All Forum Posts by: JD Martin

1. First true rental property bought specifically for that purpose? - Single Family Home. 

2. What did I have in place? I had money saved up to purchase it for cash from working a typical job. I have extensive experience remodeling and building my own homes already so no real need for contractors unless I just didn't want to do the job (I don't like working on roofs, for example) or it had to be licensed (electrical in the city, for example). 

3. What did I learn? Well, I have learned more things than I could ever list here, probably, but here's some:

• Pick your bottom line number, then bargain up to that number. 
• Never bargain down from the seller's number. 
• Be sure you have thoroughly vetted the neighborhood, as that is one of the few things you cannot remodel. 
• Don't let the psychology of previous investment lead you into what turns out to be a bad deal (i.e., you already spent money on an inspection, or you'll lose your $500 earnest money, so you follow through on a dud). 
• Be sure you can accurately estimate repair costs. 
• Be sure you can realistically project rent or resale figures. 
• Be sure to have access to good workers if not doing the work yourself.

4. What would I/will I do different? Bargain harder. My places have all been great deals but I'm sure I could have gained another grand or two on each, which doesn't sound like much but pretty soon adds up to a whole 'nother house, free and clear. 

It depends on the nature of the tenant. Since you inherited this tenant, and if they are not doing anything you don't want done in the place that was permitted previously (indoor smoking, pets, etc), and paying on time, then consider it a gift - you have all kinds of leverage for raising the rent or booting them out without the lease. The value of a written lease is as much for the tenant as it is for the landlord, as it prevents you from booting them for no good reason or for raising the rent during the terms of the lease (unless written into the lease that you can, and even that is often governed by state laws). Not having a lease with a tenant that has a good track record is actually to your benefit, since you can charge more money or send them packing relatively easily. 

Millenials don't want Class C apartments. They want downtown balconies, top-floor suites with elevators, and stainless appliances (including Kona Coffeemakers, stainless please) at affordable housing rates. :D

OK, I was goofing around there, but there is some element of truth to it. I have personally found that younger renters expect far more amenities in rentals than they are willing to pay for than those in the 35+ age range. That said, I have had no problem keeping any of my places rented by being sure to include amenities that most people under 40 would see as being "normal" - central heat & air, dishwasher, off-street parking, cable/internet ready, etc. 

Is this a house or apartment? If it is a large house, in a good neighborhood, you can probably leave it as hookup and have the W/D design/install specified in the lease (front stackable only, to be hooked up professionally only, etc). If it is an apartment, I would definitely supply as front-load stackables are going to cost a lot more than top-load side by sides. 

Either way, I would include language addressing the W/D in the lease - who maintains it, who repairs it, who pays for replacements, if you get more money for it/tenant pays to have it removed to storage, etc. Whatever the specifics are going to be, put it in writing. 

In your case I would absolutely rent before you buy anything. Renting the wrong place costs you a month or two of rent to break the lease, or a little aggravation while you live out the lease. Buying the wrong place can wreck you economically. I assume you don't know a lot about the US real estate market overall or much locally where you are settling, so renting will give you a chance to feel out the community. 

Either way, welcome to the US! PS: You said "The money you pretend to use" :D  I assume you meant "The money you intend to use". 

Not to mention a tenant falling through the floor while in the shower could be a hell of a lawsuit. 

I wouldn't bother with the eviction unless they don't leave. Consider it a learning process:

1. Your deposit sounds too low - either the rent is $1300 for a month, or 850 for a month since you say they are 1.5 months past due; either way you should have a month's worth of rent.

2. Try to get a signed agreement from them to pay you back what's owed on the rent. If not, you might want to let them know (nicely) that you'll have to sue them to be made whole if they don't pay.

3. If anyone is/wants to break a lease, and is going to go on their way anyway, I prefer to get paid up front and take my chances on getting it re-rented. Money in the hand is far better than a promise to pay or someone being responsible month-to-month while waiting for the place to be re-rented. 

My general rule of thumb is to (reasonably) spend as little as possible on purchases that don't make money. If your consideration was to sell and buy something that was even better than what you have, I would probably do it - but you are looking for a "dream" house, which generally doesn't equate well into an income-producing asset, and you look young enough and lacking in funds enough that you might consider building your portfolio longer before going that route. 

As Ryan mentioned, that's only going to work if you are under contract for a steal because they need that same cushion in order to make any money; if you are, why not buy it yourself? I am guessing that you have something under contract that no one has any interest in at the contract price? 

Generally it's not that these costs don't exist, it's that there's enough equity to absorb the costs on behalf of the seller.