All Forum Posts by: Dave Kush

Hi Jake!

Check out the BRRRR book by David Greene. This will give you all the basic info, so you know what question you need to ask.

I also am a big fan of "The Weekend Millionaire's Guide to Real Estate Investing", by Mike Summey and Roger Dawson. It's a very straightforward, basic approach to buying SFH rentals, but the process is transferrable.

I don't get anything for recommending either of these. I just like them.

Dave

Good Afternoon Rick!

That's doable, if you're up for a little risk.  Essentially, you'd be clear of the mortgage +10K upfront, and then you are seller financing the other 100K.  You technically are giving a second mortgage for 100K.  I don't know all the specifics of the deal you're in, but my gut reaction is that if you're taking this risk, you need to get paid, either in the form of interest or a higher price.  Second, definitely get YOUR lawyer to draw up the note/mortgage and any other needed docs, so that you are able to foreclose on the property if there's nonpayment.   You either get paid or you get your house back.  

Double check that TN, if that's where the property is located, is a quick-foreclosure state. If so, all the better. If not, maybe ask for slightly more interest or fee, knowing that you'll have more time and cost involved if you have to take the property back.

Is the buyer going to pay you monthly payments of 4166.66 for 24 months, or is this a smaller payment with a balloon?  Can you verify they will have the cash flow for this?  Are they credit-worthy?

Inflation is a consideration right now.  Today it sits at 3.5% or so, but that could change. If you aren't at least getting interest that matches inflation, you're not actually getting 100k, but rather slightly less.  Knowing that market rates are in the high 6s at best, and much higher most likely, I would be looking for at least 6% interest.  Another way to think of it is to look at the opportunity cost. If you had 100k right now and invested it, how much would you have in 2 years?"  (T-bills, stock market, other real estate). Then try to get at least that.

If the buyer balks at a higher price or interest rate, you could always have a balloon at the end.

Again, not knowing all the specifics, financing 100k of the price for the buyer is a big ask. Don't be bashful about asking for something in return.

Thank you!

 That makes sense. It's a lot easier to see if the curtain is inside if there's a tub vs shower.  I have tub-shower combos.

 Thank you!  Assuming the mounted rod has a better appearance?

 That was exactly my concern.  The ones I have in my home require cleaning and maintenance, and I have my doubts about people keeping up with it.

Good Afternoon!

Here are a few to get you started.  Get specific and ask follow ups. These are somewhat general...

Did they pay on time? How frequently were they late?

Did you refund the whole security deposit or were there repairs?

Were there any complaints from neighbors or police?

Would you rent to them again (why/not)?

Were they reasonable about repairs when needed (time needed, facilitating access)?

Did they abide by the rules of the agreement?

Why did they move?

Two other small pieces of advice that are gold, as far as I'm concerned:

After you've covered the basics ask, "Is there anything you can tell me off the record?" You will be surprised how often that will get you more information...often critical information.

Second, if at all possible, try to get on the phone with the landlord prior to the current landlord.  If they are a bad tenant, the current landlord might say anything to get rid of them, but the landlord prior is under no such pressure.

Good Luck. Let us know how it goes!

I don't see an issue with that if the tenant is willing. My first concern as a tenant would be that you are going to increase the rent in month 2.  I usually do 1 year, then go m2m after that. Where I am at, I only need to give 30 days notice on rent increases or lease terminations on M2M, so that is nice.  Then I try to give a 90 day notice on rent increases.  

I recommend small rent increases every 6-12 months rather than large ones less frequently. Tenants will adjust better to the small increases.

Apologies if this is redundant. I tried to find an answer posted already but didn't see one.

Do you install tub/shower doors or just go with rods/curtains?

I don't mind installing a shower door for a bathroom remodel, but wanted to get input.  All of the units had curtains, not doors, when I bought them.  This does not appear to be an issue for the tenants or the property maintenance (ie, no calls about tiles, soft floors, rot, etc).  

My personal opinion is that a shower door is nicer, but wondering if that's going to create maintenance headaches later.  What do you do for your rentals?

My properties are typical mid-grade rentals in good neighborhoods (ie, not luxury apartments).  Do you find that tenants have much of a preference either way?

Thank you for your replies!

Dave

That's nice profit! Congrats!!  

How did you locate the property?

Any lessons learned?

Dave