All Forum Posts by: Kevin Beres

Thank you Bettina for your advice. I appreciate the great advice and thorough response, I'm going to base my strategy around this.

As far as renting to a friend I wouldn't have considered it but they already were renting the house when I bought it so it was a situation I had to work around. I have done everything by the book so far.  Any ideas on whether or not I can consider the property abandoned by my one tenant since he turned off the utilities and left?

Hello Everyone! I just bought my first rental Property and closed on it at the end of the month. This is in the state of VA. I was able to get a decent deal on it since I got it off market however there is a big caveat to that. There where 3 tenants in the building without a lease in place who were paying month to month. It did not seem like a big deal because one of the tenants was a friend and he had been paying rent there for over a year.

When I closed on the property I informed all tenants that the agreements they had with the previous landlord including the rent amount and due date would be the same. Well surprise surprise the 5th rolls around and they haven't paid. I issued a 5 day pay or quit on the 9th and I am prepared to get a unlawful detainer once the 5 day period has expired. However there has been what can only be described as significant roommate drama and I am trying to figure out how best to proceed. 

The drama started early in the month when my friend was arrested because one of the other roommates claimed he touched her, but it was over a dispute about wasting water in the unit. Since all utilities are in his name he went and cancelled everything; water, electric, gas. He also is staying at another friends place and doesn't want to return to the house until the 11th of next month for legal reasons, however all his stuff is still there. The one tenant who called the cops moved out and I told her as long as she never returned she would not owe anything or be apart of eviction proceedings. There is one tenant left who pretty much only sleeps there every night.

The problem with the one remaining tenant is she has refused to turn utilities back on. She claims she can't afford it. It has started dropping below freezing at night in my area and I am concerned about pipes bursting. I informed her if she didn't turn the utilities back on she would be liable as well as the other remaining tenant for any damage that occurred. She claims since she is not on a lease and she doesn't have any responsibility for damages to the property. She has also stated she plans to move out by Thanksgiving but I am doubtful of this.

My questions are how do I proceed? I am moving forward with filing the UD as soon as I am allowed. Can I claim the tenant who was my friend and turned off the utilities has abandoned the property since he turned off all utilities and doesn't plan to return for over a month even though is stuff is still there.

My plan is to turn on heat and electric in the property in my name to protect it from further damage. I have considered paying the girl to move out but I don't know if it would speed up her departure. Also the keys I have no longer work for the unit. I want to change the locks but plan to provide the tenants with the keys, is this legal? I am doing this so I can turn on the heat and inspect the plumbing for damage. I would also move my friend stuff out and put it in a storage unit if I can legally claim he abandoned the property.

The last question is where do I find a lawyer who I can consult with about landlord tenant laws?

UPDATE*

Thank you all for your advice. I wanted to update this thread since I ended up reaching an amicable solution for all parties. I voiced my concerns about the property not being in the condition that it was suppose to be at closing and how I was unwilling to close AS-IS. I was able to renegotiate the closing cost so that I am getting money to fix the major issues. I am glad I posted this topic as I don't think I would of been so vocal about the issues without your support. I am closing today and I feel 100X better about the property.

Thanks!

Plan of action is to extend closing date well I review the contract with a real estate attorney. I called the closing company and asked them to extend the closing date a couple days but they said it couldn't be done. Is this correct information? Are closing companies not able to change the closing date if it is scheduled for that day?

I was only able to get the closing date moved till late this afternoon.

If I am able to move the closing date back I would like to review the contract with a lawyer to see what my options are.

@Kris Fox & @Wayne BrooksI am not concerned about losing my earnest money deposit. It is a larger sum near $4,000. Can I just walk away without being sued? Couldn't I have a specific performance lawsuit on my hands? If I would simply lose the EM deposit I would be ok with it. However I am concerned about the other parties suing me in the contract including the Title agency. If I walked couldn't I still be forced to be closing cost as well?

In four hours I will be finalizing a purchase of a home that I generally consider the worst decision of my life. I guess the decision is already made since I am going to the closing office to hand over my check. 

I made almost every mistake in the book buying this place and I am embarrassed to being purchasing the place. I rushed my self into purchasing a property because I felt I needed to own a building today. I trusted the seller that the property they were selling was in good condition and I did not walk through the property for the 1st time until just days before closing. The inside of the house is in terrible condition and there is nothing in contract I can do about it. I signed a completely one sided deal all because I was too busy with my day job to slow down and seriously evaluate the deal. I am an idiot plain and simple and just wanted to vent. My sole advice I can offer to new home buyers like myself is if you feel rushed to make a deal on a home just stop walk away and seriously think about the decision in a quite place without any outside influences on your choice. Don't let anyone rush you into making a decision.

Thank you very much for providing a detailed estimate to double check my numbers. My only other option on this property would be to fix and flip but that is not a road I am ready to go down at this time. 

I appreciate your help and I think I will walk away from this property.

Thanks for the replies, this is a single family property and will be my first rental property. I admit I am not quite experienced enough to know what the typical cap rate in the area is but home appreciation is stable in the area and averages 1.5-2.5%. My best guess for cap rates are an average of around 10% in this area. This is a B- area of town.

I will remove the water utility from the projections, I do plan to self manage for at least the first couple years but want it to still make sense if I used a property manager in the future. Repairs are being budgeted at $150 a month

After adjusting the numbers to remove water and a property manager and assuming a rent of $950 I am getting a cash on cash ROI of 10% and a cap rate of 8.7% and it just barely qualifies for the 1% rule. This would be with 25% down and 32.5K in total cash required. Based on these numbers would you walk away from this deal?

Hello everyone, I was looking for advice on how to proceed on a potential buy & hold property I am looking at. I made a very rookie mistake and got to eager to get a deal done and did not run the full numbers. Now I am looking at the numbers again and I don't know if this property is worth it.

Property is $78,000 I would be putting 25% down, the closing cost would be $3000 and an interest rate of 4.6%. It would need $10K to get it into rental shape where I could ask $950-1050 a month in rent. This is in Richmond, VA

I have already paid a deposit of $1000 on this property but after running the numbers through the calculator on BP and accounting for 10% vacancy, 15% Repair & Cap EX COMBINED and paying for water at $50 this property comes in at 6%-8% cap rate and it seems like it has the potential to be a money pit or at least no returns.

My question is am I being overly cautious or should I cut my losses on this one and back out of the deal? I would rather lose a $1000 than be stuck with a bad property.