All Forum Posts by: James Back

Like already stated, you probably need to "consider" all vouchers.  That being said, make sure you still look into the people and the voucher.  If it is section 8, i would make sure they at least have some income coming in to be able to afford to eat, clothe, and buy all the other necessities.  During and after COVID I ran into people that had "Vouchers", but it had a 3 or 4 month expiration date.  The last thing you want to do is get someone in there with vouchers that have a definite expiration date, you will see a lot of headache and turnover.

Not sure who you dealt with in the past, but i have used Mike Haas for the last two years and have been pleased.

Usman, I invest solely in Hamilton and can echo Tylers comments above.  There are a few good pockets in Hamilton to invest, but there are a lot of areas to try to stay away from at least from an appreciation perspective.  I have helped a few other BP out of state investors get started in Hamilton, let me know if I can be of assistance.  

File for eviction and move on.  If it is starting the first month then you will likely get a story like this every month.  I wouldn't even bring up the cat, just move forward with eviction due to non payment of rent.

I live and invest in and around Cincinnati Ohio. All the deals I have found the last two years have been off market. If you are buying MLS listed properties with only 20% down, and having to use a property manager for upkeep and leasing then you will likely never find a property that will cash flow. I manage myself and can barely find any on the MLS that will cash flow. It sounds like you need more cash, or you need to look into property in the market you live so you can self manage. If you want true "Passive" income in real estate, you need to have a lot of cash to put into it.

Quote from @Wendy Black:

We're in Phoenix and have owned a rental in Oceanside for quite a few years. It's a beautiful home (in Rancho Del Oro) and hasn't been vacant a day, but we've had several issues through the years with the plumbing. We were told it was construction in the entire subdivision. This time it's the tub that's rocking in the master bathroom on the second floor. We're told it wasn't installed correctely. It looked as if it just had to be regrouted, but no. One vendor quoted us $11k-$15k to demo it and do the necessary repairs and bring it up to code. We thought of having it converted to a one-piece acrylic or fiberglass shower and called Home Depot. They're still around the $15k.

Between paying for a family emergency and some remodeling on another rental, we literally can't afford it at this point. We were hoping we could've just done it for about $4k. (Yes, I know it's more expensive in SoCal.) We owe about $130k on this home that's worth north of $900k. We're not keen on getting a second mortgage. While we're raising the rent by a couple of hundred dollars, it's not even paying for the hefty repairs last year. 

My first question is does anyone know of someone more reasonably priced in the area who could come out and give the PM a lower quote? I suppose we could leave it as-is for the time being and not raise their rent by the $200 we had planned to until we could afford to repair it. There is another bathroom in the house. I certainly don't want to run up another $20k on a charge. We discussed selling or doing a 1031, but the commission would be about $50k, and we don't want to lose that now. 

Any ideas?

Thanks.

 The cost to replace the tub does seem inflated.  I'm not in your area, but would definitely get some other quotes.  

I understand the situation you are in with your funds with having a family emergency and remodeling another unit, but you should have the reserves to be able to afford this repair.  It sounds like you're stretching your finances too thin.  If you are going to own property you need to keep a certain amount of reserves per property in an account and not touch it unless it's being used for that property.  I don't exactly understand why you wouldn't want to either get a second mortgage, or try to take a heloc out.  If you do have that much equity there should be a way to pull some of it out in the short term to cover this repair.  Also, at least in my area some handyman will do work and accept a payment plan, so maybe see if this is possible in your market.  I would definitely fix this problem promptly because water damage is nothing to mess around with.  Also, continue on with the rent increase.

Like others have stated you shouldn't do anything unless it isn't paid after the 5th.  Just adjust your payments and expenses to accommodate the payment being received on the 5th.

I've gotten so much help from the forum that I wanted to share a lessons learned and the process i went through with an eviction i had mid last year.  This property is located in Hamilton Ohio, and is one unit in a 4 unit complex that I purchased in June 2023 full with tenants.  The day I purchased it I reached out and introduced myself to all four tenants and one tenant told me that she was currently living with a relative because her electric got shut off.  Apparently it was in the old owners name and got shut off with the sale so I turned it back on in my name just to help them out.  This tenant seemed really nice, let me in to inspect the unit, but already started talking about how they were trying to find funding to help pay the rent for July.  She told me a few sob stories and being the new owner I gave her the benefit of the doubt and allowed her to have until the 18th to pay the rent.  On the 14th she asked me to give her a 3 day notice to vacate because no organizations were willing to help without it, but I didn't provide one because I had moved her due date to the 18th so she wasn't late yet.  I tried to reach out on the 16th to see if they were going to have the rent ready on the 18th but never got a response.  I posted a 3 day notice to vacate on the 19th and still hadn't heard from the tenant.  I reached out again on the 24th to ask if they had moved out and would like to turn in keys but never heard back.  On the 25th i had my lawyer file the eviction with the county, and got a court date on August 9th at 10:30am.  July 26th I got a text from the tenant from a new number with another sob story wanting to stay, but still not offering a July rent payment.  Also in this text I learned that the boyfriend had been in jail the last two weeks and just got released.  August 7th, two days before court the tenant reached out and wanted to pay July and remain in the unit.  Once the 3 day notice is posted the landlord has no obligation to accept any rent so we declined acceptance.  The judge ordered the eviction and gave them until August 13th to get out.  Of course they weren't out and actually told me that July rent was paid and if I moved forward with removing them from the unit they would file a law suit against me for an unlawful eviction.  We proceed with having the bailiff remove them on August 16th.  September 13th we went back to court for our "Second Cause" which is where we present our case for how much the tenant owes us.  The total including rent, damages, and utility payments came out to $2600.  As of the date of this post we have not seen any of that money.

Summarized Eviction Timeline:

July 1st: Rent Due (Actually extended to July 18th at tenant request)

July 19th: 3 day notice to vacate posted

July 25th: Lawyer filed eviction with Butler County Court

August 9th: Eviction court 

August 13th: Date judge gave them to be out by

August 16th: Bailiff removed tenant and set out stuff

Cost: $195 in lawyer and Bailiff fees

Lessons Learned:

1.) Stick to exactly what the lease says about late payments and evictions.  I know there are specific instances where some leeway is ok, but in hindsight this was not one of them.

2.) Hire a lawyer to deal with filing paperwork and processing the eviction.  I own the property in my name so in my county I can represent myself but for the cost, it is worth it to have a professional that knows what they're doing handle it, and also having someone to answer all of your questions is nice.

3.) Trust your gut on the red flags.  There were many red flags throughout this whole process but I chose to ignore them.

4.) Don't be afraid of vacancy.  In this market good tenants aren't difficult to find, so don't let the fear of vacancy stop you from getting rid of a problematic tenant.  We were able to renovate, and rerent this unit within 1 month and were able to get a $100 increase in rent per month.

5.) Always increase your vacancy rate and capex amounts when you're buying property with tenants in place.  No matter what the seller tells you or has you believe to make you feel comfortable with the tenants you never know if they'll pay the rent on time until the time comes.  

6.) Don't let a tenant intimidate you.  This tenant tried to intimidate me with "Legal Action".  As long as you are operating within the law you will be fine.

7.) Ohio is a landlord friendly state.  I sat and listened to at least 25 eviction cases before mine.  The judge asked every tenant "Where you late with rent", and everyone of them said yes but then proceeded to tell stories about how the landlord was terrible or there were issues and that's why they didn't pay.  The judge went forward with the eviction on every single one of them because even 1 day late is an evict able offense in Ohio ( at least in Butler County).

8.)  Unless you know where the tenant worked to be able to try to garnish their wages there isn't much you can do with a 2nd cause order.  I did know where the tenant worked at the time, but when I tried to file a garnishment they moved jobs.  I consulted a lawyer and a few other investors to see if there was anything else to try to do, but they all told me the only way I was likely to see my money was if they went to try to buy a house one day they would need to pay off my "Lien" before proceeding.  If anyone has any advice on this let me know in the comments.

Quote from @Ben Scott:

Your local housing authority will use HUD guidelines on the condition of the property. You WILL fail your first inspection. At least that's the case in my market. Something like 90% of properties fail their first inspection before and during placement of a tenant. Bring a handyman to that housing authority inspection so he/she can address the inspection concerns where the inspector is there.

The housing authority's big concerns in my market: bedroom windows will open and stay open for egress, smoke alarms in every bedroom, weatherstripping on door, TPR valve on the water tank, to name a few. My list of required repairs was 70+ after that first inspection. 

Long story short, pain in the butt to set up. But rent is guaranteed and you are fulfilling a housing need.

Ben makes a great point, you will definitely fail your first inspection.  For whatever area the property is in be sure to reach out to the local housing authority and see if they will send you an inspection checklist so you can try to be as ready as possible.  Also localities regulations may vary, as we only have to have smoke detectors on every floor.  

It really depends on what your goals with section 8 are.  Are you talking about buying a big complex and making it specifically rented to section 8 tenants, or are you just wanting some guidance for single family house being rented by a section 8 tenant?  I have had good experience with section 8 over the years.  The process for getting section 8 tenants is almost the same except you will have a section 8 inspection of the house beforehand, and will have to sign a lease through section 8.