All Forum Posts by: Jonathan Holmes

It sounds like either will solve your immediate problem. Personally I would go with the HELOC and pay it down as fast as possible. Assuming you do not have a prepayment penalty, I would put all the cash flow from this particular property to pay this debt down asap. This will hurt to do but unless you need the cash flow to live on I think it is the best bet. I'd be fine carrying a HELOC to term for a down payment but for a capex I would want to pay it down fast to prevent the next one from putting you in the same situation.

 I would also increase your capex budget. This property must be at least 30ish years old in my opinion 10% is a safer bet. This will also insure the next big repair doesn't hit you like this one did. This will impact cash flow obviously but it is better to have money saved and not need it than have no money (or not enough) and need it.

In the future you may want to assume "near the end of life" means its pretty much done. Five years is a long time for something that is in that shape. Do people get lucky? Absolutely. Should you bet on it? No way. You probably already have arrived at that conclusion.

Good luck don't let this stop you from continuing to invest!

Unless I’m understanding you incorrectly you’re suggesting you pay 20k at closing and carry the owners mortgage as a subject to? The mortgage is 170k plus 20k and it’s worth 185k? If I am following you that is not a deal to be wholesaled, rented or anything else.

The only way I see this going forward is if you can find a money partner. I can't see any hard money lender loaning on the property when there is already a mortgage. If you happen to be a close friend or relative to a person with the cash then a private loan would be an option. Also, do you know rezoning is an option? Have you developed a scope of work with a contract so you have a good idea of how much you need? Lastly, there is a small chance, if you actually transfer title that the bank will call the loan due. Do you have funds in place or available to cover this? Otherwise the current owner will be put in a very untenable position.

I would be inclined to evict her just for the hassle of the situation. The proper procedure would be your states version of a cure or quit notice. This would inform the tenant they’re in violation of the lease and must correct the violation or leave. If they correct it it is unlikely you will be able to go forward with an eviction. If you want to evict make sure your state law allows you to skip the cure or quit stage and go directly to eviction. This may also be a good time to look into you inspection policies. It seems like an angry pit bull would probably bark a lot and perhaps it should have been noticed before this point. Or maybe it just moved in yesterday you never know.

You can also verify the amount of time they work. If they are putting forty hours in at a nice restaurant it is safe to assume they’re bringing in decent funds. Tax records might help as well but I would really just want to know what restaurant it is and how many hours they work on average.

Yep like John Warren said it will be entirely dependent on your local market. Agents can help but you would be best served to pick your farming city and get to know it.

@Michael Temple Oh and one final thought for limit setting. I notice you mentioned the tenants seemed irritated via text, in my opinion these conversations go best in person (not always practical) and a phone call is better that a text. Maybe the texts were snarky or maybe you just interpreted them that way. Maybe yours sounded annoyed to her and so she responded in kind.

If instead you called her and stated "Hey I got your texts about bugs I am so sorry that has happened. How many bugs are we talking have you been seeing a handful at a time? (unless the say the walls are crawling with them your response is) That doesn't seem terrible but I definitely understand your concern. (acknowledges their concern as valid while downplaying the severity)

When I lived in the property I used to do (whatever) to control them. Have you tried that? (subtly shifts the responsibility to your tenant and implies they should have KNOWN to do this stuff first) Remember any dead wood, food or garbage left out can attracted these insects. (again implies they bare responsibility) 

Why don't you give (whatever) a shot, make sure there is no wood or anything around that could be attracting them and let me know how it goes. (they now have an assignment they must complete prior to contacting you again) 

If that doesn't work feel free to text me again, I have been pretty busy lately so I make not get right back to you (you never should) but when I am free I will call back. (many people are uncomfortable on the phone so they are less likely to text again to avoid another phone call)

The goal of this is to manipulate their behavior but you never should use this to avoid your ACTUAL duties as a landlord. Those you should handle asap.

@Michael Temple I use the same techniques as in my day job working in mental health. 

1. Set limits-you need to know these before hand and set them in the lease as well.

2. State limits-at lease signing and when the tenant attempts to cross them

3. Enforce limits-it is always uncomfortable to say no. No one who is a decent person wants to say no but some people learn how and others get pushed around. I still to this day am uncomfortable telling both my clients and tenants "No" but I do it when I need to. A side note every time I fail to say no when I know I should it makes my life harder than it needs to be.

@Ray Harrell You will find the inspections in Chicago are extremely different than in most places in Ohio. That said your point is excellent we should always be aware of what big brother thinks are responsibilities are and take preemptive action when we can. I don't know Toledo that well but  I would be surprised if the inspection was any more than a walk through and a bill.

You may need to implement some tenant training if you’re getting to many texts. I am one of those landlords who have the “this unit is delivered pest free if any appear after 10 days it’s the tenants responsibility” clauses in my lease. In my opinion that applies more to mice and such than ants and spiders. It also gives me an option to withhold the security deposit if I find a mouse infestation after the move out. You need to follow what your lease says and if it says nothing it’s probably your responsibility. Having a terminator spray is fairly cheap and I would be willing to do it nine times out of ten. With your particular case though you may have a needy tenant who will never stop with little issues until you stop it. You need to do that at some point or you will become their butler.

If the lease states the landlord covers the utilities you must honor that until it expires. If it’s a month to month lease and I wanted to change that I would give them 60 days notice. However, you should look at your states laws to see what they require for amending a month to month lease. Also how will you separate the utilities? Are they already separately metered? If not you will have to either pay to have it done or use some sort of back billing system. Personally I would want separate meters. If you choose to separate everything be sure to factor that cost into you purchase price it can be a big expense.