All Forum Posts by: Clinton Davis

Quote from @Melanie P.:

Do not wait two weeks to start the eviction process. The first step in that is terminating the month-to-month tenancy by posting a 30 day Notice to Quit on the property. Get a time/GPS stamped photo of the notice on the door. This way in 30 short days you can have an attorney or eviction service file for tenant holding over and get him out that way. There's no reason to extend the timeline two weeks - he's on your water and every day the cats are there the property IS getting worse. If he asks about the notice you can tell him it's just housekeeping for your insurance company, that it won't affect him since he's leaving in two weeks. But get your ducks in a row!!

Contact Mom, let her know she continues to be financially responsible for the premises as long as he continues to stay there. 

These type of people always have a story about the job they're about to get, tax refund coming soon, inheritance, etc. and when you drill down you find out they lack basic things (ID) that would enable them to follow through on their plans. This guy sounds like a hoarder who spends all day watching television and hanging out with his cats. The $20 you gave him went to his favorite habit - cigarettes, liquor, drugs, cat food. Certainly, not toward new ID.

Ok.  I assume the post office can do the timed/GPS photo of the letter being delivered on the doorstep?  Thank you for your advice.  You're right, there is no reason to delay things and allow anymore damage to the property.  The last time I had to make people leave my property was over a decade ago and I just did a cash for keys so this is an unfamiliar situation I find myself in.  

UPDATE;  

First off, thanks for all the great suggestions and advice.  I truly appreciate it. 

I ventured over to the house after work today and was met in the driveway with 4 cats.  I was surprised to see the power was still on but more on that later.  I spoke with him and he was very respectful and explained to me how he is trying to find a job and he has applied to McD's and dollar general and a few other low paying jobs.  Then he said he doesn't have an id. ha! I told him there no way he's gonna get a job without an ID. So he starts telling me he's trying and to give him a month etc etc. He said it costs him$20 to get an id but he didn't have it.  So I gave him$20 and I said I'll give him 2 weeks to show me something.  I told him even if you got a job starting in this house is gonna be too much.  It's better to move in with family or find a roommate to rent out a room or something so he can save some money.   

Here's the deal ladies and gentlemen. There's just no way he's gonna be able to afford to live there.  I gave him the money for ID just so I could show that I'm trying for him but I know that he won't be able to pay.  He has cleaned the house a little bit and cleaned the cat feces. So that's a plus.  haha!   I feel that if I went over there hot headed and demanded him out then there was a risk he could damage the property further.  So I decided to maybe better let him come to the realization on his own that he has to move on.  Anyway, in a couple weeks he will have to leave as we both agreed on so we'll see what happens then.  I know its easy to say you should have went over there and kicked him out and changed the locks etcetera.  but for me that is a last resort action. Did I do the right thing? Let me know what you would have done or have done in this situation.  

I called and spoke with the sister and she said the power company won't turn off the power until the balance is paid....huh?  But she doesn't wanna pay it because she is tired of having to pay all these fees since her sister died.  I dont know what's going on with that.  So that is why there is still power at the house. 

Quote from @AJ Singh:

@Clinton Davis

technically, he is not a squatter since he was living on the property with his mother even though not on a lease.. we had a situation where the tenant moved out and boyfriend did not. just finished the eviction in 3 weeks in memphis area as well.

Reach out to an eviction attorney in Misissipi area for a consultation 

good point.  thank you.

Quote from @John Underwood:

Call code enforcement.  They can temporarily condemn the house since it has no electricity and is therefore uninhabitable.

Then they should be able to remove him in 24 hours.

I just did this here in SC.

Sheriff gave the person 15 minutes to get there stuff and get out.

 That's great to know.  Thank you. I'll update on this thread later tonight.  

Quote from @Ricardo R.:

@Clinton Davis sorry to hear you are going through this. 

1) You SHOULD give him 24 hours notice to entry. I know he is not a Tenant (no lease) but better safe than sorry to cover your butt. Give 24 hours notice, you're not asking him... you're telling him. 

2) If you are worried, yes you can call the local police department, explain the situation and request a police escort, it they decline at least you have it on record that you requested. If you decide to proceed, record everything. 

3) Many ways to go about this but you should consult an attorney before even going over there to review your options but you will likely have 2 main options all of which lead to him moving out: 

- You can go it the nice way and offer keys for cash, you pay him (an amount less than you would pay for legal fees) to move out; the contigencies are that he must move out all of his belongings, sign a termination, and you pay him on the day he leaves at the door as he is moving out (you then change the locks) - he's out and you have a signed termination, the end. 

- You can go it the more heavy handed way and you will likley be able to file for an emergency eviction becuase your property is being destroyed, to do this you should take photos of the damages during your walk-through. 

*There is one last method, which I do not recommend but it is a method nontheless, you can sign a lease for the property with yourself as the Tenant or anyother person you trust. In this method you are looking for police removal and bypassing the eviction process altogether because after all he is squatter not a tenant. In this method you or the rightfull Tenant on the lease and have much more leverage to file criminal charges vs. the squatter and seek police removal immediately.

Again, you should CONSULT AN ATTORNEY now before you even schedule a walk-through to review your options, you can pursue one option at a time OR you can pursue ALL of them at the same time.  Sent you a DM on BP, if you can assist I would appreciate. 

 Great advice!  thank you.  I'll update here how it went tonight or tomorrow. 

A couple weeks ago I had a post here asking about whether to sell a property or not and I appreciate all the feedback.  Here is an entirely new situation to deal with.  As the title says, here is the deal.  

FYI- property is in North Mississippi not Memphis, TN as BP only has Jackson and gulf coast as selections under MS.  So Memphis is closest. But this is a MS property.  anyway....

I have a property that is filthy (I bought this property as a packaged deal with another property from a tired landlord, I inherited these tenants) The lease is month to month but only the 2 older ladies were on the lease.  One of the ladies died from health complications a couple weeks ago and so the other lady moved out already as she informed me she wouldn't be able to afford the rent by herself.  I said fine.  However, her bum son who was also there living has decided he doesn't want to move out.  He has told his mother he wants to continue living there because he has nowhere else to go.  He has no job and has been mooching off the deceased ladies disability.  Now that she's dead her family has cut off the electricity and gas to the house.  The water is under my name.  To make things worse, the living conditions in this house are the worst I've ever seen.  There is around 5-9 cats (he is obsessed with cats and let's them breed in the house) their litter box is just the bathroom vanity cabinet.  There is feces and urine all over the floors and you can imagine the smell.  I need to go over there and get him to move out.  The rent has been paid this month but he needs to be gone by March.  I have yet to go over there since the old woman died but I plan on going today after work.  What are my rights as a landlord and what if any do I owe him as a occupier?  He is not on the lease so I basically see him as a squatter.  The old woman's sister went over there to get her deceased sister's stuff and she said he was hostile towards her and she warned him that she was gonna turn off the power and gas.  What should I do?  Do I need to serve him with some papers to evacuate property?  Should I call the police and tell them the situation?  This is new to me as my other properties are my picked tenants and are all great tenants.  

Quote from @Dave Foster:

@Clinton Davis, You need to compare all parts of the IRR to see what the actual impact would be - positively or negatively. Monthly cash flow is one component. As @Lee Ali mentioned, depreciation is the second component.  With the 1031 exchange you don't reset depreciation.  But you have the opportunity to buy additional depreciation.  And that is a direct impact on your bottom line. Appreciation of course is another component.  But the component of the IRR that might be most interesting to you is the amortization of the loan.  Because you are actually purchasing two properties (or a larger property). you are getting more return of capital each month in amortization paid for by the tenants.  

It's very conceivable that your monthly cash flow might drop a bit (probably not much since your loan is already over 6%). But your actual IRR is much higher because of amortization and depreciation.

The last big thing to consider is the capital expense risk to your monthly cash flow.   If that property has some looming expenses.  You may want to exchange into something less risky from a larger repair perspective.

 Excellent points.  Thank you for your help.  Something has come up even more daunting.  A tenant has died (health issues) in one of my other properties and it was part of a package deal from a seller finance deal I did in 2020.  I will make a new post about this situation a bit later.  The property has good bones but the inherited tenants destroyed this property and I've kind of been delaying putting any $ into it because the house needs so much work.  More on that later.  I've never had a tenant die on me so its a lot to take in at the moment.  thanks.  

Quote from @Lee Ali:

If you can execute it then you should sell and buy as big a property as possible.  The reason is depreciation. That will more than offset your net income. If you have good credit you can even buy a 4 family. 

With 1031 Exchange you are not paying any taxes. So your appreciation will go far, and 1031 Exchange your depreciation clock to 0 year.

Please talk to a 1031 Exchange expert, and a CPA who works with real estate professionals. 🙂

Hi Lee.  Thank you for the sound advice.  I'm unfamiliar with the term 4 family.  Do you mean a 4 unit apartment?  thanks

Quote from @Glen Wiley:

I recommend not selling. I have regretted every single house we have sold over the past 30 years.

Refinance and work with that $52k. The rents will restore your cash flow margins in a few years and then you can do it again, and again, and again.

I like to keep our LTV for our portfolio at or below 75% because it reduces risk.

 You know you bring up a great point that I forgot about.  I did one fix and flip and I really regretted selling that house because it would have been a perfect buy and hold.  I'm highly leaning towards what you suggest.  Thank you. 

Quote from @Ko Kashiwagi:

Hi Clinton,

Have you looked into your Return on Equity (ROE)? While selling or refinancing would lead to lower cash flow, this does not necessarily mean your return is lower. Your Return on Investment may be lower, but it's also important to keep up the ROE.

Given your rate is 6.25%, it doesn't sound too bad for you to buy a new property or refinance if you find a good deal (many investors are holding 3-4% which would be much more difficult to let go. I'm curious to see if the investment property you have is in B, C or D neighborhood as this would heavily affect appreciation.

 Thanks for the reply.  I would say this property is in a B- neighborhood.  blue collar, starter homes 3bd, 2full baths.  I'd like to get into more B+ to A homes in order to get some of that ROE you are taking about.  This current home I held for 17 years before it went crazy with the covid thing and appreciated from $100k to $190k.