All Forum Posts by: Eric Carr

I am not advocating that you do this, but I know people who have. Your chances of getting caught? Not high. You could do it, rehab all units, refinance out of it asap. 

Some banks will do 10% down and no MI. 

I tend to be conservative in my projections, however, you are not just buying a property. Of course no one likes to be in the negative on an investment property but... you can look at this a couple of ways. Some people want cash flow no matter what, but for me, hard rules don't work. There's always and angle, find the payoff. I look at things from multiple angles. You have already said this is a buy and hold investment. Do you expect the value to rise, do you expect rents to rise? I have a place in Austin and we both know it's hot. In other words, on one hand - in addition to cash flow, I will look at what the long term outlook is. And in that context, I look at it from the standpoint that I am buying the market. Not the SFH, or duplex, or zip code, but buying the entire market. What's it going to look like in 10, 15, 30 years? Even if you have to put some money in to cover expenses that could come up, ask yourself what's this worth to you in the long run? Also factor equity paid by tenants and the tax benefits you will receive. Having a property pay from day one is the goal, but don't rule out your long term goals in favor of short term goals - look at both sides, what are you willing to do? What's your plan? Does, or how does this fit? If you believe in the market and the opportunity is right, looking at it from 3 years from now, which decision would you make or have made?

Have you looked towards Montopolis?

Class b- and below, I use Smartkey locks, which allows you to easily rekey a lock in a matter of minutes and at no cost - my handymen do it at my properties. Class b and above, starting to install electronic locks upon unit turn overs. ALWAYS good to start new when a tenant vacates. 

A couple of things about the liability - If someone were to go back into their old unit, obviously there would be no forced entry. The police would ask the current tenants who else has keys. Even if they are certain they haven't allowed anyone to take a key (and possibly make a copy), they police aren't going to know for certain. But.. the tenants will likely suspect the next logical answer, which is the locks hadn't been reset, and will they connect it to a previous tenant and then to you. Not easy to then prove, unless the culprit is caught, but will certainly cause stress and trouble with your current tenants

I've rented to roommates and I've rented to couples - some also in their 20's. It's hard to predict what's going to happen in their personal lives and there is no way you can get a "feeling" about it either - almost doesn't matter. If there is a lease involved, someone is paying rent whether they need to get another roommate or not. Develop solid rental criteria and stick with that. If their individual income and or credit doesn't meet the standard, the answer is no. There might be people who will work with them, but you have no guarantee and it doesn't sound like you're that person. If a couple breaks up or a roommate leaves, they can be replaced whithin the group - but rent must still be paid in full, however... If the couple in this case is sharing a bedroom, and being able to afford the place depends on all four people being there, there's a risk and it has nothing to do with being friends or there being a couple. It's simply a fact of income. If they break up and the girl moves out, what's the dude going to do? Go get another girlfriend to move in with him? No. They could probably find a friend to share the room but going down any of this rabbit hole mess is over thinking it. It is not your job to decide how they could make this work or how they could damage your house - your job is to stick to your standards, perform background checks and due diligence, and collect a deposit. Does theirr income and credit qualify?  Could the remainder afford the place of one of them moved out? 

Define your criteria and stick to that, either way. You do not want to deny them on a feeling or worry or on thoughts planted in your mind by posters... Otherwise you could get into fair housing trouble. 

Discuss this with your property manager and look over the rental criteria to see where you might be able to improve it. Have a solid criteria, solid standards, and rely on them

Millennials also are dealing with student loan debt. Everything will work itself out - we might see more renters for the time being but everything in life cycles

I advise against it, you're opening yourself up to a whole lot of pain

Originally posted by @Matt Greer:

@Eric James I’m in a military town and the most successful property managers are on the road between base and town and have high vis signage. People will know your business and walk in or just google your business name if it’s present in their mind.

 But are they successful because of the great work they do or because of the sign and an office? 

Matt makes good points. I believe there is always a way You can look for homes that are older, out of date, that a lender would finance (windows that close, running water). Knock on doors, make relationships, build trust, and land one. Buy the home, make the necessary updates as cost efficiently as possible, and flip it. Start small and roll that into the next rehab. Look at company structures and the tax implications as well. Also look into every possibility as far as financing goes. Scratch and claw and you will find your way

My belief and experience is little. 15+ years ago sure, but for me, my firm belief is no on cares about your water cooler, sign on the office, or the view from their office - they care about what you can do for them. Google and Facebook have offices, but most wouldn't care either way, most don't know where those offices are, and fewer have ever walked in. We have all the tools we need and no longer need an office to house infrastructure or paper, nor do most people walk in to look at property, they start on the internet 

Value is the key word 

If he passes your rock solid application and screening process, accept him and let him pay rent on the first like any other tenant

Don't get spooked by comments here, treat him as any other individual because for all intents and purposes, he would be if he hadn't offered to pay a year up front

If it were me, I would be upfront that I will not accept a years rent in advance, screen him like any other, and then make a decision based on that. If he declines renting your unit because you wouldn't accept the years rent, then he weeded himself out - for whatever reason that you might be glad not to be involved in 

Treat him like any other tenant. Our brains are designed to look for what's wrong, and when something goes differently, whether it be positive or negative, we come to conclusions based on fear

You are right to see a red flag here, but don't let that take you away from your process - you designed it to sift through unqualified tenants! You don't need to think about this any further, you have a process, stick to it. If you have a gut feeling, I'll leave it to you to move other applications to the top of the pile