All Forum Posts by: Gregory Schwartz

I'll probably get pushback on this... but here's my experience. I have 4 units, 2 have formica and 2 have quartz. There has been no noticeable difference between all 4, same income, same 5-star reviews. 

@Steve Tse thanks for the background. I think that all sounds very fair and in keeping with how we raise rents. What is the monthly rent? What would it cost to turn the unit / get it rent-ready for a new tenant?

I don't aggressively increase rents if a tenant's current rent is within the turn cost / 12.

For example, if you need to replace flooring, paint, and fix up a few things... your turn cost might be $5-7k.  $6000 / 12 = $500. In this situation, I would likely only increase rent $50-100. If the tenant pushes back I'd feel comfortable with a $20-40 increase.

Not a perfect system but its how we think about it. 

@Nathan Gesner I agree 100%. You said it much better than I did

A few things to note
- Know the market value of your rental, because I guarantee your tenants do. 
- Your expenses don't mean anything to a tenant. The market dictates the value of your rental. So dont use the "taxes when up" excuse with a tenant
- Raising rent to market rate could prompt a tenant to move to save money. For me, a turnover costs around $2,000. Spread over 12 months, that’s about $160/month. So, if I’m under market by $160, but the tenant will signed the renewal thats a win. I’d rather avoid the turnover and save on out-of-pocket expenses.
- Having a set % and applying that each year is lazy and will result in higher vacancies. See my first point

@Sanjeev Advani Thanks for sharing. I think the important takeaway is that you need to know what's going on in your local market. Dont rely on national number to drive your investment strategy. 

For example, in my market, we see MF building permits way down for the last 2-3 years. However, SF permits have been booming. 

If you live in Texas this is a great resource to see how much MF inventory is growing in your market https://trerc.tamu.edu/data/building-permits/

@Casey Coffey great negotiations! Lots of equity and a house that pays for itself even when you account for capex, future vacancies, etc! That's a big win!

@Joe Villeneuve makes some good points. We really need to account for and highlight the fact that there are more expenses than just PITI and equity is a fun number but it really doesn't have any true value until we tap into it. And of course, the process of accessing the equity comes with its own cost / expenses. Sell it and you have agent fees, closing costs and taxes. Cash-out refi costs money to originate the new loan, appraisal fees and your PITI will increase affecting cashflow.

Overall I think this is a great deal! Congrats 

@Chris Seveney really, you think it's ok if all the apartment complexes stopped sharing rental history? 

Would you approve applicants without a verified rental history? 
Doesn't this hurt the tenants trying to move to a better location or larger home for their family? 

I have to deny this family who is otherwise likely very qualified. My unit sits vacant longer and this poor family will struggle to find a good place to live. We all know the type of landlords that dont screen tenants, they're horrible and usually dont take care of their properties. So what kind of living conditions will this family end up in? 

I really hope it's not a policy that becomes widespread.  

I generally dont like the idea of charging for more tenants. It just gets messy, and complicated and opens you up to false allegations of Fair Housing issues. In my rentals anyone over 18 that wants to be added to the lease can do so given that they pass the same screening as every other tenant in my portfolio. Of course, if the unit is at capacity then we can't allow any more occupants. IE not more than 4 people in a 2 bedroom unit. 

We are in the process of screening a tenant which of course includes verifying rental history. We ask simply questions, like were they late, did they have lease violations, outstanding debt and would you lease to the tenant again. But we were told Graystar management has a policy that they don't disclose any rental history even with a signed release of info by the tenants?! This same PM company requires tenants to provide verifiable rental history?!?

I've been in PM for the last 5 years... has this always been a thing with Greystar? And if so, this sounds like the most hypocritical practice, we require but don't provide rental verification. 

One of my younger clients is a 21-year-old college student. He worked his *** off for a year to save some money, then convinced his dad to contribute and co-sign. He purchased a relatively inexpensive ($210k), 3 bed 3 bath townhome. He lives in one room and rents out the other 2 for $700 per bedroom. 

I would do that.