All Forum Posts by: Jay Dean

In my area typical is one month of rent, but that is typically for the listing agent.  You don't normally get an agent on both sides of a rental.

I would tell the prospective tenant what you are willing to pay if anything for agent fees.  You can always decide not to take tenants with realtors if you choose too.

Pick your battles carefully.

A tenant that consistently pays rent on time is a good thing even if they complain.  Let's face it, we hate to have to fix things but this is basically our only duty to our tenants.

Assuming that they leave if you stick to your guns on the increase, what are your vacancy costs and what costs (if any) will there be to get the unit listed and occupied (agent, ads, etc).

In my case, I would assume 1 month vacancy in addition to another months rent for the agent to get it occupied.  That works out to over $1,600.00.  $50.00 less per month over 12 months works out to $600.00.

Also, hind sight being 20 - 20, you might have met less resistance if you tried to bump them 8% each year.  I reassess the market rate for rent every time I renew or list a unit.

@Jorge Contreras  To decide whether to go with pre-tax or post-tax contributions, you need to try to determine what your financial picture will look like at retirement age.  If your income is projected to be really high at retirement (from multiple real estate investments for example) then you can reasonably assume that you will be in a higher tax bracket during retirement.  If this is the case, it may make sense to contribute post-tax contributions today since you are currently in a relatively lower tax bracket than you will be at retirement.

One of the big advantages to some employer 401K plans is employer matching.  I am not sure if this is offered at your company, but you will want to ask about the vesting schedule.  In many of these plans, you don't actually get all (or in some cases any) of the employer match if you don't stay with the company for a minimum number of years.

Based upon your plans to stay with this employer for about one year, I would tend to invest my money in some other way and not in the company 401K plan. If putting money toward retirement is a huge priority for you, look into a personal IRA as an alternative.

You are on a real estate investment forum, so I assume you are currently investing in real estate or at least considering it. If so, I recommend that you evaluate using the money you would otherwise dump into a 401K or IRA toward real estate. One potential problem with 401K and IRA contributions is that you typically get penalized for taking them prior to retirement. With real estate, you have not lost control or use of the money although you might have to get a loan or liquidate to get the use of your cash back.

Talking with a Financial Advisor and Tax Professional is also a good idea.

@Giovani Mobarak - Buy and read Set for Life by @Scott Trench  You need more than an emergency fund prior to getting into investing.  Learn what a "financial runway" is prior to doing anything.

Just starting out is an absolute grind.  You will feel like it is taking way too long and your progress is too slow.  Celebrate the fact that you have the $2,000.  There are many in far worse situations living paycheck to paycheck and carrying insane amounts of debt.

This book will get you motivated and tell you what you need to know and what you need to here.  I absolutely recommend it for someone like you.

Start with a strong foundation. 

Think of the extra 2% or so as the cost of doing business and the cost of security created by having everything in an LLC. Stop trying to "beat the system". Many have looked into this. There is no legitimate way around the rules. The rules are there for a reason.

I am not an attorney, but I would want to see signed leases prior to purchase.  Otherwise, you potentially have "squatters" on your property that you have to get evicted.

@Ken P.  Looks like another solid deal.  I am particularly impressed with your ability to land private money at 5%.  I suspect this comes with experience and track record.

Depending on how your condo association is setup, that monthly HOA payment may not cover everything. In my case, I got a surprise special assessment last year.

You have not provided enough data. The key data to consider is your interest rate on the student loan versus the rate of return on the first rental and / or a potential second rental. If your student loan debt interest is higher then pay that. I doubt this is the case. I you are earning a higher rate in the rental(s) than you are paying on the debt then I advocate considering a second rental. That said I would not leverage more than 50%. In other words, the debt would be no more than half of the value of the properties values combined. Other BP members will disagree on this key philosophy that I employ.

@Moises B.

I've seen it before.  Typically, a month to month lease gets a premium rate for rent.  The down side is you could have a revolving door at the front of the property and a high vacancy rate.

Understand (look at) what the current agreement between the current owner and tenants says prior to moving forward. 

Also, with the current landowner's blessing, I would ask the current tenants of their intentions to renew, stay, etc.

@Daniel J.

Analyzing the deal prior to an offer isn't the time to be skinny on your expense estimates.  That said, my default is 10% of rent unless I have better data to work from.