All Forum Posts by: Ignacio Rosenberg

@Karen Margrave see above. We already decided to not increase. We can’t remodel the interior regardless until the tenants leave....and take their stuff. We’ll do the sweat equity stuff outside and re-frame when the leases are closing to ending. 

Agreed on all fronts. Look we’ll break even and barely cash flow at current rents. We’re good. We just had a massive disparity between what we researched and what is charged. We still have an inspection and disclosures so final price may even go down. Or we may pull out if we find something odd.
It’s less about being on the news and more about standing by what our company means to us, and to the people that choose to live in our properties. We never bought a place with tenants before so this was all new to us.

Thanks everyone. Incredibly appreciative of all the input.

Thanks Jim, we will do exactly that.  Still have a few days of due diligence and disclosures, should clear all of this up.

True!  We're still in disclosure with the current owner. For all we know they may have a clause on the lease, or nothing at all, or just a rental agreement.  We'll see.  Above everything we want to be good landlords. 

That’s a good point. We’re going to do that. We’ll continue with nominal rents, at most give it a $50 increase if we see it works, and see where stuff goes the next few months. It’ll all work out. We don’t want to evict anyone during this time even if we could. 

Thanks for the insight Patrick. To be perfectly fair, the market rents that we got were “as is”, there’s definitely higher rents to be had once we renovate. We’re not trying to be greedy or shoot over the moon. 
the downstairs unit is currently paying $725 and market rents that were given to us were $900. Fixed up more like $1100. These guys have been grandfathered in for a couple of years. They do have a lease until next year which we’d transfer over to us upon closing. 

The outside cleanup is for the neighbors, for future tenants as well. The fencing is literally falling down, the mailboxes are zip tied to a random freestanding door. Mowing the lawn and installing some fence won’t cost us much, and we don’t want to own the crappy house in the block! We definitely will save cash for the bigger reno when it comes. 

That said “I suggest settling in, learn your tenants, learn your buildings specific market, increase rent appropriately and move accordingly” are wise words.The shrubbery is free :-)

Thanks Jim.  We're definitely not in this to kick anyone out of home just because, and we don't have to remodel in order to keep rents going.  We would like to remodel to get higher rents but that was something we'd leave until the leases end, amongst other things to make up revenue, and we're going to fix the outside now because we want this to be a place they're happy to live in, and it's currently pretty unkempt.  We'd break even at current leases with 0 cash flow which isn't ideal, and I do hear you about financial hardships making people close out the ugly.  We'll monitor the market and see what happens, and have an honest conversation with our managers and realtors to see where they stand.

I really appreciate everyone's input, it's so much easier to go through things when there's a sounding board.

@Frank Wong no, definitely not on the offensive.  Paying rents is great, but it gets tricky when it doesn't cash flow.  The point here isn't to be offensive or defensive but to navigate the line between providing a home and running a business.  We do need the loan to get paid, and I can't imagine these guys not expecting some rent increase from new ownership.

The exterior project is sweat equity and some materials.  If we end up having to take on the interior before we planned, that'll be the case whether we want to or not.

Thanks .  That's partially the idea, the property itself needs some love.  New fencing, new mailboxes, some patching up of mortar and paint, and a serious lawn mowing.  The inside needs a slight update and cleaning up, but things that are hard to do with tenants in place.  Our idea was to implement new rents to match market at the current condition of the units.  We'd still clean up the outside of it.  If they want to break lease we'd give them right of first refusal to come back at higher rates once the units inside are refurbished.

@Jim K. like I mentioned above we have an initial round of cleaning out the curb appeal and the privacy of the current tenants. New fencing, mortar and paint, lawn, mailboxes, etc. The inside of the units isn't terrible but we would reconfigure the kitchen to make them more usable, create a laundry room/division for the bottom unit, put a washer from this century.  Definitely new floors all around and some new windows.  The carpet seems ancient and there's a trend here to vinyl faux wood that seems to be doing well.

Hiya all;

We're closing on a property in the next few weeks and struggling with balancing the business and the human side of what we do.  The property has tenants in place but are between $130-200 / mo under market at the current state of the place.  Way more if we revamp it a bit.  We realize this is an incredibly hard time to ask for a rent increase, but we don't see how we cannot as a business. One idea is to give them a free month and then start again with the new rents, while also giving them the option to break the lease if they want to.  We do want to provide homes for people, but we can't lose money right off the bat!

I can't get a fully straight answer about the rental market at the moment, everything seems too volatile, but it does mean we'd have some time to spruce up the homes and get better rates.  We also run the risk of not getting tenants for a while.

Anyone going through something similar in these unprecedented times, or have any suggestions?

Thanks!