huge alcoholic, what else might he do? So at this point, since he waived his 10-day notice to quit, what can I do to get him out ASAP? Ideally he'd go to rehab and then directly to a recovery house.

Another thing throwing a stick in my spokes is the fact that I just found a new tenant for the first floor unit (the current first floor tenants are moving to North Carolina and are not moving out because of the second floor tenant). The new tenant (single young woman) moves in on 8/1/19. I'd hate for her to find out about the guy on the second floor, get scared off, and ask to be let out of the lease.

Also, is there something I could've done differently about my screening process to have avoided this issue? Am I allowed to ask if a prospective tenant is an alcoholic, or is alcoholism considered a mental disability and therefore in violation of fair housing guidelines if I were to ask that?

Thank you for your help!

You may be right, which would make it a no-go for me. That's just not doable. In that case, I think I'd just try to offer the space to current tenants for them to use as additional storage or something.

Those are all great questions, so thanks for helping me brainstorm.

Yes, the bathroom issue stinks. The tenant would have to go somewhere else. But like I said, if they know that before renting the space and are okay with that, then I'm not too worried about it. Obviously it makes the space less appealing and less marketable, but perhaps somebody just needs a space to use for an hour or two at a time to meet with clients. The alternative would be using their home (which they don't have the space for, or it's too loud because of their kids and barking dogs, or there's no parking, etc.). This tenant would be happy to pay $300 for this space as opposed to $700 for one that has access to a bathroom.

Parking - yes there is plenty of parking on-street during the work day, and we are currently adding onto the driveway to allow 6 cars to park.

Utilities - The heat is just one huge forced-air system for the whole building, so we'd have to include that. There's already a supply vent in that room. And the electricity is on the common area breaker, so we'd end up including that too.

There would be no outside entrance directly to the room. The tenant would have to come into the main front entrance (which has an electronic keypad deadbolt), through the common area hallway, and up the common area steps.

Liability insurance - would our current policy not cover the tenants guests? Even if it did, I suppose the best idea would be to require the tenant to have their own insurance and add the owners of the property as additional insureds on the tenant's policy. I wonder if that's common in those shared office space buildings.

I agree, it might not be able an ideal office space, but it might work for someone, or perhaps there is something else we could use the space for to monetize it.

Hello Everyone,

I have a 4-plex that has a spare bedroom off of the second floor hallway. It's 104 square feet, bright with 2 windows, and has no rooms adjacent to it (only the hallway) so it's quiet. I'd love to be able to monetize this room in some way, and I think it would make a great small office.

My first thought holding me back - the legality of it. The building is zoned for 4 residential living units, but does that mean I can't rent this extra room out as additional storage or as office space or an artist's studio or whatever? Would that extra room be considered a 5th unit and be illegal? Maybe? But let's be real. People are doing it all the time by renting out their garages (which I understand doesn't make it legal). For example, a duplex I have elsewhere has 2 living units plus 2 garages. I plan on renting those garages out at some point, and I doubt anyone would ever say anything to me for having 4 tenants on a 2-unit property.

My second thought - no bathroom. I don't know if a bathroom would be required legally or not, but I think as long as that is disclosed in the rental listing and the tenant knows exactly what they're getting, I don't see it being a big deal. For example, if I were, say, a small accountant or a small part-time therapist or something, and would only see a couple clients per day and would otherwise be in and out of the office, I might not care if there's a bathroom or not.

Any thoughts on this, or any ideas on other ways I could monetize this room? Thanks!

Thanks Mike, I actually found out about Wilmar after I originally posted this. Most of the sizes I needed, though, weren't available or were backordered. I will check there again on the next unit I redo.

Don't get me wrong, I loooove cordless blinds. I have them in my own home and they're great. I prefer them over corded and I agree that they are better. But corded definitely have their place in the market.

That 5-foot-tall person you're referring to is my tenant. Sure, she can reach the current cordless blind to open and close it, but she can only open it a little over halfway without climbing on a chair. She'd like them to be able to open all the way, and to be honest, I would too! It might not be a problem for you, but it's definitely a problem for some.