All Forum Posts by: Dave G.

@Brett Foley Have you checked with wherever you currently do personal banking to see if you can open a business account with them? The credit union where I personally bank in Phoenix opened a separate business checking account for me. Much more convenient to me than having to go to another CU or bank for the biz account. You could check into that first and see what kind of rates and lending propensity they have on the business side of things before searching other lenders. 

Quote from @Jared Ladia:

Quote from @Dave G.:

@Jared Ladia I'm not usually a proponent of keeping a primary rez as a rental after you move out, but I might be inclined if I were you depending on some of your circumstances. Some questions/thoughts:

How much would it rent for? Is $985 PITI? What kind of condition is the property in? Will it need a lot of maint work in the coming 1-2 years? After moving, will you be local to the property still? This would obviously make it easier for self-managing, especially if you go the STR route.

You don't have much equity (at least as of now), and if you sell you'll take a haircut on transaction costs. For me in AZ this would be about 8% (closing costs/broker commissions). So you wouldn't have much in the way of proceeds (to me at least, maybe it's a lot to you). 

If you meet the primary rez requirement (2 of the last 5 years) you could rent it out for a few years and sell before you hit that time threshold saving capital gains tax. 

I purchased the house on 12/31/19. It would be at least 1-2 years before I would list it as a rental (if I went that route.) It looks like similar rentals in the area are around $1300 right now. I'm honestly not quite sure about the PITI. It was flipped and move-in ready when I bought it, so everything is new and in good working order. I have not had to do a lot of work on it, and I don't think it will need any in the coming 1-2 years. I would be moving 2.5 hours away if I did decide to move. My dad could possibly help with management while I was gone. I would be coming back to visit pretty often. I'm not familiar with the primary rez requirement. I will need to read about that.

Thanks for your suggestions!

Well, based on your numbers it looks like it would include PITI. So your mtg pmt + taxes & insurance is ~$1000 and it could rent for $1300. Not much margin there for vacancies, tenant turns, or any maintenance that does come up despite the recent remodel. So without property mgr expense I would expect to have very little or no cashflow. I would expect negative cash-flow with a pm service. You need to decide if your time, headaches and risk (would this be your 1st rental property?) are worth only principal pay-down and possible property appreciation. That's how I would be looking at it and for me I would probably sell despite my earlier comments. 

@Ryan Leake 

"the fear of being set back by debt for years on end" - interesting way of putting it. 

I bought my first primary residence when I was 23. I bought my 1st 3 investment props at age 24. I was up to my arse in debt. Not once did I ever think of it as a set back. I was leaning forward. And this was a long time ago when interest rates were 10%.

Did I do things perfectly? Nope. Did I eff some things up. Yup. I learned and continued to move forward. 

Debt should not be feared, it should be respected. It's a tool, just like a chainsaw. Used properly, it will accelerate results. Used improperly, and you will get hurt.

"It's the start that stops most people" - Don Shula

@Sasha Fukuda From a space standpoint, you could go to a tankless system but they're more costly than a tank system. Is this an otherwise pretty good tenant? If so, I would probably discuss with her your limited options and, if you need to, offer her a small reduction in rent. Even small monthly $ differences are usually meaningful to a renter. Especially on a $800/month place. Offer her $10/mo reduction, and go no more than $20/mo. After that she'll need to look at moving. She did after all, rent the place sight unseen which is not your fault. I might be inclined to not do that again since it is causing you this headache.

@Jared Ladia I'm not usually a proponent of keeping a primary rez as a rental after you move out, but I might be inclined if I were you depending on some of your circumstances. Some questions/thoughts:

How much would it rent for? Is $985 PITI? What kind of condition is the property in? Will it need a lot of maint work in the coming 1-2 years? After moving, will you be local to the property still? This would obviously make it easier for self-managing, especially if you go the STR route.

You don't have much equity (at least as of now), and if you sell you'll take a haircut on transaction costs. For me in AZ this would be about 8% (closing costs/broker commissions). So you wouldn't have much in the way of proceeds (to me at least, maybe it's a lot to you). 

If you meet the primary rez requirement (2 of the last 5 years) you could rent it out for a few years and sell before you hit that time threshold saving capital gains tax. 

@Naeem Barbour I had to "remove" one of my tenants last year after he pulled a gun on a neighbor in the property parking lot. The tenant was arrested for aggravated assault and then quickly out on bail due to no priors. All the neighbors were very concerned after this incident and I needed to take action, both morally and from a biz liability standpoint. This was an otherwise good tenant that had rented from me for 3+ years, always paid rent on time and no issues whatsoever until this. He had some sort of mental breakdown or something so this was not a habitual troublemaker. After my prop manager discussed options with counsel we decided to engage the tenant and "ask" them to leave. We did have language in the contract that would have warranted the eviction route, but we were able to get him to leave sooner, more quietly and with less of a financial hit to me by telling him he would avoid an eviction on his record this way. 

Agree with @Dena Puliatti to contact the case worker and discuss. You may want to let the tenant know this in advance to gauge his concern about it. But you'll probably just need to get him out of your prop to ultimately resolve as adult adolescents rarely change their ways.

Good grief. How many times a day is this question asked on BP?? If people only searched for recent discussions before just posting questions...

Quote from @Linda S.:

@Gigi Smith,

From my experience, happy tenants stay happy, complaining tenants stay complaining.  

If I were you, I'd be upfront the tenant "Look, nothing personal, but I don't think you are happy here.  You have contacted me X times in the past 12 months about stuff, and I have sent people who have told me it's not broken.  I checked the lease, and I have erroneously been sending people, when it's actually your responsibility.   I won't be sending anyone else, as per the lease repairs are the tenants responsibility.    If you'd like to get out early, I can let you out at cost and waive any fees.  Please let me know how you'd like to proceed."

Perfect. Everything needed for the dialogue is right here. Send notification in writing too. 

You can do this, or you can keep sending repair men out until the end of time. These are you options.

Good luck in your choice.

To all you new/aspiring investors, this is a clear example of a "landlord" getting exactly what she deserves from the tenant. She is not holding the tenant to the lease, she is in denial about to handle it and is getting all kinds of great advise in response to her post which she appears to not be listening to. 

It's not a matter of being cold or heartless, this is a business not a social program. You cannot allow other peoples' issues or limitations become your problem. You must "train" your tenant (and everyone you do business with) that you will hold them to your business agreements (lease). If they deviate or don't perform, there are consequences. Period.

@Joe Villeneuve right on....there is a glaring absence of any numbers from the sales pitches. 

I think the used car salesmen pitching it are attempting to appeal to emotions with actions that provide the illusion of progress in mortgage elimination. The busy-body actions make people think they're doing a bunch of clever stuff and getting things done but in reality not so much. 

Reminds me of the politician's answer to unemployment - Hire half the unemployed to dig holes and hire the other half of the unemployed to fill them in. Voila - no more unemployment, but nothing is actually getting done.