All Forum Posts by: John Teachout

In my opinion, the fees and rate structure is absolutely where I would begin. If I get an answer of "a month's rent to place a tenant, 20% of rents and I keep all the late fees", then there wouldn't be any additional questions from me and we'd both save time.

For inherited tenants, we have found that they're always far under market rents. We typically let them know that we'll be raising the rents incrementally and we will sometimes give an increase schedule such as they're now paying $450 and we're raising the rent by $20 effective in two months, and then six months after that it's going up another $20.00 and so forth. We've never vacated anyone because of rent amounts or tried to raise someone up to market all at once. With our inherited tenants, we've kept some, evicted some, and some left on their own. In the future, I would require units to be delivered vacant.

Quote from @Justin Melton:

It does have reduced headroom but there is room for a bed.  I think we’re gonna just stick with the sofa bed.  

Sofa beds in general are terrible. Unless there's a need for a sofa, I'd ditch that and get a real bed.

The answer to this question would obviously depend on the circumstances with many. For me, I only acquire rental property for cash flow. We don't have a W2 and live on rental income. We don't use leverage so that obviously helps guarantee our properties to cash flow. We do all our own renovation and repairs so that helps as well. Rentals are our full time job and we spend 5 or 6 days a week working on them. We live in an area with relatively low prices. We are unwinding our portfolio and selling properties as they become vacant. (and now investing in more passive income streams). So to summarize, I would never buy a property that had negative cash flow.

Oak tree stumps/roots do not generally live if the tree is removed. It's hard to tell from pics of course but the cracking doesn't look that severe to me. Is the house on a slab? The tree situation wouldn't keep me from purchasing the house if the deal was good enough to cover mitigation. I have a number of houses on slabs and they all have cracks. So if you remove the tree, whatever damage there is won't get worse.  You don't have to get the stump and roots "gone", they'll eventually rot away (maybe even in your lifetime)

Provide a vacate notice (per your state laws). Jurisdictions vary, most states it's a 30 day notice, here in Georgia it's a 60 day notice. Being in NY it could be different yet. When you provide notice, be sure to make it clear they still need to pay the rent and if we have someone that doesn't, we post a pay/quit notice and start the eviction process. A notice to vacate is not an eviction. One of the biggest problems with inherited tenants (besides being way under market) is that often they either don't have a lease or it wasn't enforced. We've kept some, evicted some and some left on their own.

Quote from @Jay Hinrichs:

Quote from @John Teachout:

Lots of Monday morning quarterbacks in this thread. Some have no idea what they're talking about. Returning to the original post, we are invested in Ashcroft Value Add Fund #2. They did stop distributions some months ago. They recently sent out an update indicating it was unlikely there would be any distributions in 2024 and likely not in 2025 until a capital event takes place (re-fi or sale)  We are involved in other syndications and most of them have paused distributions. One recently restarted distributions and one fund we're in never stopped. That said, we're currently investing in a new syndicated fund (new build apartments) and are optimistic it will perform as expected.

John,
Out of sheer curiosity why all of a sudden all these projects we are now hearing about distributions stopping when they were ginning along just fine for a few years or many years.. they all could not have had an adjustable rate loan that adjusted basically at the same time.. I mean renters are still paying right .. OR are these MF all of a sudden having vacancy issues.. I get that some of them might have 5 year notes coming due and they were never underwritten for interest rates rising at all or as much as they have .  Your thoughts or the reasons behind this that the GP s might have imparted on you ?  

Syndications actually were affected all at the same time. As interest rates shot through the roof some had floating debt that increased payments immediately which required using most of the cash flow. Others had a cap rate in place (short term) and realized that the next cap rate cost was going to be considerably more so they started hoarding cash. Others realized that this huge interest rate increase was going to have a significant effect on the cap rates and make the intended exit plan or refi plan not viable. Some of the rehab/value add has had to be paused as there's just no cash to do it with which negatively affected rent growth and occupancy. So from my observations, the whole mess can be laid right at the feet of interest rate increases beyond anyone's wildest nightmares.

Quote from @Paul Azad:

John are you only invested in Multi-Family syndications or other classes like office/retail/self-storage/mobile-home/industrial etc? and if so are those classes having distribution suspensions as well?

As far as real estate goes, for the syndicated investments we're only in value add multi-family. We also have mineral acreage which is a type of real estate at the core but that's an oil/gas investment in my opinion. We also have a portfolio of single family rental homes that we operate ourselves and it's in our attempt to get more passive that we went into the syndications. In retrospect, we purchased most of the syndicated investments at the worst possible time. But no one could have known the interest rates would go up that far that fast. These investments usually have very short term debt and often times it's floating.

Lots of Monday morning quarterbacks in this thread. Some have no idea what they're talking about. Returning to the original post, we are invested in Ashcroft Value Add Fund #2. They did stop distributions some months ago. They recently sent out an update indicating it was unlikely there would be any distributions in 2024 and likely not in 2025 until a capital event takes place (re-fi or sale)  We are involved in other syndications and most of them have paused distributions. One recently restarted distributions and one fund we're in never stopped. That said, we're currently investing in a new syndicated fund (new build apartments) and are optimistic it will perform as expected.

Did you do a credit check on her? What's her score? A lot of people say they don't have a credit score but I think I've only run into that once in many years. It's highly possible she's just not in a financial position to be a home owner so you can continue to rent into the future (does the property cash flow?) or you'll need to vacate her so you can sell the property. (vacating a property is NOT an eviction)