All Forum Posts by: Johnny Hastings

Regarding the late rent fees, it sounds pretty straight forward. I do something similar with my leases, except it's the 5th of the month, and not the 10th. So, for instance, in my lease it states that the rent is due on the first, and is considered late if I don't receive it by the 5th. After the 5th, I charge a $5 per day late fee. Seems like you will just have to adjust the day the fees start to the 10th. 

You should also be following due process regarding non-payment of rent. The way I do it is if I don't have the rent by the 5th, I send out a 5 Day Notice. That's a WI state required notice, it essentially says they need to pay rent or move out in 5 days. If the notice expires and they've done neither, than I can go file eviction. Regardless of whether my late rent fees started on the 5th or the 10th, I'd still be following this due process. That county code kind of sucks, since it limits the amount you can collect when people are late, but whatever the due process is in your county you should be following regardless of the late rent fee schedule.

Regarding pet fees, it seems like you're out of luck. That said, there must be ways to work around it. For instance, when you show the apartment to potential renters with pets, you should have higher rents. It looks like there's no code regarding monthly pet fees that are included in the rent. It also specifies 'Non-refundable'. So don't call the up front fee 'Non-refundable', call it an 'Additional Security Deposit Requirement' for people with pets. Keep it with the rest of the security deposits, and when they move out, if the pets have caused damage that wouldn't have otherwise happened, then you have the additional security deposit to cover it. 

If you're looking to use the state approved forms used by the realtors, a quick google search will turn them up. Search: 'wb11 offer to purchase'. There's also a wb15, which is the commercial version. Wb11 is the residential one. Those are usually tied with a few  addendums, A, B, and so on. The addendums specify certain inspection contingencies, or waivers there of. You can turn those up by searching 'addendum a to offer to purchase'. You'll find savable copies of all the forms that way. No need to purchase them. 

You don't have to use those forms to get a deal done. You can sort things out with your seller, get it all in writing, and take it to a real estate attorney to get it handled. A title company can likely do the job too. All those forms work though because they've been honed for accomplishing these types of transactions. Most anything that can go wrong has been considered in the forms, and they help everyone stay protected legally should the transaction get sticky.

This may be a good time to find a partner, or start building your team, because having someone knowledgeable in this area seems like it would help you out a ton.

Contracts and licenses will depend on what exactly you're doing vs what you're contracting out. It's also sometimes city specific, if you're talking permits needed and all that. 

I put down 20%. It just doesn't make sense to me to throw money away every month. I'm on my 4th home, and I only paid PMI on the first.

That said, if I was purchasing a new primary residence, and I really needed part of that down payment for an investment property, I'd bite the bullet and pay the PMI. Acquiring the investments is my current primary goal, so if a small PMI payment made another acquisition possible, I'd be OK with that.

I think, much like most situations, the answer for you depends on your strategy and goals. That's kind of a cop out answer, I know, but it's legit. 

Not per unit. The building those stats came from is a 12 unit. The tenants pay their own electric (there's electric ranges and wall AC units, so they cover all that themselves). I pay water, hot water, gas, and sewer. The building is heated by gas, the boiler is the only thing that uses gas in the building, and it supplies heat and hot water. I pay electric in the common areas (hallways, exterior, laundry, etc). 

They have to be pumped out and inspected once in a while. In WI for most residential houses, it's every 2 years. It's not expensive, around $75. The state tracks it, so you get a card in the mail saying it's time to have it inspected. 

If it's old, there's risk that it's nearing the end of it's life. They tend to last upwards of 30 years, so it isn't often, but I have looked at old farm houses that needed new ones. 

Wells also have a valid life span. We had issues in our county with wells running dry because the city put up a new water tower, which pulled a ton of water from the water table, and then dozens of homes now had dry wells. Occasionally a well will have issues, the pump will go bad, a check valve down in the well will go bad, there's also a pressure system set up, here it's in the basement of the home usually, that can fail or hiccup on occasion as well. Older homes will have iron pipes feeding the water to the house from the well, and iron pipes taking the water to the septic system. Those rust out and corrode over time, then require replace. 

On the plus side, you don't ever have to pay for city water or sewer!

If you're considering purchasing, definitely write inspections of these into the contract!

I have a RE sales license in WI that I've never put to any use. We have the same restriction, that you have to work under a broker if you're a salesperson. I studied for it, and took the test on a whim 3 or 4 years back. 

I wouldn't be any worse off at this point if I didn't have it. My real estate investing background is: I own and manage a 12 unit, a 3 unit, and a 2 unit. 

It was definitely interesting subject matter for me, that's why I've done the training every two years and kept the license up. When working with agents I've been able to know exactly what they're talking about, and been able to ask educated questions throughout the purchase and prepurchase processes. I'd say it has helped to show agents and others I've interacted with that I'm smart, and it makes it easier for them to work with me because of my knowledge base. 

If you have the time and the inclination, I'd say do it. It certainly isn't going to hurt you to expand your knowledge and skill set.  I'd also say don't expect it to work any real magic for you, if you aren't intending to be employed in that capacity.

At this point, I'd say it'll be at least a few more years before it needs any attention. I'm in Central WI, we get weather from crazy summer storms, 90 plus degrees with insane humidity for weeks, winter snow and ice like mad, and even a 40 plus day stretch a few years ago where it didn't get above zero degrees! I think the key for the longevity of the project was the prep (I cleaned it well with a power sprayer), followed by multiple coats of paint and primer. 

If your brick looks good, and isn't an outdated color, then I'd definitely leave it unpainted. I agree with what was said above here: why create a maintenance issue where none previously existed? If it looks out dated, you don't have many options with it. You could have it faced with a more modern look, but that's not going to be cheap. 

Why not call a contractor or two and get some quotes on the paint job? At least then you'd know what your investment would be. Perhaps it would be so expensive that it isn't even worth considering.

That Repairs/Rehab cost seems trivial. I'll assume the buildings are in excellent shape, because otherwise that seems low at $1K.

I think your amortization may be off. Here, I could only find bank loans that amortized to 20 years, not 30. That still doesn't mess up your plans too much. 

I'd say insurance is a bit low as well. I have a duplex that I get charged $122 per month. You can probably at least double that one. 

Do the tenants pay all utilities? Gas/electric/water/sewer? 

Otherwise your numbers seem OK to me. 

I agree, something seems odd that this would sit on the market so long. What size is your town? Have you driven the neighborhood? Is it in a decent area? 

That one's easy. This applies to WI, and I have no idea what the eviction process is in VA. In WI, when someone hasn't paid the rent by the due date, I send a 5 Day Notice. Good tenant or bad, it makes no difference. That's the first step in the eviction process. I either hand deliver them, or mail them certified.

Usually the tenant will make contact at some point. If they pay up, with late fees, no biggie. I do note in their file that they've had a 5 Day Notice, and when. I also keep the proof that I sent it in the form of the certified mail receipt and a copy of the notice itself; there's times here when I won't have to send another one if they non-pay within a specific amount of time again. 

If the person contacts me and explains the situation, and when they'll pay; it's no biggie. I tell them the notice is a part of normal process, and protects me should they not hold up their end of the bargain. If they don't contact me, I check to see if they vacated, if they haven't, I post a copy of the 5 Day on their door. I also Facebook stalk them at that point, people don't realize it, but anyone can typically see that. I have found the status on a few absent tenants that way. 

All that said, if this guy is a good tenant, I'd say don't worry yourself. Perhaps they're on vacation, perhaps something else completely innocent has come up. Follow due process here, as it's your only recourse. 

You don't mention how much the security deposit was. Does it cover all the damages? If so, there's no real question here, you write them up a checkout invoice, and keep the security deposit. 

They've violated the lease agreement, so you could make an argument that you're entitled to the entire security deposit, regardless. I've heard some possible concerns with a judge seeing it that way, but it's never stopped me from keeping the entire security deposit in this case. It's happened to me a couple of times over the last few years, and every time it's been a tenant I was happy to get rid of.

Yeah, they're going to be upset that you kept the security deposit. In that case, they shouldn't have violated the lease. Your job isn't to make sure no one gets upset at you. Get over that, or you'll be taken advantage of all the time in this business.

I'd keep the deposit, without question.

I'm not sure on the grade of property you're dealing with here, or the tenants that you attract. Did these people have a solid rental history before you let them move in? One thing I've started doing, and it has been a great mitigator of this exact situation, is to require first and last month's rent up front, along with the security deposit. If the potential tenant has any kind of blemish on their rental history, I don't budge on that. This exact thing happened to me in November, and it was a tenant I'd had pay first and last month's rent up front. That rent was long spent by me, but at least I got it at some point!