All Forum Posts by: Jeff Bridges

Given this plan, be sure to calculate the cost of moving your entire family's belongings twice with the alternative of moving your family once, and instead paying an additional months PITI out of pocket on a vacant original property. This not only might reduce cost, but also reduces family pain of moving, burden on other family and you'll have the luxury of moving in a less hectic manner and over a couple of weekends perhaps. thinking out loud, you could get something under contract, close in 60 days, then have tenants move in 2 weeks or 1 month later depending on how quick you can make things happen. After all, you'd be incuring rental costs anyway even if you were able to rent it right away. just calculate each of the options first. one might be less painful for not much more out of pocket.

For tenant screening, the most important things for me are talking to all previous landlords to find out what type of tenant they were and what issues happened in the past i.e on time rent, clean apartment, neighbor complaints?, what rent were they paying and able to afford in the past. secondly, I will get the pay stubs and maybe talk to the employer to check length of service. based on both of these, I have overlooked questionable or even bad credit histories if the above checked out. So these you can still check in depth without the SSN/ immigration info. I still always prefer to get credit/ criminal checks if possible, so if you cant get these without social, then you have justification for being uncomfortable renting to #1.

given the time involved in finding/buying/rehabbing (if applicable) a new place, I don't believe your idea of finding renters before buying would be plausible. It would take min 60 days on a flawless closing with financing from time of contract. Very few renters even sign a rental contract a month out, let alone 2-3 months if there are unforseen delays in your closing.... You might have to take that leap first if you understand exactly what rental price you can set for your current place...

The only way to know how many mortgages or liens are on the property are a) to ask the seller or with more certainty b) have your title firm pull title for the property and give you the title report. You will likely have to pay them a small fee to do this separately from the closing process (esp if it doesnt close).

I have been in deal scenarios where the owner has a single mortgage, but failed to share that there is a lien imposed by the HOA for deliquent payments that need to be resolved before closing (in one case it was 16k!!!). There was another scenario where the seller had 2 mortgages with the same bank that were opened at the original purchase: the processor only asked for short sale approval for one of those mortgages and didnt realize that the second had not been considered/ approved. The file got kicked back and had to be reviewed/ approved all over again, taking alot of additional time.

This is where experienced short sale processors come in. If they dont check all of the issues up front, they dont include them in the negotiations with the bank and typically have to start over again after initial bank approval. A regular real estate agent would likely miss one of these issues and cause the process to be drawn out several months. It is important that you make sure that the processor is dealing with all of the known liens/ mortgages up front so that they all negotiated the first and only time with the bank.

Finally, despite due diligence with the above, short sales can sometimes end up dead in the water anyway so you'll need patience and never keep your hopes up that you will be guaranteed to get the property at all or even at the price you'd hope for. Finally, if you checked the area comps and they support your offer price and the bank counters, feel free to submit to the bank comps on an excel sheet with your justification for your original offer price or a little closer to their counter. I've done that before with success in response to the the bank counters. Otherwise a lowball offer not supported by area comps will not be accepted by a bank and expect a counter or rejection... so be prepared for that...sometimes even a short sale contract at list price wont mean jack to the bank whether they accept.

@Brandon Turner posted a good anecdote about this recently: http://www.biggerpockets.com/renewsblog/2013/01/21/rockstar-investing

Bottom line is this is generally a red flag to be extremely cautious. While there are a few trustworthy people who just want to pay in advance, the more common reason is poor financial management that will come back to bite or they have something to hide. While they are flush with cash during tax time, you have to ensure they can continue paying rent normally the rest of the year. Up to you to determine.

9. Utilities- Short term guests will require basic cable TV at the minimum. You should also expect to provide wireless internet (as your competition will likely offer this as well). Finally, any utilities not covered by HOA such as electric will need to be incorporated into expenses. estimate $100-$200.

2. Since your intent on managing/ cleaning the place yourself- Cleaning supplies costs & make sure to add costs for 2-3 sets of bedroom sheet sets for each bed so that you can take home a dirty set to launder after the previous rental.

A couple of issues I noted that you will need to revise in your estimates. 6% is not a realistic down payment for investment rentals (especially for condos). Most lenders will likely require 20-25% down for investment condo rental so readjust that aspect and reassess if this is realistic.

Management: driving on both ends of each short term rental along with cleaning and maintenance multiplied by 10-15 rentals a year might get old for you. If its next door, then no big deal. If not, the money saved in DIY might be a big sacrifice for your sanity. yes they usually charge 10% of the rent, but you will need to check your expenses appropriately (or buy a more reasonably priced condo).

Profit: Some people can make a tidy profit with vacation rentals and pay-off their entires years expenses with a couple a rentals a year while others lose big time. You need to decide what your expenses are WITH management fees OR not renting it out to anyone as a full year summer house for a worst case scenario. Just be conservative and decide if the effort, money, headache is worth the price.

Schedule: You have to decide if you are willing to allow it to be rented labor day, july 4, etc to maximize profit while accepting off-weekends for summer vacations with family. these weekends might even determine whether you break-even annually or not. Make your calculations with these dates in mind. Be realistic what sacrifice you want. On top of all of this, you have to be prepared to see if it will be rented at all outside the summer months or even the holiday weekends.

Good luck...

It just hit 20 degrees here in MD after an unusually warm start to the winter. I know I wouldn't want to move with a uhaul truck in this weather!:) Which is why its much easier to fill rentals/ rooms etc in the more temperate months. While there might be a college student cycle and general family market, January doesnt typically meet any of these needs/ demands.

I always try to time my leases to end in the spring/ summer timeframe so that I could easily replace tenants in an opportune season. If that means signing a 6 month lease or even a 14 month lease to end in the spring timeframe, that would be a smart idea if possible. generally you want to avoid having to look for new tenants between Nov-jan due to holiday/ winter season and light interest by people to move.

Maybe check your incentives like waiving app fee or security deposit lowered or one month free (paid out during the second month). Might need to be creative or just wait it out until spring?

Good call. Its likely going to be 90 days notice required for tenants to move out if they are on month to month with no lease. If they are on a long term lease, that lease still stands until lease end date. Local jurisdiction trumps this law if there are longer terms.

http://www.nolo.com/legal-encyclopedia/renters-foreclosure-what-are-their-30064.html

Your first step is to introduce yourself in person to the tenant and try to start off on a positive note with them.

I would ask to schedule an inspection of their unit (to check the unit condition, check any damage and needed repairs). Then decide what rent you want to charge and if you want to keep your old tenants. If you dont want them to stay or they won't pay the rent you wish to charge, you give 30 days notice in writing that they will need to move out (you can say that you will be renovating the unit or whatever reason you need). If you do, you can use Jon's suggestion with the estopple letter or ask them to sign a new lease with your new rate/ terms if they want to continue living in the apartment.