All Forum Posts by: Jonathan R McLaughlin

@ tatayana M.,

Definitely agree with @Thomas S. all this should be in the lease, and going over the lease at the beginning with them is necessary. I like giving them the checklist of easily walkable items, definitely have them initial that one for sec dep purposes.

Not sure if you have a higher end or lower end rental but if you want to do another step to call out things and help them protect your house, I would change this doc to more of a handbook tone and be sure to include a (short) explanation of what harm you are trying to prevent.  And remind them it will affect their quality of life, which they will likely care much more about than yours. Quoting IRS regs isn't likely to do much. And yea, I wouldn't place much money on them reading it. 

Some people really don't know  water expands when it freezes, drains clog up, you shouldn't run a garbage disposal without water ("hey whats that grinding sound?). We had someone who thought they were being helpful by turning down the heat to the bare minimum (and worse) when they went away. 

Lack of DIY knowledge is part of why people feel more comfortable renting. And the "be nice first" tone goes quadruple for VRBO, I'd be peeved if I got a guest book with that much negativity in it right off the bat on my vacation. 

Scared people do stupid things. Use this to help them not be scared--and not be scared to call you if they don't understand why water is backing up rather than just leave it to get worse. So just let them know how to keep things working,  what can go wrong, how much it will cost to fix and that you would hate to have to charge them but would have to.  Less is more...a lesson I should probably learn for my own posts.

I'd question some of the advice here, mishandling security deposits can open a landlord up to serious issues and fines. I don't know your state law, but I bet they were required to keep the security deposits in a separate, interest bearing account. If they didn't do so they are likely liable to the tenants and the tenants would get the security deposit back no matter what damage, at least in MA and the landlord would be liable for TRIPLE damages. I'd check with a lawyer for a good solution, and do so while its still the sellers problem. Don't inherit a mess

We have a PM managed multi (established company, established building) about 3 hrs away and the distance hasn't been a hassle even in the problem times.  So much stuff is on the phone and the occasional well timed appearance does a lot. To be fair I have a partner so we split those appearances. And we did make sure it was a place we wouldn't mind spending the occasional weekend or overnight. 

"I have no experience in trailer park management" I think thats your answer, even with your friend as a resource . A friend of mine is snapping up a lot of these parks and he describes it as very management intensive, (if profitable to be fair). And you would have 3 employees and the headaches of a whole separate business with the laundromat. As  @Matt K. pointed out, is that a salary you like? 

I might add with "buy"  to determine sellers motivation and needs before constructing your offer. Analyze them, not just the property. Good luck!

@Henley H.make sure you ask the New England guys as so much of our stuff is from the 1800's.  1900s is new :) 

This isn't really a fair analogy, but its friday...I might compare it to appliances....the new high end stuff works great, computerized, high performance etc. etc. but if the system is thrown out of whack its incredibly expensive to fix. An old fridge without the motherboard can work almost as well and tends to be much more durable. 

Look at all the 1950s cars still running in Cuba...

I wouldn't be scared of it and the remodel is a plus. Knob and Tube wiring , Lead paint can be issues, check the window frames especially. I'd be surprised if most of the systems hadn't been upgraded over the years. Heating systems, roof, wiring if all thats new and just the skeleton is older? Meh. Make sure the foundation is solid enough.

Veteran of an 1875 Victorian which was like a time capsule of DIY projects and eras. 

I can make that date/time

Fun thread, thanks @Eric James !

I think you have a couple of different points mixed in about SF's v. MFs.  We are in both and I'd agree with the general points that 

 MF's are usually more cash flow overall and benefit from efficiencies, economies of scale and ability to add value.

But I'd also add that you can benefit more from a MF if you pick the right location than an SF--more chips on the slot if you will--and the paydown starts to get significant, too. 

And things start to turn into really separate beasts the larger the dollar amounts. A $1M house is usually capped in income, liquidity and market potential much more than a $1M MF of which you could have all types, not to mention $10M houses, there are only so many Taylor Swifts to buy those things, and its a pretty specialized field. Tons of options in multis there..... and 1% of 10M is 100,000 while 1% of 100,000 isn't worth much time. 

Going a little overboard to make a point :)

I agree that its hard to see the  value at 5-7% in lots of properties --people are paying more and more for the same size of income stream. Just because thats what people will pay that doesn't mean its the best idea and cheap money and investment size hedging bets (i.e a safe place for cash) are creating a lot of the downward pressure on cap rates. Especially foreign investors are willing to take nearly negative returns just for perceived safety. Not sure I'd want to walk that path.

We don't feel we can make reliable money unless things are over 8% (for real, with actual vacancy, turnover repairs, pm, taxes and reserve) and income stream can be increased and expenses reduced. We finance, so our margin doesn't have tons of room. I think you can still do that with decent places in lots of secondary and tertiary markets (25K-100K population around the US median income, not glamorous but solid) that haven't felt quite the squeeze the big metros have. 

Hope I'm right enough :)

I might look into the difference between repairs and improvements...If you are making repairs to a previously existing structure you may have different (and less) permitting requirements? And if it was 2 units/bedrooms before maybe there is some grandfathering....

Or pull the permit now and as @Aaron K. said maybe you are just adding office or playroom spaces. I think for a bedroom you need both a closet and a window but YMMV. Good luck. 

And if you are adding wiring, etc. I would definitely go pull a permit before doing that. A phone call to inspectional services for info may be a good idea.  Good luck 

@Jason D. you put it well and I don't dispute the general validity of that central point for a given property.  And if you have sufficient cash flow, reserves etc. by definition you aren't over-leveraged for most circumstances. But as @Caleb Heimsoth pointed out having equity in properties can be "leveraged" in other ways than debt. I mentioned a few as well but there are more and I'm sure many more than I know. Just saying its a bigger world than presenting a hard and fast rule implies.