All Forum Posts by: Sam LLoyd

I had the same thoughts... If you have 150k, you might want to consider a more expensive 4plex.  If you can get a 4plex for 50-70, you should be able to get one for 100 that will have less issues down the road, and is in the best location... and you'll still have money left over.

The reason I followed this point was to put out the same question Shaquetta has.  I've been researching different management softwares, and my biggest criteria is the ability to have my tenants pay online without a fee.... and without giving them my bank account information and worry about receipts.  So, anyone who has a way to do online rent collection for free or close to it, please let me know.

In response to the other items brought up, it is something I struggle with all the time.... pay someone to get it done, or just do it myself so it gets done quickly and correctly the first time.  I've discovered that it comes down to two things.  The value of your time, and how that compares to other things in your life.  Here's an example with an explanation:  Garage door spring breaks.  Quote to repair - $215.  Do it myself - $100 material, probably 3+ hours of my time, and it would put me into rush hour getting home... miss out on an evening with my family.  So, time-value is less than $30/hour since I have to take time to go buy the parts.  Is the evening away from my family and the stress of figuring everything out worth $30/hour:  Not for me right now.  It was several years ago, but not right now.

Management is the same thing.  I'd guess that with each unit I have, I put in about 24 hours/year average... and that's because I do most of the maintenance.  Management cost to me would be about $1200/year.  It probably would be realistic to round that up to $1800 if you include the little maintenance items that I take care of.  So, that comes to $75/hour time value.  At that rate, with my stage in life, I cannot afford to pay someone else.  That time-value of $75/hour is what I'm using to build my portfolio faster than if I just kept my day job.  If I were making more that $75/hour at my day job, I would hire the  management.  There's no reason to have the stress of management if I can make the same money just going to work.

Those are my thoughts on self management. 

I'd say it depends on the standard of living you are looking for.  If you want a high end home in a fancy neighborhood, renting makes a lot of sense since it probably costs less than a 30yr fixed mortgage, and gives you flexibility in life.  If you have the standard of living I'm looking for for my family, it makes sense to purchase a house that will make a good income property should you have to leave.... a duplex usually does this.

Of course, it also depends on your market.  In some markets where you could buy a house for under a 100k, I imagine it would make more sense to buy your own home.  If you are where a house costs >500k, I think it makes more sense to rent.  My market is right in the middle.... which makes it hard to cash-flow a house when you move out, but still a bit financially better to buy than rent.

Don't forget what  Gail said, if the wife is on the lease, she also has to sign the termination agreement for it to be valid.

I currently have a potential tenant that wants to sign a 2 year lease for a commercial shop.  They also want 4 two year extensions.  That means they are committed to the current terms for 2 years, and I would potentially be committed to the current terms for up to 10 years.

I figure I need to work in a 3% minimum annual increase to cover inflation and cost of utilities.  Does anybody have recommendations or other areas that I need to cover myself when making this long of a commitment?

Thanks

If this is a duplex.... or something you live in, then yes, you might be able to ask him to leave.  If he pays the back rent, then I'd say you're stuck.  I had the same situation, and the guy stayed on for a few months more.... left the place in good condition.  Sad, yes, but this is a business.  If he pays, and does not violate the lease, I'd say roll with it.

That being said... if the rent is overdue, I'm betting it's all over and you'll have to say goodbye in 14 days.

I think we need to know why you are moving.  If you are moving because of your job... and might only be there six months, that's one thing.   If you're moving to your dream location, and just giving yourself 6 months to get the lay of the land.... that's another thing.

If I were to choose where to live and start from scratch, I would not go where duplexes are 320... with such low rent.  A duplex here can cost that much, but it would be 1500-1800/side.

If you're stuck there for a period of time, but planning on moving in the future, I would go for the live-in flip if you could find a great deal.  On the other hand, if rent is so low, maybe you should continue to invest in the market you are familiar with, while putting money away from your job and enjoying life.  If rent goes down $250/month, that's a bit more you can put toward another rental or two at your current location.

I think Ralph hit they key points.  Egress is necessary and subjective... If you think they can't get out, there you go.  

A thought that just occurred to me is insurance.  You might be able to work with your insurance carrier such that you can honestly tell the tenant that their stuff puts the building's insurance at jeopardy.... then, when you feel it is clean enough.... or they're gone. you can tell them that the insurance is satisfied.  On the flip side... if you did have a fire or something, the insurance adjuster might be able to deny coverage if this situation could be to blame.

I've been told different things by different mortgage lenders/brokers, but they are similar.  Here's what one said:

4 conventional loans with 25% equity in the property.  You'll have to have reserves for recent ones or ones that you don't live in.

6 more conventional loans with 30-35% equity but less reserves

I think the fact that it is a cash-out instead of a purchase might raise the rate a % or so.

Anyway, this is a place to start, but in the end, if you dig around, ask every lender/broker to make exceptions and find something special... build a track record and credit score that looks good... they can find work arounds for these limits.

My preference would have been a roll of vinyl, but flooring is the one thing I contract out, so I haven't spent time pricing rolls vs vinyl tiles.  Either way, I think you have to go with Vinyl considering your budget. 

Another thought:  What's the sub-floor?  If you're going straight onto concrete, I think a jump to tile might be worth it... easy to do yourself (I like doing tile)... It could raise the value of the building a little.  If your subfloor is rotted out planking with old vinyl tiles to scrape off then that's a different story.