All Forum Posts by: Jimmy S.

Jimmy:

Throwing away $320 by selling and paying off your mortgage doesn't seem that good an idea.  Having a paid-off rent property also makes you a target for lawsuits.  Neither of those make sense to me.

I would refinance.

But, my concern is that you are focused on eliminating debt.  Refinancing your rent property to pay down your primary mortgage is a really bad idea.   Let me explain.   The interest rate on your rent property should be higher than your primary residence.  So, in this scenario you pay closing costs for the benefit of paying more interest (in total) than you otherwise would pay.  I repeat, bad idea.  Refinancing to pay off our primary mortgage has no upside.

Refinance to buy another rent property.

Let's do some math.  Let's say you get a 50% loan and go buy another property just like this one.   At 5% your interest payments on your rental are now $2,375 per year which takes your cash flow down from $770 to about $570 per month.  But remember that now you have two of these properties.  That means your total cash flow has increased from $770 to $1,140, which is $370 per month better!

But wait, there is more.   

Depreciation on your current rent property I estimate at about $250 per month.  That means you are paying income tax on $770-$250 = $520 per month.  But, in the scenario with two rent properties you would pay income tax on $1,140 - $250 - $250 = $640 per month.  So your income went up $370 but the government treats it like your income only went up $120.   

Oh, but wait, there is more.

You can do even better if you use accelerated depreciation.  You can also do better if you get a bigger loan and buy a third rent property. Also, over time, your tenants are paying down all these mortgages so you are banking equity every month.  I could go on and on, but hopefully you get the idea.

Bear with me. These things are always a bit complicated. Our rental is a triplex in California. We had a new tenant move into the middle unit about a month ago. Tenants on either side have lived there for 7+ years. Tenant on one side, we'll call her "Smokey" has been causing issues. When Smokey moved in we had low quality applicants to choose from. We knew she was a smoker and agreed she could smoke outside the unit. We put no smoking clauses in her lease in several places. At some point along the way we knew she had started smoking inside, but the damage was done and she was paying her rent on time so we ignored it. She also got a small dog sometime over the years. We had long time renters in all 3 units who didn't call us for anything so we didn't immediately become aware of contract breaches. 

About a week after the new tenant moved in I had to go over there for something. When I was in the unit I smelled cigarette smoke. I contacted the new tenant and told her she signed a lease that it was a no smoking unit and she needed to abide by that.  She told me she actually wanted to talk to me about that. That she didn't want to make waves in her new place, but that it was actually the the other tenant "Smokey" causing the odor and that she was worried about her kids breathing it in.  

So we sent Smokey a letter reminding her of her lease agreement to not smoke inside the unit and also let her know that we were adopting a no smoking policy for the whole property which would take effect in 30 days (which we could do per CA laws).  Well Smokey flipped her lid and started a verbal attack on the tenant, yelling profanities at her through the walls, out her window, etc and at one point yelled the threat "if you F with me I'll F with you!". And continued to smoke heavily in the unit. Sidenote, we arent sure what has changed in her behaviors because we didn't smell the smoke in the other unit for years, but now we were smelling it heavily. We also knew she was a bit kooky, but more of an annoying talk-your-ear-off kooky. We had never experienced any hostlity or issues like that.

When the new tenant called us about the hostile environment we went over to the property immediately. The cigarette smell was nauseating. Smokey was being loud, but no longer yeling obscentities. Still my husband went over and spoke with her. She was intoxicated and denied everything. 

Our new tenant told us she didn't think she could stay there anymore. Between the smoke and fearing what the crazy lady might do. We told her we understood, and when she asked about her lease we told her we would let her out of it. 

We followed up with Smokey (who is on a month to month lease) with a 60 day lease termination (CA law we have to give 60 days if they have lived there longer than a year). We told her she had 60 days, then followed up with a 3 Day Quit notice which told her she had to quit smoking in the unit and get rid of the dog within 3 days. There is more to this part of the story, but my main questions right now have to do with the new tenant who moved out.

I just met her to do the walk-through and she told me that she wants us to pay for the cost of her moving van, babysitter she had to hire when she moved, moving boxes, and I am not even sure what else at this point. I was completely blown away at her demands. We had no control over the situation and did everything in our power legally and ethically to mend the situation. I don't even know if we had to let her out of her lease or not but felt it was the right thing to do. 

Can she come after us for her moving fees? I'm afraid she is also going to try to get us to pay her storage fees and who knows what else.  I think she may try to say she didn't stay there a bunch of nights because of the smoke and yelling that took place before our knowledge of the issues. To the best of your knowledge, what (if anything) are we obligated to pay for? 

Also, she was pretty much out of the unit yesterday but left a headboard in the patio that she said a friend is coming to get later today. When I am prorating her rent do I count her still being there today since she left a big item? I know I sound petty, but at this point I am not willing to give her any freebies after her demands.

Sometimes I really hate being a landlord...

Hi everyone. I know back before the housing crisis it was possible to get a HELOC on a rental property, but is this still possible today? Have any of you recently done this? We have one single family home and looking to get more. Just wondering if this route would be an option. Thanks!

Just because he lied it’s an automatic no.

Originally posted by @Jimmy S.:

I use traffic master allure from home depot. Its very durable and is holding up pretty good after 8 years of tenant abuse. Its cheap and very easy and fast to install.

What do you use in the bathrooms and laundry rooms?