All Forum Posts by: Jibu V.

@Holly Horn

I’ve found that most tenants and prospective tenants are focused on the rent amount. It’s more appealing to prospects to have utilities separated than to advertise a higher rent amount with certain utilities included. While a few dislike having to pay all utilities, there isn’t really any argument that they can make against it.

Awesome, thanks for confirming that you also had an experience that’s consistent with what I’m expecting. 

@Ned Carey @Tom Gimer

I spoke to the inspector and property manager. The tenants need to vacate immediately or it will be considered trespassing. We are going to give them 30 days as long as they’re cooperative. If they don’t move out, then the township will actually step in and take legal action against the tenants (i.e. they’d bring law enforcement to the property to remove any squatters). The normal eviction process doesn’t apply in this case. As well, they’re not putting any financial responsibility on me to move the tenants (since I’m not the owner who let the safety issues go unaddressed). They’re also going to issue citations to the previous owner. After the issues are remedied, the township will reinspect and lift the condemnation notice.

The PM Co said this is the best case scenario in order to turn the property around as quickly as possible. 

@Ned Carey Thanks for sharing. That makes sense. Although, I thought condemning the property results in termination of any associated leases. 

In MD, is disclosure of the “latent defects” required in an as-is sale? Also, would a wholesaler be required to obtain these from the seller?

In any case, the notification from the city came just today and I have a call with the PM tomorrow so we’ll see what they say. 

I’m assuming you got a judgement against them during the eviction process.

While this is not what you want to hear, in all honesty, you are highly unlikely to collect another dime from the evicted tenants. You’ll still need to send them the itemized security deposit letter. You could also try turning it over to a collections agency. 

@Ned Carey Yes, it did settle. It was an as-is purchase and we did estimate a certain level of rehab when analyzing the deal. We’re working with a reputable local property management company and intend to bring in legal help as needed. That said, I wanted to also ask the BP community regarding potential ways to move forward with the tenant situation, so that we can switch gears and focus on rehabbing the property?

Does anything work in our favor by the fact that these issues existed prior to purchase or that the specific issues raised were unknown to us?

Here is the scenario: 7-unit tenant-occupied property purchased a week ago from a wholesaler. Buyer responsible for U&O after settlement. L&I did inspection and condemned the property. City posted a notice that the tenants need to vacate. 

Question: What if the tenants don’t vacate in a timely manner (not sure yet how much notice, if any, they have from the city)? Does this still require the normal eviction route or can something quicker be done (e.g. code enforcement)? 

Over the next 8 years, you’ll make that $30K in profit while still keeping the property for more cash flow. That’s not even counting rental increases over time, mortgage principal paydown, and tax benefits. 

As long as incorporating property management still works for your cash flow numbers, why not go for it? If you find a good enough deal, you can BRRRR out of it and move on to the next one at a distance wherever you end up.

If I were in your shoes, I'd keep it as a rental and seek out a HELOC. Some local banks and credit unions allow a HELOC on investment properties. As well, they may grant a much higher LTV (e.g. 90%) for a HELOC vs. 70-80%, which is what you'd get if you refinance. The HELOC also minimizes your loan costs while you identify the next rental to purchase. With this strategy, you have no selling costs, the HELOC costs are typically $100 at most (unlike refi costs), and you're maximizing the use of your equity.