All Forum Posts by: Joe P.

I have one tenant who is a carbon copy of your tenant, @Wesley W. Nothing but complaints about small items...some have been big, obviously, but just a very "adversarial" approach when it is totally uncalled for. But...rent is paid every month, on time, but usually sandwiched between complaints about other tenants, complaints about maintenance, etc.

The problem is that they perceive their worth to you (and in general) way beyond what a reasonable person would. They have an unrealistic view that their problems and life are paramount, and any disruption or inconvenience to them is the end. of. the. world. A small increase to rent...and this is small...is being perceived as a SLAP IN THE FACE. I mean, come ON. Grow the eff up.

Sadly there isn't a right answer to deal with this. If this tenant is otherwise good, a bird in hand is worth two in the bush. Suck it up until January, because it isn't a big deal to you more than likely. Or, if you feel like they're too high maintenance, invoke the "happiness clause" and see how much tread you get on those tires. You know these people better than anyone -- is this worth it to get them to pay up/ship out? Do you anticipate future and more aggressive problems from them?

HML should be the ticket you need. Honestly as @Greg Scott said this guy ghosting you is a favor assuming it is indeed a good deal.

Supply and demand. Low supply, high demand...high prices. All this means is deals are less plentiful and harder to find, or snapped up more quickly than you anticipate. If a deal isn't a deal, then don't make the deal. I don't personally care when a crash is happening...my criteria won't change. The market only dictates the amount of deals I could snatch up in my net.

I would be careful regarding the making the tenant pay water -- if they do not and you don't find out about it, for whatever reason, that bill belongs to you. Conversely, its a good touch point for you and it puts the onus on the tenant to watch their consumption. What I do is a $1000 (or whatever rent is) plus $75 (or whatever I think water will be per month) for a total of $1075, for example. It explains to the tenant that they're responsible for the bill even if they pay me, and I also put a consumption max (e.g. if the water bill exceeds $75 per month, they'll be responsible for that overage) and if they're under, kudos, you can pocket the difference.

I think your repairs/CAPEX is too low. You're right in that everything should be good early on, but lets say the first tenant is a bit of a mess and on turnover, you have about 1000-2000 in expenses. Not much, right? But you're only setting aside $780 a year total for that. It's low, in my opinion. Others may disagree. I do 10% of rent for CAPEX and 10% of rent for maintenance, personally, because I'm not very handy and I would rather have the setaside ready instead of going into my reserves and accounting for the inevitable repairs.

The cash flow is probably most important -- what does cap rate do for you? Nothing. It serves no purpose other than to tell other investors how good of a deal it is. If you're hitting a monthly cash flow goal, that's way more important. I.e. I want $150 per door, per month. 10 doors...I want $1500 per month in net proceeds to me. 

I'm not adding it in to the return, I'm subtracting it from the cash flow analysis. It's a cost. He has a 125k mortgage so he's paying $~525 per month for debt service. 

Yep...missing key details like debt service/price paid for the property. Tenant won't pay water, because water will be in the owners name. So if you are adding that number to your rent, make sure the rent remains competitive with the neighborhood.

Also, while you may be self-managing, that's a job. The point of this is to not have a job...so bake a PM cost into your expenses. At the very least, it can be used to pay yourself for your time, be used for future acquisitions, etc. But your pro forma analysis should have all expenses.

I don't know a single property in Philadelphia where the taxes are less than 2k a year. In Grays Ferry, I would imagine you'd be in that range, so make sure you confirm and adjust.

I'm not sure of the price of this property, but lets assume its 200k. If you're paying cash, with the numbers you provided, it'll take 20 years to earn back your money (assuming all numbers hold). That's pretty unacceptable to me. If you're using debt service, assume 25% down on this property, you would have a $150k mortgage costing you $716 per month at 4% interest. Your cash flow becomes miniscule or negative.

Hey all - looking at a purchase in Philly for a multi-unit property. I've heard from the sellers agent that one unit has a squatter. I see the eviction moratorium is in place through the end of the month, and then I assume the backlog begins, so it could be months before I even saw an eviction judgement.

Has anyone dealt with this situation on a potential purchase, especially in Philly? My gut says run, but my head says *IF* seller concedes enough, anything could be a good deal...

Background checks are a commodity. Any reputable company will work just fine; just don't overpay for the commodity. Zillow does them although they missed that a tenant I ultimately selected had warrants, so either it wasn't in-depth enough or the timing was off. I've used TransUnion SmartMove as well. I like Zillow because everyone knows Zillow and the tenant pays THEM to do the background screening for me.

Ultimately the screening you should be doing (after the background check) should be on your own. If someone gets close enough that I would select them (e.g. all my hard criteria has been passed -- they have a job, they can afford the place, no problems with credit, no criminal/eviction/bankruptcy problems, et al), I then like to perform a soft check on whatever the internet provides me about this person. Usually this means Google, FB, Twitter, Instagram, etc. Usually these are indicative of how someone spends their day and how they feel about things in general. If they spend all day posting nonsense, complaining, etc., it just gives you more information about who this person is, good or bad. You can also check out pictures and look how people photograph themselves in their own home. Is it clean? Does it look like a mess? Usually indicative of the personality of a person and how they live their life. Sometimes even confirming someone is on LinkedIn in their job can be a nugget of information.

Agreed, and this is probably the right move. Would love to know where you found a property to get 700 CF per month! Hook a fellow investor up ;)

So true -- I bought a property last year and offered cash...they asked to see the POF and before they could finish the sentence I had the paper ready to go. If you're serious, you'll present as serious. If you're a joker, you'll present as a joker.