All Forum Posts by: Corey M.

Not all landlords are millionaires or billionaires. I am not. Ultimately, I made this investment to ensure I have housing and can put food on the table when I'm older. And I want the same for our military. I appreciate their sacrifices, but on a more macro level, if I'm bringing this up, there must be other landlords who quietly think it to themselves (and think twice before renting to the military). This could be easily resolved if the government just covered the landlord's costs in the event of an early lease termination.

It's a two year lease, so I don't think REI is going to be giving me anything.

Yes, I have 5% set aside for vacancy and 4% for repairs. This is the recommended amount that REI Nation puts in their pro formas, and it reflects the typical expenses based on the 1000s of properties they have under management. While the house can hopefully be rented again swiftly, the bigger costs are a combination of a re-lease fee and turnover, and there's no way around those. I made my decision to buy based on the average length of stay being 5.5 years. If I'm turning these properties over every 18 months instead of of every 66, those re-lease and turnover costs could run $10k+ instead of around $3k, severely lowering my return.

I understand this is a controversial post because it involves the military, but I was completely unaware that leases could be broken without penalty. Of course I want those who keep our country and citizens safe to have places to live, but I also want to be able to afford a place to live when I get older. These rentals are part of my retirement planning. The flaw here seems to be that the US government doesn't pick up the landlord's tab for a broken military lease, and - like it or not - that incentivizes landlords to rent to civilians with good credit scores.

I'm sort of reticent to continue this chain because I don't want to sound callous, but I do worry that I vastly over-estimated my return in this area.

To be clear, I would never want to discriminate against anyone. My dad is also a military vet. This was a turnkey property with 5% vacancy in the calculations. But turning over every 18 months is not supposed to be the norm in this deal, but I do understand the 5.5 years is only an average. The price of the house was top of market - which will end up being fine because of last year's appreciation - but the cash flow is only a couple hundred dollars per month. Insurance coverage has also increased. The margins are thin. It's a very hands off investment, but it is an investment. 

I agree that active military are good renters in terms of paying and doing so on-time, but what stops a landlord in a military town from having to turn over a house several times in a year? Every time the house needs to be turned over, I have to pay the management company an entire month's worth of rent for re-leasing plus make any repairs needed after the last tenant vacated. That could easily run in the $2700-$3k range. And it could be much more if the place can't be immediately rented.

As a landlord, I have to choose the best investment opportunity. Eventually, I need to have enough to retire. It just seems like landlords are carrying a pretty big risk in this scenario. If the government is allowing outs for military moves, they should also account for the landlord's costs, particularly if it's breaking a lease, which is what's happening in my case.

I don't think I did very well considering the average tenant stay is ~5.5 years under this company. I understand that some companies only get 18-24 months, but that is not the average with REI. But an average is just that, and it looks like I just had bad luck. I got a copy of the transfer order and it appears to be real, but I also don't see a law in Oklahoma that prevents me from refusing to rent to military personnel in the future. The government should really step in and make sure landlords get paid in the event that an active service member gets relocated. Seems like it has two major repercussions: 1) Landlords won't want to rent to the military for risk of leases getting broken 2) Landlords bearing the burden of any repairs and new leasing fees when a service member is relocated.

I purchased my 1st investment property from REI Nation last year and a major selling point to me was that the average tenant staying for ~5.5 years. This morning, after ~1.5 years, I was informed my tenant is terminating the lease early, without penalty, because of a military transfer. I looked in the lease agreement and there is no language to support this move. However, there is apparently a federal law allowing for military transfers without penalty. I wish I was aware of this up front, as I would've thought twice about renting to someone who is likely to be relocated during the lease term.

Re-leasing the unit is going to require me to make any necessary repairs and pay one month's rent to the management company for finding a new tenant. In short, this early termination is likely going to wipe out my cash flow for the first year-and-a-half of the lease. It's a huge bummer to have both repair and re-leasing expenses this quickly.

As a landlord, what are my rights here?

- REI is saying the tenant is only responsible for this month's rent, but in my brief googling, it appears they are also responsible for next month's. Is that correct?

- To prevent this in the future, is it within my landlord rights to tell the management company to only lease to a civilian? I want to support the military, but also don't want to lose money on this investment, which will happen if I keep putting in tenants who are likely to get transfers.

I'm sure there are seasoned landlords who knew about this rule, but it had never been brought up to me; I was a little blindsided by the financial hit. Some of it may be recouped by a higher rental fee for a new lease, but it doesn't look like rental prices have increased significantly in the area.

@Chris Clothier, would you mind weighing in?

Hi,

I'm a long distance investor looking at a turnkey in Pecan Valley Heights, just west of WW and just south of Chandler Rd.

Is there anyone from SA that can tell me about this area? Is it safe? Good tenants? Etc?

Thanks!

I am not a big believer in cash flow, as you're not going to get rich off $200/mo. But in looking at Redfin, it appears that anything around the tourist-y area of Downtown is uber expensive.  I imagine there's a robust Airbnb market in that area of town, but even a 700 sq ft condo is going for $400k+. Is it likely that at 20% down almost everything in Nashville would be cash negative? I'd be interested in neutral cash flow, open to l/t rental or airbnb rental.

Hi,

I recently went to Nashville for the first time and noticed that there are cranes everywhere building out the city. I know many people say that Nashville is played out as an investment area, but many have also said that of bigger cities like LA, which has continued to appreciate in value for years.

Does anyone have advice on Nashville? Are there cash flowing properties? Are there passive rehabs that can be made with an existing team who's done it?  I'm only looking for a relatively passive investment as I have a f/t, OOS job.