All Forum Posts by: Joe P.

Plenty of older units do not have AC, nor do they have window units standard. I just purchased a property with several windows and no AC...I expect my tenants to purchase. Now, if I had a lot of walkthroughs and folks said they weren't going to rent until there were units, I might consider buying and making them part of the rental. Hasn't happened yet.

Agreed with Jackie. The source of a deal is only a minor factor in its validity -- does the deal make sense, is it in line with goals? That's what I care about. You can find terrible deals off-market and a great deal on MLS, and vice-versa.

The investor in me tells me that they should go pound sand.

The human in me says try to work with them. Split costs on a window unit or two. Its an accident, a misunderstanding, but you started the misunderstanding. A few hundred bucks from your maintenance budget will probably cost less than an angry tenant, an evicted tenant, or trying to get the place re-rented.

Top applicant for a property appears to be a mother-son combo, he is 23 and speaks good English. Both are from Columbia and appear to have come here in the last year or two. Both have SSN, hard-working, blue-collar, very kind people. Glowing report from current landlord, all income verified, no criminality, bad credit but mostly because there isn't enough history.

TransUnion's only real flag (besides the credit) is that SSN may be invalid, and I'm not sure how to take it. Should I/can I do further checks on this? Is it because the SSN may have been issued recently?

@Account Closed, welcome and good luck to you.

You'll see that people constantly cite a few pillars of what someone brings to the table...so which is it for you? Capital? Knowledge of trades (e.g. building, carpentry, plumbing, electrical)? Finance knowledge? Ability to procure deals?

Everyone wants to get involved, but not everyone has the means in which to do so. What can you provide based on the above (or something else if I didn't mention it)?

GRM is purchase price divided by gross rent.

Ex - I just purchased a property for 102,900 and the gross annual rent is 21,600. My GRM is 4.76.

102,900/21,600 = 4.76

COC is how long it'll take you to recoup your money in.

Ex - On said property, my all-in cash investment was 32,728 (down payment and closing). My cash flow after all expenses is projected to be $2,592. Therefore, my cash on cash return is 7.92%.

2,592/32,728 = 7.92%

Now here's the rub - both can and should be used when evaluating properties, but you need to decide what is most important. GRM to me isn't as important as COCR, but it's all relative to your goals.

Some people buy for appreciation, some people buy for cash flow, some buy only properties that achieve it all, and some unfortunately buy stupidly where nothing makes sense. Decide what is most important to you, use the metrics accordingly, compare those to other available properties, and then make a decision.

On this particular property, I wouldn't call it a home run by any stretch. But I needed to jump in, and I want to make improvements to the property to increase my monthly rent. I'm going for COCR and everything else is just a benefit.

@Antonio Porta nailed it with the "Truth in Lending in NJ" PDF document. Here is the quote from that document:

"Therefore, any prepaid funds held to secure future rents are considered to be a part of the security deposit. This includes the last month’s rent. It does not matter what the prepaid funds are labeled."

It is illegal to charge more than 1.5x rent for the deposit, and security deposit is superfluous for "lease hold" or "lease deposit"

Again -- thanks to you all for this information and it seems like the answer is very straightforward.

@Gregory H., @James Lloyd - thanks for your input. I think I was making the distinction and I should not have. Every place I've ever rented required first/last/security but that was always in PA.

I've already changed my listings on CL/Zillow/Trulia accordingly. I was wondering why so many people were interested but wouldn't talk to me after I told them the deposit/minimum income requirements -- I was starting to get discouraged. Hopefully my mistake is temporary and good tenants start coming out again to get this place rented.

Many thanks to all of you for your quick and expedient education on the matter. This is why I love BP!

@Greg Torian thanks -- the idea is to get there eventually, but I want to self-manage for now. For me, having someone doing this job requires me to know 80-90% of everything that comes up. How can I properly manage my manager if I don't know their job? Eventually I will move it, but for now, I'd rather take some lumps to understand it fully, which also helps me be a better investor in the long run. Information can sometimes be worth more than paper money. :)

@Antonio Porta thanks for your input, the link doesn't work though.

Perhaps I'm not being clear, so I'll try and make my point and people can shoot it down.

• Security deposit - 100% returnable to tenant upon lease end. Covers non-wear&tear damage they may have caused. Can also be used to cover non-payment of rent if necessary. The maximum security deposit is 1.5x times monthly rent in NJ.

Security deposit rolls up to/is part of...

• Lease deposit - an amount required to sign the lease. Can include prepayment of rent (e.g. first and last month) and is inclusive of the security deposit.

To me, a security deposit being only 1.5x rent makes sense, and is fair. But that only applies to the security deposit, not the deposit to sign a lease to rent a unit. It's a little nuanced, and I'm more familiar with PA (where you can sign first/last, and most do), which is why I'm trying to get to the heart of the issue.