All Forum Posts by: Gail W.

I am in the Effingham area and I am doing alright with my buy and hold investments. There is very little available rental inventory in this neck of the woods, so I can be picky about who my tenants are. 

     This is a story of how to not stay in this business long. I have been investing in residential real estate for just three years and I have one property where I have done it all wrong. I am writing this as a warning to new investors, and to point out how easy it is to make these mistakes.

     In one of my properties in a very small town where I have lived for 40 years I made the decision to rent to the daughter of a man who has been a friend for almost all of 40 years. She was struggling with a divorce and needed a place back in her hometown. I have known her since she was a child and felt obligated to help. She keeps the place very nice and takes care of most of the maintenance herself, (I did have to go fix the furnace once.) She has been there for 15 months at this point. One time around 6 months in she was late on rent. I sent her a text and she paid right away. November comes and no rent, so I text her. No response so I call, no answer. Things got busy and I just figured she would catch up to me. December no rent, so I sent a letter giving her 5 days to pay. This put us close to Christmas so I let it go. On December 30 I sent a pay or quit notice. All along I was sure if I just called her Dad he would take care of this, but I reasoned this was between me and her. After hearing nothing I finally sent an eviction notice, certified mail return receipt requested. Before I got the receipt back her Father was at my door, he had a check in his hand and was cussing me out as he delivered it, because I had not called him. After trying to explain my thinking, and failing, I invited him to hit the road.

     At each step I knew I was not following my own policies, but I was rationalizing. Here is a list:                                              1. I rented to a friends daughter with no background check because I felt sorry for her.

     2. I didn't send a late notice the first time she was late, and in November, to keep things on a professional footing.

     3. I let things slide thinking she would do the right thing.

     4. All along the way I did not treat this as a business relationship, or set expectations of what I needed from her. 

I would not want to buy a property without a home inspector that I trust looking at the house. I have considerable experience in construction, electrical, and building maintenance, but it's always good to have an extra set of critical eyes on a potential project.

That being said I recently walked through a property for sale for a friend who is looking to get into rentals, and noticed some signs of a leaky boot on the roof, and asbestos insulation on some of the duct work. The bank sent an inspector I didn't know and the only thing he noted on the inspection was the water heater pop off valve drain pipe wasn't long enough, and there was an open water line with a valve shut off that wasn't capped. No mention of asbestos or a leaky roof. 

In my mind these things missed were major things that needed addressed. I guess this goes back to my earlier comment that it's good to have an extra set of eyes, but also use an inspector you can trust.

$3500.00 is way to low for plumbing a whole house in copper. I would avoid very low bids like the plague.

As far as copper pipe is concerned I would ask the plumber why would a use a material that is more expensive and won't last as long as Pex. I have never gotten an answer that makes sense to this question. Also plumbing in copper takes longer to do. 

Ok that answers that. Thank you all for the responses. It will be a simple no I can't do that.

     I have just sold a flip. The closing date is May 21, and the buyer is asking for possession on May 15 because he sold his house and the closing for that one is on the 15th. I am not inclined to allow this, but I have thought of requiring that he rent at a daily rate until closing. Are there problems with strategy or should I just say no possession before close? 

I had this same issue, the previous owner had passed and his kids could not find the title. Long story short tax records is the place to start. I decided not to rent the unit because it needed about 6 thousand dollars work to make it rent ready and I didn't want to put money into it until I had the title in hand, so the trailer sat on the property empty for 6 months,  

I have done three rehabs in the last 2 years and I can't imagine how difficult it would be to do out of state. My first one I feel burned me, I finished over budget and had around 15% equity after all my work, but the market appreciation has made this a very nice investment at this point. The second was a foreclosure and after rehab the numbers came out pretty well 36% equity in the end, but I spent the first 4 months of my retirement completely dedicated to the project  The last was just cosmetic in nature, very quick and easy 10% increase in value. So I agree with the OP there is a learning process. Oh and I should say I worked in the building maintenance and construction field all my life so I had some experience to rely on. 

Why couldn't you do a full screening on the current tenant back ground check, whole ball of wax, and then if they do not meet your criteria let the seller know you need to back out or the home needs to be delivered vacant. If it is someone you would rent to anyway then you are good.

If I can't screen for past evictions, or eviction records are sealed, that puts me out of the rental business. I would sell my houses and move on. If enough people do the same that puts the very people they are trying to protect in jeopardy of not being able to find affordable housing. It would leave the big players in the rental industry holding most of the rentals, and they will price according to the much higher risk.