All Forum Posts by: James Mc Ree

I like the suggestions above of 2 payments for rent, 1 on the 15th of the prior month and the 2n on the 1st of the current month. That seems like it would address their ADD. You should ask them how their other creditors handle their payments.

I used to offer 5 or 10 day grace periods such that rent was due on the 1st, but no late fee until 10 days later, then I reduced it to 5. I found some tenants consistently looked at it as rent is not due until the 10th, then would ask for leniency because they were only 1 day late on the 11th. I abolished those grace periods and now tell my tenants the grace period is the week before the 1st.

Do you need to get a judgment before turning the debts over to collections? I haven't done this yet, but may need to do so next month.

I think the main question is, "What kind of relationship do you want with your new tenants?"

It looks like you told them the bill will be a little high, but only for a week. That minimizes it in their expectations. I would absorb whatever is high due to my defective furnace. Electric furnaces are the most expensive heat sources and one running full time emergency heat is ridiculous. 

It is probably too complicated to exactly calculate the additional cost. I would offer to credit about 25% of their monthly electric bill for the week with the pld furnace. It can't be that expensive or it is even more reason to do so.

If AI is so unreliable that all answers must be verified, isn't it a waste of time to use it if the answer must be correct and the required verification is the actual work you are trying to avoid?

Google provides an AI summary of search results that is usually good enough for a general question, but I would never give any AI a detailed tax scenario and just run with whatever answer it gave me. AI may get to detailed accuracy someday, but it is a language model today, not intelligence. It just looks intelligent to some people.

Keep contributing to the 401k up to the limit of the match assuming the match is 25%+. Not only is it free money, but you probably can't beat that return.

Research the 55 year old 401k exemption. You can withdraw from your 401k starting in the year you turn 55 if you qualify.

I am following a plan similar to yours. I went full time into real estate in 2023. So far, so good, but it is early. 

I recommend modeling your family budget for a year and conservstively project project your income, investment growth and expenses conservatively out to at least 80 years old. Establish a wide safety buffer so you aren't broke at 80. This is your error margin. Then, actively track and adjust as need. The model won't be perfect, but should be a very helpful decision maker for when you can safely leave your W2 and establish your budget going forward.

Absolutely, go to college and get a worthwhile degree, especially if you have a free ride!!!!

Why? Real estate investment involves having money to make money. You will earn much more with a college degree than without and you will understand the world better. You will need to save that initial income to buy your first properties, get your mortgages, etc.

You don't need a college degree to swing a hammer, but that psychology class could come in handy negotiating with a difficult tenant. The accounting class will help you keep your books in order and understand your taxes. The marketing class will help you keep your STRs and LTRs leased.

Be careful to avoid analysis paralysis. In depth knowledge of a city's economy is not necessary if you are buying a single SFR. Some knowledge is helpful for sure, but you don't need to become an economist. Location and paying attention to Nathan's points above about the immediate area are more important. Consider sourcing a local REI group for that info.

I recommend evaluating your local area first since that is what you are most familiar with and most accessible. The local property will give you practical management experience.

You might do better buying a REIT if you are planning to buy single properties far from home.

Do you get a benefit for allowing the tenant to have the dog, such as a pet fee? If not, all I see is risk with no reward. I charge a scaled pet fee based on the size of the dog with a premium for high risk dogs. It would be a very expensive pet in one of my rentals - so much so that the tenant would decide it wasn't worth it or go somewhere else. I also require the tenant to have renters insurance with liability coverage for me and them.

More information is needed for the root causes of your plumbing issues to lay blame. It is likely your tenants are responsible for causing fixture clogs. It is very unlikely your tenants are responsible for a sewer lateral failure. They fail over time.

Your lease will say what your tenants are responsible for ordinary use plumbing issues. They are almost certainly responsible for issues caused by abnormal use or abuse, such as a kid sinking his battleship into the toilet. You will probably need support from your plumber to make your tenant responsible.

Would I sell because of this? No, but I don't know the root causes. You have to disclose all of this when you sell, so you will end up paying your plumber or discounting to your buyer.

Your answer will most likely lie in your lease. Others' experiences might not matter as much as their leases are different. What options does your lease give you?

Most mortgages say the lender has the right to buy homeowner's insurance for you if you don't prove you have it. Does your lease allow you to buy renter's insurance and charge the tenant?

My leases say I can charge my tenants anytime I do something or pay for something they are responsible for. I haven't had a renter's insurance issue, but have done this for maintenance items. You might be able to go this route if your lease says something to that effect.

Without lease support, you can write them a letter informing them they are in violation of the terms of their lease due to the lack of proof of insurance. Tell them they have until [Date] to show you proof of insurance or move out of the property. You can add that you will buy the insurance for them and charge them if they remain in the property after [Date]. Alternatively, you can tell them you will charge their security deposit for it, but that becomes a charge against your security for the property.

You should consider whether you really want them out of the property with regards to the above paragraph. You can drop the move-out part and just go with the buy-for part if you don't want to push them out. Otherwise, you can go the other way if you want them out. If it were me with my tenants, I would go with the buy-for option and just charge them.

Next time, update your lease and don't let them have the keys until they show you proof of insurance.