All Forum Posts by: Dan H.

I do not know if appreciation is anticipated but all things being equal I would go CA due to prop 13 protection.  

I have a couple units that are taxed at about half their current value.  I use 1.2% as expected rate in CA as a rough guide.  That is close to same as many areas in Nevada. But if there is huge appreciation the CA rate goes up at a low capped amount.  I have a unit that I save >$3k annually due to prop 13.  I have another that I save over >$2.5k annually. 

We once had a property in Gulf Shores Alabama that had its property tax increase much faster than the rents.  Our cash flow was reduced each year until it got hit by a few hurricanes.  Then there was the expense of the repairs and a huge depreciation of value (who wants to own in a beautiful area if every other year it needs significant rebuilding?). My point is property taxes can affect cash flow and most investors want the property to appreciate but appreciation is not all positive for buy and hold investor were there is no property tax protection. 

I agree with the sentiment of @Mark Elliott but you can save some effort by using a mortgage broker.  Their job is to find the best loan.  They of coarse get paid for their effort but they have a knowledge that would allow them to find financing in likely much less time than going to every bank or even calling every bank.  

I am not from Connecticut area so I have no mortgage broker from that area to recommend but I suspect if you asked for some recommendations for mortgage brokers in Connecticut on Bigger Pockets you would get some. 

I have used Casa Financial Services in So Cal (mailto:[email protected]) but do not know if they can help in Connecticut. 

M view is that you have nothing to lose by contacting the owner directly.  If you do nothing you end up not purchasing the property.  If you contact the owner and he truly wants $165K then you do not purchase the property.

However, if you contact the owner and the "realtor" did not present the offer or if the offer was too low due to realtor fees (4% to 6%) and the listing period has expired he may now accept your offer.  There is even the possibility that an offer that was previously rejected may be accepted after not selling at the desired price.

So I recommend you contact the owner with the realization that your offer may still be rejected (leaving you in the same place you are currently).

I set my rents in a similar way that you did.  I look up all the currently available comparable rentals in the area on postlets, Zillow, and Craigslist.  I then make additions/subtract ions for material differences.  I do this in Excel.  It provides an appropriate range.  Then depending on the available comparable units I set the price in that range (more competition I go at lower end of the range, less competition I go to higher end of range).  

I therefore think your process of setting rents was fine and likely the Bashers are less informed on current market rents. 

I attempt to meet in person and get their contact info in person as well as provide our contact info.  I follow it up with an introduction letter, lease, tenant application (make sure no criminals but I ignore credit check on inherited tenants and so far have not been burned).  There really is nothing special about our introduction letter as it mostly explains who we are and tries to create a tenant/landlord relationship with expectations (we also do not immediately raise rents even when significantly below market - we are terrible at raising rents so miss out on some cash flow).  

There are places in So Cal that can have positive cash flow but it will not match the cash flow of many other places (I have only 1 property that satisfied the 1% rule).  Yet I still choose to buy and hold in So Cal.

Here are some of the reasons I chose to buy and hold in So Cal rather than out of state

- appreciation

- prop 13: I had a property in Alabama shores that the prop tax went up faster than the rents.

- ease of managing local: when a hurricane hit Alabama shores being away meant I was every contractor's lowest priority. Dealing with everything is easier when you can be there.  

- cost to be there: going to Alabama from So Cal was a pain and costly but was sometimes a necessity.  Most of my units in So Cal are in a blue collar town less than 30 minutes from where I live. 

I am only looking for multi-unit properties in So Cal.  Good luck with whether you buy and hold in So Cal or out of state. 

2 per bedroom + 1 is the law here.  So if you were here you cannot deny a tenant that has 7 or less people.  

Like most landlords I require all adults to apply and pay application fee.  Lease is written so that each has full financial responsibility.  

I have had a 3 BR with 7 (5 kids) and they thrashed the place in a short time span.  I kept their entire deposit but their damage exceeded the deposit but not by that much.  I did not try to collect for the additional damages but would have if they had significantly exceeded their deposit. 

It was amazing the damage they did to the carpet.  They also had ringed a beautiful tree that I brought in an arborist to save (fee taken from the deposit).   They had also knocked down a fence but blamed the utilities reader but neighbor states they used the gate like a carnival ride and the kids broke fence (I suspect kids broke fence, set it back upright, did not tell parents, utility reader knocks over broken fence, parents believe utility reader broke fence).  I did not collect for broken fence (too hard to prove even with neighbor's statement). 

So tenant basically covered all damages but my turn around on the unit was almost 2x normal (I typically takes me less than 2 weeks to be able to show a property). Much of this was arborist time to save 2 trees with heavy trunk damage. 

I suggest that you are not a ready to purchase until you have seen enough properties and what they have sold for that you can tell a property that will have offer accepted the first week of hitting the market.  

I believe in my area of expertise I am better at knowing the value than the appraiser.  This is because typically I was in each comp he uses for his comps versus he is typically getting his condition, layout, etc information from the selling agent.  To be frank most agents cannot distinguish the difference between a $1k foundation issue and a $20k foundation issue.  Most agents have not been in the other comps used to know relative condition.  

I received an appraisal once of a unit in good shape.  One of the comps was a unit I pulled offer after seeing it.  The condition was listed as similar.  I can state that I would have needed to spend at least $20k on the comp property to have them be similar condition.  The agent called the condition of the comp good versus it was barely OK.  The appraiser had not been inside the property had to use the selling agents description on the condition.  That selling agent clearly had not seen this property.  I love when an appraisal come in below what I know the property to be worth (this one was below but above my offer so I did not get a price relief). 

My recommendation is you look at every duplex to quadplex that hits the market in your desired market. When you can tell with a lot of confidence the ones that will have offer accepted in a week then you will know what a duplex through quadplex is worth.  You will know what each has recently sold for and the condition, location, etc of each.  You will be able to know this unit will need to reduce price to sell this week or this unit is priced to sell this week.  

Good luck

I like cats but something has to be done.  The dog or pseudo barking dog are not bad ideas but this is probably easier, cheaper, and faster.  

Go to the store and purchase a spray bottle.  Fill it with water and keep it at the unit.  When the cat tries to slide by you give it a couple of squirts with the spray bottle.  Cats hate it and no damage to the cat.  The cat will quickly learn to not enter you unit.  

For the yard they sell motion activated sprinklers.  Same idea.  The cat enters yard, gets hit by sprinkler, quickly learns its old yard is not a good place to hang out. 

I use the spray bottle technique on my own cats to teach them to stay inside because there are coyotes where I live and them getting out could mean they die.  I want it so that even when the door is open the cats will not try to get out.

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