All Forum Posts by: Jacob Beg

Hi All,

Our tenant's lease requires a 60 days notice, she only gave 30 days notice, and we immediately started advertising the property and were able to secure a tenant fairly quickly where her lease ends on June 30, 2024, and she has already moved out as of June 22, 2024 after paying the rent for the month of June, and the new tenant will move in on July 1st, 2024. 

Under the circumstances, assuming move out inspection was ok, would you return the entire deposit? 

I had a similar issue. Unlicensed plumber says that there is a gas leak needing gas pipe replacement, would do it for 4k. A licensed master gas tech fixed the stove for $50. 

I am now seeing some junk costs, etc, while the property sits vacant. The moral hazard is that the owner’s and the manager’s interests are not always aligned. It’s not a performance based model unless you negotiate a bespoke contract, or have a larger portfolio. 

The manager could be well-intended, and getting duped by a plumber, but that’s where an experienced hand makes a difference. The single man property manager is likely short on time. He must, as we all do, maximize the return on his time and that’s where the misalignment of financial interest kicks in. 

@Adam M. I wish I could be be there. I am an out of state investor, so it is not feasible for me to be at the property. In fact, I have only done in depth face time viewings. I spoke to the manager this morning and they are getting someone at site today.

I am in two minds here, my current lender would allow me to extend the loan with 1.3% origination with no prepayment penalty. Or, I can refinance with them at 2% origination knowing full well that rates are likely to decrease by the end of the year, but I will be subject to a 3 year prepay so I will be stuck in higher rates, especially as the property is vacant. 

Frankly, I bear some blame here as I should have been all over this early on. Part of me wants to self-manage, as I already manage other properties from out of state but this being a multi family and a sizeable building subject to onerous regulatory regime, and that I am time poor puts me off. I may just have to step in do exactly that. 

@Arn Cenedella that’s sound advice. I have left a message for a local commercial broker with a view to sell. The local MF family is quite soft at the moment so I’ll keep trying to rent while I attempt to sell. 

@Melanie P.I buried my head in the sand for a while, now the note is due in less than 30 days so I have to refinance which will add considerable costs. 

I have also left a message for the PM, and I’ll DM you with the address  

generally, I have a lot of experience at rehabbing from afar.  I haven’t visited any of the properties in last 4 years. I think it was the size of the property or may be just a combination of bad luck.  The whole hiring of unlicensed person got me pissed off. 

You can do a quit claim deed, where you are on the title and he is not, however, he still have a liability, that is, the mortgage is still under his name. There is an acceleration clause is most deed of trusts, that is, his mortgage document that calls for a full payment of a mortgage if the title is transferred in this manner, but people do it all the time and accept that is the mortgagee/lender ever exercises this clause then you'll just have to refinance the property and since you were paying the mortgage and have proof, you should have no difficulty in refinancing the property. 

Of course, you are putting a lot of cash in the deal so you need to be comfortable with the property itself. I would negotiate the price first. The seller may not be OK with letting you "handle" the mortgage, because you could go in default and ruin his credit. He may take the view that since you are putting a lot of money down you'd not screw up. 

You'd want to have a notarized document giving you permission to make any inquiries on the mortgage. Because you may have to call the lenderat some point to speak about the mortgage for whatever reason. You'd also want to speak to a title company to make sure tile is marketable and whether there is any scope for you get title insurance, in case the title ever gets challenged a decade from now. 

The cost isn't all the much because it's just drafting straightforward contract. It's a case of tying all the lose ends. Even then, some ends you won't be able to tie (such as a acceleration clause), however, in practice, the lender barely triggers the escalation clause. Hope this helps.

I have purchased a multi family over a year ago, rehab took almost 6 months and it was mainly due to, and a series of poor contractors and poor property managers, as I was doing this from afar. The property was acquired through a hard money loan that is expiring soon and I still have not been able to rent a single unit. In effect, I have been paying a mortgage for over a year and it has really put a major dent.

I have a new property manager, and frankly, I do not know what to think of them either. The property was recently rehabbed, they want me to spend ton of money, almost implying that the property does not present well. I have rehabbed enough single family units to know what costs are like. They suggest that I use their contractors, but their pricing seem outrageously high. Recently, they engaged a plumber to investigate a gas leak and the recommendation was that the gas line needs changed in one the units at a cost of $3600. I got another master gas tech, as a second opinion, who fixed the issue for $50, as it was a leaky stove. It turned out that the “plumber” they engaged isn’t even licensed. And now I have an invoice of $150.

My main concern is how to get this rented out at this stage, do I part ways again. I manage a sizeable portfolio myself-all from afar. But I was burning out and wanted to engage a property manager. They seem to fit the bill, etc. I also notice that property managers tend to do block viewings, they will show it to bunch of people and sometimes coordinating everyone’s schedule means that it may be some time before the “actual viewing”. Of course, that’s costly to the owner. They are effectively blaming “the product and the pricing that I have asked for”. I have a very aggressive style of investing and a sales background, so something seem amiss.

I am time poor, so I do not wish to undertake this myself. And frankly, I probably don’t want to do multi-family units anymore. I feel I have such an edge on the single family units, as I know my market quite well and have great connections. This project has horribly gone wrong, and I cannot sell at this stage. And of course, refinancing means that I now have to put even more money and refi at higher rates as rates have not come down as expected.

Rant over… I am just looking for some ideas/support on what is the next move. I can fire the PM, that’ easy. And not sure if that’s the right idea.

Hi All-

I am planning a rehab, and I am trying to replicate the attached kitchen. There are a number of issues that I hope to get some feedback on. As can be seen the stove/gas line and cabinetry is on the right hand side. Behind te cabinets and stove is the living room, my plan is to bring the stove and cabinetry to the left side which is the exterior wall with two large windows, so I can tear down that wall with the living room to create an open plan.  It would mean I would have to brick both, or at least one window to create enough space on the wall for cabinets. It's not ideal to block the windows, meaing no natural light but I can't hink of anything else. 

Additionally, that exterior door would have to be bricked to get the exact layout, and I am not sure if I need a backdoor by code, or that it's a good idea to brick a backdoor or more aptly a side door. While there is an exit door in the basement, and egress windows in the bedrooms and living room in the upper floor, I will lose this egress/side door. 

Any input on the said plan?

Thanks!

Here is my 2 cent worth on the zip codes in and around Baltimore. Those without any annotation, I would, and do buy in. You DO need a rental license to rent in Bmore. 

21206

21214

21234

21231

21236

21230

21229

21207 (not as much)

21215 (not as much)21212 (Its ok)

21218 (generally quite rough so unlikely to buy here)

It might be worth getting advice from an attorney. Check with the local bar, most offer a reduced fee half hour consultation. 

So I doubt that the board can force the broker to purchase the property, there might be disciplinary issue for the agent/broker especially if he claims he hadn’t seen the contract. 

I would be angling to see whether this is claimable againsg the E&O policy, depending on how you design the issue. Or perhaps professional negligence, if the broker stands to lose his license-depending on the size, and having heard from an attorney, you might get a sizeable compensation because even courts, that is, if you trouble yourself with the litigation costs and get a favourable ruling, are likely to award a monetary sum. Of course, I am not an attorney but there are so many if's and but's and the legal verbiage is critical.

May be the broker is right, or May be not, that you are misconstruing the contract. Another argument is that had it not been for this misrepresentation (again verbiage is critical), you wouldn’t have entered into a listing agreement. I think this might be your far better argument. Again, if the sum is large enough and you age upset enough then get proper informed legal advice. 

Kal- What is your budget? NOVA is overpriced, unless you have risk tolerance, capital, and legal know how or darn good attorney on board, to purchase directly through foreclosure auctions. If you are risk averse and looking for yield, as someone else said you will have to look further afield from NOVA. 

PG County, Bmore city (not county), montgomery county has some of the highest property tax. Best bet for rental is Baltimore county (try buying houses built after 1978 to avoid dealing with lead abatement laws. Charles county is a good bet and so is Anne Arundel (their RE tax is low). 

Plenty of flip opportunities in MD, but a lot of investors want the same thing that you do, so there is definitely a healthy competition.