All Forum Posts by: Jeremiah H.

I'd love some examples of information you guys put on letters to tenants of a property you took over. I thought I would put our contact info such as, where to send payments, how reach us via telephone, what to do in case of emergency and possibly a little about ourselves. I thought I would also include a letter for the renters to fill in contact info for themselves and include a self addressed envelope for them to send it back to us. 

A few of the tenants are currently not under lease and are doing month to month. We'd like to address this as we like all of our tenants to be under contract. Would it be appropriate to do this within the first contact with those tenants? How long should we give these tenants to get under contract?

One property is residential and one is commercial. Does any of your answers vary based off which type of property it is? 

As always, I appreciate the BP community and all you do.

thank you for all the advice. It seems as if the seller is only obligated to pay the prorated amount and it's not our concern that they weren't forth coming with the fact the tenant was late this month. I'm ok with paying to have the tenant evicted, I'm just not familiar with the process so I'm uncomfortable not being on fimilar turf. I knew this day would come as a landlord so it's fine. 

The information provided by the seller and their agent dated back to last month and at the time all was fine with the rent. This problem seems to be limited to September. 

I've never had this situation arise before and I'm looking for advice. We are closing tomorrow on a duplex that is currently rented out. One side has a tenant that is month to month and below market value. We were going to approach this tenant immediately to sign a yearly contract for market rent or ask them to move out in X number of days, being completely reasonable about the timing. 

The second tenant is 3 months into a year lease and hasn't paid for this month, which was due 9/1. The seller is suppose to pay the prorated rent amount until the end of the month and when they sent over the HUD they said they were going to pay this amount "even though they haven't collected rent this month yet". This was how we found out about the late tenant, not a call from the realtor. I'm not sure if this is common with multifamily properties, but these are nice units in a good neighborhood. It would be abnormal to have a bad tenant in one of these properties and I feel like it's something that should have been brought to our attention much earlier than 24 hours before closing.

What should I do, both before now and the closing and immediately afterwards? I don't want to take over a unit with a tenant that will likely turn into an immediate eviction (which I've never done before).

Not having luck with pulling equity out of a rental property without refinancing the whole amount. I'm looking for options to refi the equity up to 75-80% or do a heloc. All the banks I've spoken to only do helocs on primary residences. 

Andy is right. The rule in now 10 with Fannie Mae. Once we got over 5 we had to purchase the homes jointly (husband and wife) and could no longer purchase separately and both our credit scores had to be over 720. It required a little more paper work, interest rate was a little higher, but it all worked out. 

I plan to keep it long term. 

How can I go about fixing the code violations with the tenant in place and under contract? It would be a pretty big under taking with them still occupying the unit due to their equipment. Since they only have a few months left on the lease should I refuse to renew the lease and repair everything after the leave? It wouldn't be that big of a job at that point being able to work in an open space and on our own time table. 

A little back story on the property first. I'm buying commercial property that has 5 units currently. 1 is 4000sqft with 1 tenant, the other is 4000 sqft split into 4-1000sqft units. The 1 tenant building is getting $1200/month in rent, the 4 unit building is getting $2100 in rent. The 4 tenant building has no one under lease and all the rents are too low. Most of the tenants are long term tenants, some haven't had the rent raised in 12 years. There is plenty of room to get to $2,400 immediately and more in the future with some improvements. These units need very little work in comparison to the 1 unit building. 

The 1 unit building was about 90% of the inspectors report. The items listed were everything from the roof actively leaking in multiple spots, to improper electrical, inactive bathrooms, etc. All kinds of issues from top to bottom. The tenant has a few months left on his lease for $1,200/month and is fine with the condition of the building. He knew what he was getting into and that's part of the reason for the lower rent. 

I look at these being some of my options:

1- fix the mandatory issues, such as open electrical and water leaks and let him continue to rent at a reduced rate. I would increase the rent to $1500ish at the end of his contract, but $1500 is still well under market value. 

2- Attempt to improve the property while he is still renting and go up dramatically on the rate when his lease is finished. I think this would be the most difficult option as he is using some of the things that need repair. We would have to work around his schedule, be in the way, cost would be higher due to lack of accessibility, etc.

3- Don't renew the lease with him, repair the building to good usable condition and continue with 1 tenant. I believe I could easily get closer to 1800-2000/month for the space after being updated. 

4- Don't renew his lease, split the building into 3-4 units, and get roughly $2400/month. Obviously I'll incur some additional cost here with splitting the units up but I don't believe it would be astronomical. 

I am still in our due diligence time and I've got to go back to the property owner and negotiate. The problem is he's an out of town investor and hasn't been in the property in years. When he came in to meet us to let us in for the inspection he was checking out rents in the area and realized how under priced he was. He now knows that if he did improvements he could get a much better return and then put it back on the market at a much higher price. I'm not sure how much room I have to negotiate since he's not trying to dump the property.

The cap rate is just above 10% as it is today with low rents. 

I'll gladly take any and all help. Thank you so much!

@Fred Conway is correct. I'm saying most people from Florida aren't from Florida. He is also correct that it probably doesn't apply to the panhandle. 

@Steven Tawresey, I'm not familiar with Jacksonville like I am the rest of the state. Being from the Orlando area and so close to Tampa there really isn't much reason for us to travel to Jacksonville. Outside of the panhandle it's the least desirable part of the state. Miami, Orlando, Tampa, Naples, West Palm Beach, etc. are all much more attractive in my opinion