All Forum Posts by: Michael Noto

If you are a good agent, this will have no bearing on anything. 

This is not a normal turnover, this tenant definitely beat up the property more than typical. This is why I never understood low price/low rent single family rentals for out of state owners who have to hire people to do everything. You get 1 bad turnaround and your cash flow for the foreseeable future is completely wiped out. 

@Gary Libero To answer your question about the agent fee, an agents fee is negotiable.

We fill 7-10 rental units per month in CT and our standard fee is 1 months rent, but is technically negotiable. 

Next time you list I would recommend getting it on Zillow Rental Manager so you can get exposure on Zillow and their partner sites. That tends to be where most people are looking for apartments from what we see. 

Investment Info:

Small multi-family (2-4 units) other investment in Southington.

Every Monday I will be highlighting a deal I was apart of either as an investor or agent highlighting a different investment strategy and how it was executed in the local market.

This past spring I was a buyer agent on a 2-family house hack deal in Southington, Connecticut.

Property details:
- 2- family side-by-side duplex
- Each unit identical 2-bed/1-bath layouts
- Natural gas heat
- Each unit has own driveway
- Solid B+ neighborhood
- Very desirable area to rent and own

What made you interested in investing in this type of deal?

My clients are a couple and one of them purchased a 3-family with a FHA loan the year prior and now were looking for another house hack to put in the others name. The neighborhood and condition were the major draws for this deal. Clients preferred a ready to rent property because of busy W-2 jobs and were really focused on areas where they could attract top flight tenants. This checked both boxes which is rare in this market.

How did you find this deal and how did you negotiate it?

This is one of those deals you read about where you have to act fast in order to get it. We were there to view the property within 5-6 hours and put our offer in. I advised my client to make a very aggressive offer right off the bat because this was going to be a competitive situation. From knowing the market like they did, they agreed and offered $5k above ask. We also did not request either unit vacant upon sale, clients were comfortable dealing w/ that issue after they closed.

How did you finance this deal?

Deal financed using a low money down conventional owner occupied loan that was offered by a local bank. This made a huge difference to the sellers who weren't interested in going down the FHA route.

How did you add value to the deal?

Rents were raised to market rent on the rented unit within 6 months of my client owning the property (it wasn't that far under to begin with) and as it turns out one of the tenants was planning to leave within a couple months of close anyway so they were easily able to satisfy their owner occupant requirement.

What was the outcome?

These clients now have a total of 5-units they have acquired through the house hacking strategy within a couple years. Both are in neighborhoods they are comfortable with and I have helped them with some tenant screening type questions when they were filling vacancies and they seem to have quality tenants in all units.

Lessons learned? Challenges?

This deal showed me once again the need to get creative with offers in order to land places in desirable areas in this market. Using the conventional loan vs FHA and my clients having confidence to not request a unit vacant upon close were huge determining factors in the sellers accepting their offer. Credit to my clients for understanding these intricacies because not all of them do.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Worked with Liberty Bank (local bank) who had this loan product was key for this deal.

The only way to run someone's credit, criminal and eviction records it to have their SSN. It is not out of the norm for a landlord to be asking for that when you apply. Explain your specific situation to the landlord though, they will probably just more heavily weight your wife's application and just take into account your verifiable income. 

@Chris C. First off, congrats on the 1st successful BRRRR.

In order to keep the momentum I would do the demo yourself if that more aligns with your goals for this project and your investing. When you are scaling sometimes it requires to do what you need to do to make the numbers work if it is within your control. You seem to get that and are willing to do the work which is important in this business.

As you grow, you will have to do less and less of the work because you will be able to absorb these budget increases for unexpected things. 

Tell your PM to take their time and go through the unit more thoroughly after the next move out and before they give back the deposit. Most states you have 30 days to do this so there is no rush. 

Next have them take detailed pictures of the unit post move out for you to review and make them tell you what they are going to deduct for and after you look at the pictures you can inquire about things you see may be included. Normally I would say trust your PM's judgment, but this seems to be a pattern. 

Generally speaking in order to amend a contract both the buyer and seller have to agree to the amendment. 

The common way I see it done in CT is some kind of pet deposit along with a monthly pet rent. Typically an additional $250 per pet for a deposit and then an extra $25 in "pet rent". Neither of which by the way will make a dent in the cost of a pet seriously damaging your property. 

The only part of your post that matters is they have been perfect tenants. Raise the rent a little bit because they are month to month, but don’t do anything drastic to scare them off. The odds of a new build home going completely as planned is not likely, they may not vacate until Spring of 2023. Who knows. 

I know it’s tough but take it month by month. A lot can change in 6-9 months, and keep the good tenant as long as you can.