All Forum Posts by: Hans Baum

Hello

We've successfully invested in Memphis since 2011 with a mix of SFRs & small multis , all because of the trust we have in our property management team to steer us.  All the properties were purchased site unseen on their recommendation & has been spot on .   You will hear many horror stories so my two cents is to find that company who's looking to your mutual success & respond to you in a timely manner.  If you want a referral we're glad to share.

Best,

Mike

It sounds like you’re dealing with a tough situation, but there are steps you can take to resolve it while maintaining a positive environment for your other tenants. Here’s some steps you could consider:

Steps to Handle the Situation:

1. Review the Lease Agreement:
• Check your lease agreement to see if there are clauses about guests, noise disturbances, and unauthorized occupants. This will provide a legal basis for your actions.
2. Document the Issues:
• Keep detailed records of the disturbances, including dates, times, and nature of the incidents. Your security camera footage can be valuable evidence if needed.
3. Communicate Clearly:
• Have a formal meeting with the tenant to discuss the issues. Be clear and firm about the violations (unauthorized occupant and disturbances). Provide specific examples and explain the impact on other tenants.
4. Issue a Written Notice:
• If the behavior continues, issue a written notice citing the lease violations. State the specific clauses they are violating and give them a deadline to comply (e.g., 14 days to rectify the situation or face eviction proceedings).
5. Consider a Lease Addendum:
• If the tenant is willing to comply but you want to formalize the arrangement, consider adding an addendum to the lease that outlines guest policies and consequences for violations.
6. Enforce Consequences:
• If the behavior continues and the tenant does not comply with the notice, you may need to start eviction proceedings. This should be a last resort but is sometimes necessary to maintain a positive living environment for other tenants.
7. Tenant Screening:
• Moving forward, enhance your tenant screening process to avoid similar issues. Ask for references, conduct thorough background checks, and clearly communicate house rules and expectations before signing the lease.

Tips to Prevent Future Issues:

1. Guest Policy:
• Include a clear guest policy in your lease agreements, specifying how long guests can stay, whether they can have keys, and the procedure for adding an authorized occupant.
2. House Rules:
• Establish house rules regarding noise, behavior, and common area usage. Make sure all tenants understand and agree to these rules before moving in.
3. Regular Check-Ins:
• Conduct regular check-ins with your tenants to ensure everything is going smoothly and address any issues early on.
  
  

While dealing with difficult tenants is never easy, taking clear, documented, and legal steps can help resolve the situation effectively. Maintaining open communication and setting clear expectations can help prevent similar issues in the future. Best of luck, and keep us updated on how things progress!

How much is the ability to assume a loan at 2.25% worth? 

Let's say I have a property that I want to sell and I have a VA loan on it. Let's also say that the property is occupied by a tenant who will be vacating in 30 days and I'm willing to leave it vacant for up to 120 days as needed to complete the assumption process. My goal would be to get the top dollar for the house. Let us also say I am willing to carry the second position note for someone assuming the loan. details below on the property ( I will use a property I own and could theoretically do this with... though not planning to). I would want an eligibility swap. My goal is to see what if any amount over normal market value you would pay to be able to assume the loan / What would you change about the deal?

Location: Chesapeake, VA (large military town)

Market Value: $360,000

Loan Balance: $245,000

Equity/Second position note: $115,000 (30 30-year amortization / 10-year Balloon Payment, 6.5% Interest, $727 monthly payment) - Bringing cash for this would save a ton of money for the buyer.

Rate: 2.25%

Years Left: 26

Current Monthly payment: $1,300 (including taxes/insurance)

Current Rent: $2,000

Scenario 1: 

-If you were to purchase with a new VA loan at 7% interest at market value your monthly PITI would be approx.: $2,757

-If you were to assume the loan and I carried the second note at the above terms your monthly PITI would be: $2,027

Saving: $8,760 per year.

Scenario 2:

-If you were to bring the same $115,000 as a down payment on a conventional loan you would pay: $1,992

-If you were to assume the loan and bring cash for equity position your monthly PITI would be: $1,300

Saving: $8,304 (with no need to refi in the future)

Since this is a hypothetical situation I'm going to give my number based on nat. average homeownership of 13.2 years. My personal opinion is that this would be a very buyer-dependent situation. If they were staying for 2-4 years probably would not be worth much more to them. however, if this was a home they planned to keep for 10+ years I think there is a huge value here. 

so let's go with 13 year scenario:

total savings would be approx. : $107,952 over the 13 years... I think it would be fair to ask for 1/3 of that savings as an incentive to assume the loan... so approx.: $36,000

Fair?

So could you see paying over the $360,000 Market value and by how much? 

If you would pay over market value how did you get to your number?