All Forum Posts by: Josh Bakhshi

Dan,

It's not a stupid idea.  I still remember 2006-8 when HELOCs were frozen.  I understand where you are coming from and it makes sense.  But from what you said, I wouldn't do it.  Thank goodness you have a job still.  Congrats!  That means that you can afford the payments.  You only have 3 years to go so you are in good shape and you have reserves.  

Personally, I would hold off and see if there are ways to make more than 4.5% on some investments.  I am betting that in 3-6 months, there will be a ton of opportunities and you would be glad you had 230K to make some real money.

Good luck

I would contact your lenders right away and see if they would allow you to miss 2-3 payments.  Then I would apply for unemployment.  Then talk to your bank to see if you qualify for an SBA loan as your rental properties should be considered a business.  

I don't know the rules in Chicago, but if the tenants moved out and it is empty I would contact local non-profits and churches and work with them to see if they can help people move in at a reduced rate and cover power bills for 3-5 months.  

Your goal right now is to survive the next few months and get back on your feet around August and September.  Spend some of this time to make a PLAN so you are better prepared in the future.  Things to consider are how to build up reserves, how to get better tenants, are the properties you have now the right fit for you, why were you only making 1K/month for working Jan-March?

Hope this helps

 Thanks Corey.  I understand where you are coming from.  But I think we both agree on principle :)

Anthony, in some of my properties I do have investors and some I own 100%.  I don't like telling them that I am the owner b/c if I have to give them bad news, I can blame the "investor".  Also when I am going to give them good news, I say I had to fight for them with the investor.  That builds a relationship and loyalty.  For properties that I have property managers for, I don't have a problem them using the same excuse and make me, the "investor", look like the bad guy.

I just threw out the idea of doing work.  I know they don't have the money.  But I would pay my PM $35-50 to change the filters so I have them do it.  I wouldn't lower the rent or give them credits, but it gives them more of a connection to the property and it actually makes them feel better about themselves.  I honestly don't think people like asking for help, so this helps build up their self-respect.

talk to them instead of sending a letter.  rent is due tomorrow anyway.  I have my people paying half rent April and half for May.  Then pay back the credits over the next 12 months.  

As far as retail, it depends on if they are still in business. 

I'm not a lawyer, but the fact that your friend accepted payments, shows he agreed to the lease even though he didn't sign it.  

Just have your friend talk to the new guy and explain why it really isn't a good fit.  Maybe pay for his moving expenses to the next location.  

Next time tell your friend to do weekly leases for the first 1-2 months to make sure everyone gets along.

Between my commercial and residential properties, over a dozen tenants have already reached out to me about upcoming rents.  If this is the first time tenants have issues paying their rents in your case, consider yourself very lucky and Kudos to you for finding excellent people.  I have not been so blessed, so I have created a process. The process is to achieve two goals.  First is to collect rents and second to keep the property in good condition. Feel free to use all, part or none of it.  But please tell me what you think.  Here goes...

1- Listen to them.  Give them the opportunity to talk.  Understand it isn't easy for them to come to you and share their situation.  Thank them for being proactive.  Show empathy.  

2- Ask them questions to get a better understanding of their situation.  Don't belittle people by saying "Why is this my fault" or "Why didn't you plan for this".  You can use this part to make sure their story is consistent.  

3- Share with them your position.  This is where I would tell them that I have investors (I never tell them that I am the "owner") that are depending on the income (rent) to pay debts and their livelihood. I want to let them know that they are not dealing with a "big corporation" with billions of dollars in the bank.  They are dealing with real people that worked, saved and took risks.

4- Find out how much they can pay.  Now you showed that you care about them, their situation and they know that you are human. This is what everything comes down to.  Personally, I have asked for half of April and May rents paid on time and the balance to be paid out over the remaining term of the lease.  One lease I had to give an extension.  I have also asked them to do extra things around the properties while they are home.  Things like deep cleanings, clean gutters, change air filters, paint (if I buy the paint).  All of these improve their standard of living while my properties are in better shape and I have people who have a better connection to the property.

Now you are asking why should landlords work w/ tenants when we all have contracts that should be lived up to?  Good question.  No, I'm not doing this b/c it's nice to be nice.  I'm doing it b/c business is business.  For the most part is that YOU HAVE NO OTHER OPTION!  Most places wont evict for next 60 days, chances to find people in better situation is not likely, getting some rents with potential of getting all later is better than getting none now and none later and if they see you like a jerk then they wont care about your property.

If landlords are living rent pmt to rent pmt, then we are in no better position than the tenants we criticize.  In fact we are in a worse situation as we have to replace roofs, change HVAC, fix appliances and make sure the properties are always in good shape.  WE ARE THE PROFESSIONALS.  Now is the time to act like it.

We actually got another house.  We bought a house from an auction site and were in contract to later sell it.  When they did they title search for the sale, we realized there were 3 lots of land and another house was on one of the other lots.  Cost us 10K to fix the 2nd house up and clear the title issues, but later told it for 85K

depends what your goal is.  but 300 income on 320K equity sounds pretty bad.  Even if you get another loan, then you're payments will be higher and it will cash flow negative.

What is your goal for the investment? Is it cash flow or appreciation?  How long are you willing/able to tie up the 100K?  Are you going to manage the property(ies) yourself or hire a PM?