All Forum Posts by: Greg Scott

In your assessment, is the carpet in good condition?  It is not uncommon for landlords to hope that the condition of their property is "good enough" when really things should be repaired or replaced.  It should look new.  If it is worn or stained, yes, put in new carpet.

On the other hand, we have had prospective residents tell us that we need to replace this stove or that carpet, and sometimes they are brand new.  They may not like the color or brand so in their mind it needs replacing. We don't throw away new carpet just because one prospective resident doesn't like it.  Also, in my experience, if a prospective resident is telling you to replace things that are new, you probably don't want them as a resident.  Their complaining usually gets worse after they move in.

What liability do you have when wholesaling? Probably very little unless you are mis-rpesenting the property.

As a wholesaler, are you an attractive lawsuit target?  Not unless you have a lot of other assets.

Saying "there is mold" is like saying "there is pollen" or "there is dust".  Mold can be found pretty much anywhere there is water and organic material.  This means EVERY house, home, hovel, apartment, and dorm has mold.

Frankly, I would be very generous about letting them out of their lease so they can go find a mold-free place to live.

That depends what you mean by multifamily.  Duplexes, tris, and quads are all valued comps, just like single family.  Because of the way they are valued, there isn't that much difference in the business plan for profitably acquiring and running these.  If you buy a SF rental, you pretty much have the idea.  With more than one unit, the biggest difference is that you have tenants complaining about each other and the property picks up more of the maintenance, like lawn mowing.

There is a huge difference when you get to 5+ units as those are valued using the income method.  The business plan to profitability is very different. 

If you are just starting out, I'd recommend starting in single family.  If, for whatever reason, you don't want to go that route and don't have enough to buy a 5 or 10 unit building, then syndication is one route. 

I would caution you to pick your sponsor very wisely.  Many charge fees all over the place.  One of my most detested is the acquisition fee.  This is when syndicators justify getting paid at closing for having done nothing but acquire a property.  But, there are many other fees that you could be charged so read the legal docs in full.  Other syndiicators are not good operators.  When the tide was coming in, it floated all the boats, but some of them are now struggling in this economic cycle.  I would also NEVER invest with someone who is just a money-raiser. (There are many out there.)  If the person you are talking to is not the person who is going to be overseeing operations, find out who is or don't invest.

Yes, this has come up in the forums before, so I've looked into it, but I have no personal experience with this company.

If my kids were considering this, I would advise against this.  While the financing and small entry price sound great, you are locked into their ecosystem with very little control. What do you do if you are unhappy with management?  If you want to sell do you have to sell through them?  If they decide to sell, what happens?

If your credit is good and you can scrape $25K together, you would be better off buying a SF rental.

Condos have much more risk than a SF rental.

A condo HOA can decide there are already too many rentals in the community and prevent you from renting yours. A condo HOA can decide they want to replace all the roofs, but if the bank account is low, hit you with a $5,000 special assessment. A condo association can get in legal trouble and banks won't lend to prospective buyers, making it nearly impossible for you to sell your condo. Those examples are not the worst thing that can happen to you.

Condos are a much riskier investment than a SF rental because you control so much less of the deal.  Buy a condo at your own peril.

Ross:

Here are my thoughts:

1) "As is" basically says to me they do not intend to give a discount because you suddenly realized the roof needs replacing.  They want you to bring an offer based on its existing condition.  "As is" means nothing to me because I would only every make an offer based on its existing condition.  If a inspection uncovers something hidden, I would still renegotiate or walk away. 

1a) I would never buy a condo as an investment for many reasons.  Its too much to get into here.

2) I have had rental properties in 6 different states while living in Michigan. You can do it too.  California is not a great place to have residential real estate for the reasons you mentioned.

2a)  Don't get freaked out about all the other things that *might* go wrong.  If you want to worry about things, you should be aware that asteroid may hit the earth at any moment and destroy all life. (Note: it is hard to convey sarcasm in a forum post but that was intended to be sarcastic.)

Good luck.

Residents can be very manipulative.  To keep your business running efficiently (and to avoid Fair Housing problems) you must follow a set process and use the same process for every resident.

I'll share a story about three different women.  These stories were all years apart but you would have assumed they had read the same script. 

These were difficult people.  Always mean to the staff.  Always threatening to call a lawyer or the city.  Always posting to social media about how terrible our apartment was.  If their behavior gets bad enough, we will non-renew them at lease-end.  With these women, this is what we decided to do, giving them 60 days notice they will need to find a different place to live.  How do you think these people would react?

They all came in to the office screaming. "How dare you non-renew me!"  "What right do you have to do this?"   "This is such an awful place, you should want me to stay here."  We then explain that we do not need a reason to non-renew them and have full authority to do so. We also ask them, "if this is such a terrible place, why do you want to stay?"  This results in more screaming and storming out of the office.  But what happens next is more interesting.

A few minutes later they come back into the office sobbing.  "I really love this place."  "I've made so many friends."  "The staff is so wonderful, you've really done a great job taking care of this place."  "I'm sorry if I was a little difficult."  "Will you allow me to stay?"  Our reply is that, management has already made the decision which is why you were notified.  We wish you well.  That causes the light switch to flip and they go back to screaming.

Three days?  Relax!  Hold firm.

If you get nervous, drop the rent $100 per month or confirm your marketing is good.

You do limit the prospective tenant base by restricting pets, but that is your prerogative. On the other hand, you may do better by allowing pets and requiring pet rents, pet deposits and pet fees.

I experience behavior like this every day.

You may not like what I have to say.

It seems that the biggest problem was how you managed the process.  Your lease should specify how a tenant breaks a lease.  Saying "no problem" should never be part of the process.  Everything should be written.  If his lease was formally terminated, and you have a new tenant coming, he is out and does not have the option to stay.  If he stays anyway, most leases have a punitive holdover clause that would charge him bucket of money because he is injuring not on your property but also the incoming resident.  We would never extend a lease to a resident misbehaving like that.

I'd encourage you to tighten up your procedures and, following your lease, get this resident out at the soonest possible time.