All Forum Posts by: Dan Martz

Mike Franco and Carlos Garza, thank you for the replies.

Mike, I've taken that tact. I.e. clean up and make it ready to show to help minimize their losses. I do 3 month walk-thrus and looked at the place today. Touch-up paint and a maid service in the bathroom and kitchen and it is rent ready.

Carlos, my one issue with that is that for all intents and purposes, yes I have to re-rent in a month...but, if every tenant were allowed to skip out on the last month that increases vacancy by ~8% (1/12 months) and I don't personally have that option when I sign a contract. I agree about asking the reason for leaving, but I think that I will ask specifically "are you leaving because of something about the apartment?".

Thank you both

Tamara R. and Roy N., Thank you for the responses.

They are at the end of their 12 month lease. Roy, I think that I will ask them to sign an addendum stating that I will begin showing, but that they will be responsible for final month's rent if it is not re-rented.

I'll try to make this short but include all pertinent information:

Tenants want out of their lease 1 month early (lease ends end of June, they want out end of May). They offered 1/2 of security deposit (equal to 1/2 month's rent). I told them I would call them tomorrow to tell them what I'm thinking.

What would you do, would you say "you signed the lease, you're responsible for the whole thing" or "I'll take the full month's security deposit in place as long as the place is in great condition minus normal wear and tear" or "I'll let you out with the caveat that I market it right now and keep the portion of your deposit that covers the unit until it is re-rented, but if it doesn't re-rent for June at all you are still responsible for the remainder"?

Thanks all!

Hi Daniel,

Working in reverse order:

What he paid is irrelevant; what matters is the market value...

Why pay 150+ when it sounds like you could buy two homes in the area for the same price (and no worries about guessing on utilities) etc....

My own personal opinion is that for a rural area the duplex makes no sense to me...He is taking away value by converting because you don't see a lot of retail buyers purchasing a duplex and I'd be buying a duplex for the rental income (which doesn't seem like it would be high enough to command that asking price in a rural setting)

J Scott, Thanks for the reply.

The downside (before inspections-obviously if the foundation or something big is shot it becomes less interesting) is that the "trendy" buyers don't buy up this last little area and I could've used that money on a duplex or triplex that cash flows.

So all things considered, the downside is that it is worth what I paid (+/- inflation) in 16 years and I avoided paying for private school during that time and opportunity costs lost me some cash flow from another property I could've purchased.

Feeling better about making an offer (just from the standpoint of my son being able to enroll in a great school system in a few years)

Ok, not really permission but input would be appreciated.

I'm looking at a home inside of a school system known to be very desirable. The city is entirely made up of expensive (for the Birmingham market) homes and is thought of as the trendy area in town (little restaurants, shops, etc).

2/1 bath homes sell for the low 200's and this is a 3/1 bath in move-in ready condition listed in the 90's. My reservation with this home is that it is located in literally the last 4 block area to be renovated in the area. It is 4-6 blocks from the trendy homes, 1/2 mile from the shops/restaurants, 1 mile from the bar area known at 5 pts, and 2 miles from a major highway. The area is also low crime.

I would be buying to live in it for the school system so that I could move out of my most recent project and rent it out (located closer to the university). My concern is that this area may never be "gentrified" and appreciate into the 200-250k price point, but what are your thoughts/input/devil's advocacy?

Hi Dan,

I agree with others that the price may be too high (considering that you will be paying for water).

If I understand the numbers, you will be bringing in $1900/mo in gross rents (475x4) and believe that you will clear $1800 after paying for water (I believe $100 in water/sewer charges for a 4plex with onsite laundry is wishful thinking. Probably closer to double or triple that amount.)

If we assume that $950 goes to operating costs (water, management, repairs, improvements, vacancies, etc etc ad naseum-a roof will age, water heaters break, hvac units leak, pipes burst, outlets die, carpets rips- you get it!) and $950 is left to pay the mortgage you will have negative $50/mo in cash flow (though you would be paying it off in 10 years rather than 30 so it may not be that bad if your 9-5 can cover this and you have reserves in place after purchase to cover the unexpected).

While renovating a SFR last year (my current residence in a middle class neighborhood) I had someone kick in the basement door to steal a new window heat/AC unit, a dehumidifier, and a number of small tools. I still believe it was the drywall guy that I fired (way over timeline and the work had to be redone). My solution was to leave my second vehicle in the driveway, and plug in a radio and light on a wall timer. No one messed with it again, but you can't stop them from getting in...they look for empty properties and know when one is being worked on.

Thank you for the feedback Rolanda! Zillow rental listings are showing 3 within 3 blocks: $485/mo 3bd/1ba $750/mo 4bd/1ba and $650/mo 2bd/1ba but who knows if they are actually getting these rented for that.

I agree that affordable housing is necessary in all markets, but I still haven't decided I want to put my capital at risk on this particular area. If you are interested I can email you the listing.

Thank you, Brandon,

Basically, opinions vary! I'm going to look at the house and determine what kind of shape it is in. Retail buyers have purchased some recently in the 40's and 50's so maybe it would make a good low cost flip to learn from if I find that the tenant pool for the area is comprised of people I don't want to deal with monthly.

Thanks again!