All Forum Posts by: Jason McDougall

@Peter Morgan no, hookah is not generally acceptable. The "no smoking" clause in most leases doesn't specify what they are prohibited from smoking, it prohibits all smoking. To me, that would be a lease violation. I would give written notice to the tenant of the violation, and then perform a property inspection in 30 days to see if you still see evidence of the violation. If you do, you have grounds for eviction, if you choose to go that route. Hopefully they decide to stop smoking instead and all is good. 

Did you find this during a scheduled inspection of the property?

@Brad E. I second @Theresa Harris advice. You might check to see if your state has promulgated forms that you can use. In Texas, there's a lease termination form available that should cover all situations. If not, you can always ask Chat GPT to draft something up for you.

@Tina Lee Check with the property code in your state and what's stated in the lease. The lease should state the number of days notice that either party needs to provide to terminate the lease. The most common timeframe is 30 days notice. I like to send by certified mail, and in an envelope taped to the outside of the front door with the tenant's name on it. It's a good idea to take a picture of this in case you need to prove that the notice was delivered.

We use Buildium to manage our properties, and we require all tenants to pay through that platform. They can pay with cash, ACH, or credit card. The benefit is that there is no accounting reconciliation needed like there is if you collect payments through Cash App, Venmo, or Zelle. Also, you can change the settings to not allow partial payments. In Texas, if a tenant makes a partial payment, you cannot file for eviction. You don't have control of partial payments with some of the payment apps that people use. It sounds like you're growing your rental portfolio, so I suggest managing your properties like a business from the start. It will make things much easier as your business grows and snowballs.

Congrats on your success!

I've been where you are. It's tough wearing all of the hats, keeping all of the balls in the air, and not getting burned out. You have to create systems and processes to outsource some of the management tasks, while maintaining a high level of profitability in your rental portfolio. Check out the link in my signature for help.

@Ramesh Seshadri

Can you give us some numbers? What is your purchase price, property taxes, and insurance amount? What are the rents for comparable properties in the area?

As for self managing, there are lots of options there. Check out the link in my signature for more information.

Hey Tim! Congrats on jumping in! I think that buy and hold is a great strategy. If your goals are looking at both short and long term rentals, I would suggest that you make sure that any deal that you buy will produce cashflow for both lease types. If STR gets shut down for any reason, you need to be able to rent LTR and still cashflow.

You mentioned that you will be paying all cash, but I would also perform a DSCR (Debt Service Coverage Ratio) calculation assuming that you will have some sort of debt on the property, just in case your plans change and you want to pull your cash out through a refi to purchase more properties.

If the property doesn't produce at least a 1.25 DSCR, I would not buy it. You can calculate the DSCR by taking the Net Operarting Income (NOI = Annual rent amount minus taxes, insurance & HOA dues) divided by the annual principal & interest payment. For example, if rent is $1300, taxes are $2000 and insurance is $800, and P&I payment is $650, the calculation would look like this:

$1300 x 12 months = $15600

Minus $2000 taxes = $13600

Minus $800 insurance = $12800 this is your NOI (Net Operating Income)

Divided by annual P&I payment ($650 x 12 = $7800)

NOI of $12800 / $7800 = 1.65 DSCR (Anything above 1.25 is great)

I hope this helps, let me know if you have any additional questions!

@Andres Diego I had to get formal appraisals done on the properties and then I had to submit those along with the purchase agreements to the IRS. The purchase price couldn't be lower than the appraised amount. The IRS took a while, but they eventually approved the sale.

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