All Forum Posts by: Karl Forshee

so I'll do my best to condense the situation down.

Last September I got soft hearted and agreed to a renter who had been down on his luck  (ya I know don't think with the heart) and that the rent was  going to be paid by the Idaho Housing Authority.  He applied in early September of last year but we didn't let him move in until the very end of of September as we wanted to make sure that Idaho agreed to pay on his behalf as nobody  could confirm until the check was cut. Idaho paid for four months of rent plus the deposit.  their letter specifically mentioned that the rent was for September, October, November and December.  

Go forward to December and true to form we get a notice that Idaho ran out of money in thier housing budget and they will no longer be able to continue the rent payments.  However, the good news is that the tenant was able land a good job and says he can continue paying the rent without issue.  The problem is he believes that since he didn't move in until the very end of September, he shouldn't have to pay until Feburary 1.   Our argument is that since we held the place from his application in September and that the rent was specified to be from September to December he should start paying the rent January  1.  We offered a compromise of him only paying half the rent in January but he is still refusing.  I have called the Idaho Housing Authority and they reiterated that the rent was from September to December. But, it's up to us the landlord to decide on how to proceed next.

So what are your thoughts on this matter.  Are we crazy? 

Well I’m just thinking out loud here

1. Like what was said do you have enough equity to do a HELOC or refinance with equity taken out?

2. Is the owner willing to self finance? Although you'll still need cash for the rehab. The owner self finances then use a HELOC for the repairs? Disadvantage is you have pay back the HELOC and loan.

3. Get a hard loan for the purchase and rehab. Then refinance once you have tenants. Disadvantage is you’ll have turn it quickly so you aren’t paying high fees for long. Make sure you calculate correctly so you don’t end up upside down.

4. Do you have any rich friends? Maybe network for cash investors. Use the BiggerPockets calculator to create a nice report. Ask them to finance and either you pay them back x amount or a percentage of the net rental. I would prefer to pay them off over time so they aren’t with you forever. And maybe repeat with them for the next deal.

5. Do you have enough leverage for a conventional loan?

@Lam N. Ok I’ll throw in my 2 cents or less

Depends on how much you value other’s opinions of you and how much you let that control you. Of course everything in balance. Class A tenants will look at your van and say you don’t know how to manage your money. Class D tenants will look at your truck and say you are using them for their money. Perspective.

Nonetheless here’s my story.

A lifetime ago I worked over seas doing humanitarian/mission worked. Loved the work but of course pay was lousy. So to help make make ends meet for my family I flipped cars on the side. Through my wheeling and dealing ended up with a BMW 325i. Loved the car. Payed way less than my coworkers and the people I served payed for their SUV’s. Instantly changed everything. People’s said things like they are paying you too much.

In the community if my wife rolled up with it purchase an item they would refuse to negotiate. However if I showed up with my beater truck they gave me good deals. It was a sad day when I sold it a year later.

@Pete B. For me our rentals are too far away for me to personally check.

For our first rental unit we specified that the tenant should change the filter at the least every quarter. We lived out of the country and my father was around to check on things. However, he had is own problems to worry about.

Long story short. Had a new tenant complain the furnace was not heating and a bad cold spell was on the way. Repair man said everything was shot. Sent me pictures as proof. The tenant before had actually removed the filter. Dust overloaded the fan and damaged the firebox and etc. I had purchased the place brand new from a developer at a good deal only 6 years past. Of course I had to get it replaced

I had worked remotely from overseas through the local Home Depot to find the HVAC company. On a side note their 24 month 0 interest made it easier to pay. As a follow up I put all my rentals on a maintenance contract with them. That way I know the filter is replaced at least twice a year and they catch items with the HVAC system before it gets out of hand

@Greg M.. Good to know that's where that information is normally at.  However, it's not in there either.  Perhaps I should ask if the R&R posted on the management companies web site is the most recent.

@Paul Johnson. I had a similar situation. Bought a nice 5 bedroom SFR in an older neighborhood with an HOA. Since it would be about a year before my family could join me decided to rent the upstairs rooms with short term and month to month rentals while I lived in the finished basement. Needed to pay the mortgage of this new house and my old house my family was still living in.

Read all the covenants and bi laws. Nothing mentioned short term rentals. I also found other AirBnB units in the same neighborhood

Guess it was too successful as a neighbor started to complain, harassed my tenants and alerted the HOA. HOA sent me nice letters saying str was illegal with no mention of where the rules were at. They failed to honor my request to tell me where that rule was at. A realtor friend told me that it could be buried in the minutes and most HOA's don't update the covenants. Apparently it's a complicated thing to do. I talked to our city urban manager and was informed that it depends on all HOA rules and judges usually side with the HOA.

In the end I switched to all 30+days room rentals. Still kept the rooms full. Rental income did drop some but I was still able to pay the mortgage.

Lesson learned is the covenants is only the starting place. It is also good to talk to the neighbors and interview the HOA management company. Or just avoid HOA's.

Ok I’ll throw in my 2 cents

Our personal gas stove has a similar issue. All the burners work perfect. However, if I light the back left burner. Then while keeping it on I try to light the right front burner it won’t ignite unless I let a lot of gas out and use a match. Obviously not the best solution.

I finally determined that when I turn on the back left burner it generates just enough air movement to “blow out” or keep a fire from starting on the other burner since the igniter is on that side. The same will happen if I open our kitchen window first.

So now I’m mindful of the order we ignite the burners Or I use my hand to block the wind. Although I would never ask a tenant to put their hand near the igniter while lighting it. Lastly, if the hardware isn’t put back correctly after cleaning the stove it won’t work.

I’m doing IT in my day job and I’ve learned playing 20 questions goes along way to solve problems instead of making assumptions. Works with renters too

All that just to say what I would do

1. Ask more questions to learn in what scenarios does it become tough to light. Maybe watch them do it. Say I would like to understand the problem more clearly, can you show me what’s going on? Either in person or something like FaceTime. Of course in person is better. I’ve learned that some of the brightest people aren’t that bright in simple things. Or the mother of these kids didn’t teach them the basics

2. If it is like my experience above or them not understanding how something works then a simple education is in order.

3. If it’s clearly a problem with the stove then call the service man back or find another

4. If it’s beyond repair or too expensive to fix then replace it

The important thing is they see you are working with them to resolve the issue and not ignoring it. If you don’t solve it now the next tenant will complain about the same thing

My bad, house was purchased in 2009.  Simple typo.  By multiple family was thinking something like a duplex for fourplex.

Thanks for the advice

Here's the situation.  In Caldwell Idaho I have a single family home that I paid cash for back in 2019.  I had a single renter from that time until now. the tenant is pack out the last of their items tomorrow.  The value of the house has increased by 3 times from what I paid for it. no loan on it.  So is it better to leverage the equity by selling it and using a 1031 exchange to say a multifamily unit? or keep it as a rental.  I'm worried that by renting it I would be losing opportunities to get more cashflow.  My end goal is to increase my cash flow.  

Since I'm not finding any multi-family units, what's the best way to find them?  location doesn't really matter to me at the moment as i'm living in colorado north of Denver where everything is overpriced.