All Forum Posts by: Kevin L.

Raise them to market rate ASAP. Charging only $800 for $1200 market rent is no different to pulling out your wallet each month and handing them 4x $100 bills. No one would do the latter but for some reason a lot of people are okay with the former.

They will likely not be happy with the rate hike but when they look at the options on the market, they'll realize they are still probably better off not moving.

Wow this makes a lot of sense. Even if I raise it from $600 to just under $1200 in the span of a month the tenants have no where to go because I will still have the cheapest rent in a 5 mile radius.

Though, I don't want to be too harsh as I have been in their shoes before, I will work with them on the rent raises.

1 Vote

Chicago, Illinois

Thanks everyone this is helpful. I will work with the tenants and see what works for them while sticking to my original plan of raising rents by $200 a month until fair market price is reached.

0 Votes

Chicago, Illinois

I am closing on a 4 plex in Bridgeport, all units are 2 bed 1 bath, and the current rents are under market at $600 against a fair market rent of 1200+. All other 2 beds in the neighborhood are renting for 1200+ so I know it's a fair price.

I will be introducing myself as the new landlord soon and I'm nervous. I was thinking to increase rent by 200 over the course of 3 months to get to fair market price. They are month to month and are free to leave which is even better because I would like to renovate the place 1 unit at a time.

Does anyone have experience handling raising under market rent?

1 Vote

Chicago, Illinois

@Phillip Dwyer same. I want to continue investing in Vegas but those numbers are no longer possible. Should've bought another one during covid but hindsight 2020 lol

1 Vote

For context the seller paid all fees and I removed PMI after 2 years due to rapid appreciation which saved 150 roughly. I also manage myself.

The only cash I have in is the down payment of 5% or 16500 with 2.875% interest rate.

Rent is 2150 against a 1450 mortgage leaving me with 700 monthly revenue.

20% of 700 goes to reserves which leaves 560 monthly net.

560 x 12 months = 6720. Divide 6720 with 16500 = .40 or 40% annual return.

0 Votes

Investment Info:

Single-family residence buy & hold investment in Las Vegas.

Purchase price: $328,500
Cash invested: $16,500

Bought as my first primary residence during COVID. Now it's a long term rental with under market rent which still nets 40% annual cash on cash return.

0 Votes

Quote from @Rick Albert:

Why can't you do both?

Because I bought in LA, I used the appreciation to buy rentals. For example, I started with a condo, did a HELOC to buy my second LA house hack. Later I sold the condo and did a 1031 exchange to bought properties out of state. I also used a HELOC on my current house hack to buy. One strategy is to leverage the appreciation here to buy elsewhere.

Right now the data is showing continued appreciation in the LA area. There isn't enough land to build and it is mathematically impossible to build affordable housing.

I also don't recommend you stretch yourself so thin. That could be dangerous as well. Consider a house hack here to help offset the costs. I understand house hacking isn't for everyone, but it also doesn't have to be forever.

If I buy at 850k I would have very little expendable income left to invest. I have yet to consider leveraging equity to invest because I'm not too familiar but I will do some research.

0 Votes

Los Angeles County, California

Quote from @Bradley Buxton:

@Kevin L.

Can you find a value add SFH or multifamily that you can house hack? This would offset some of your payment and when you move out you'll have risk distribution from multiple tenants. I also agree that if 850 is your max unless you have some good reserves try to buy below that. Also is there a way to increase your income with a second job, a promotion to increase your monthly income to save more for reserves or another down payment?

I think the only way to do that is to increase my loan to get some multi families I see in the 1.1 mil range. It would help with the mortgage immensely and I would have to pay less compared to a normal single family. I have been looking for a 2nd job but the market is tough unfortunately...

1 Vote

Los Angeles County, California

Quote from @Samuel Diouf:

Why not keep buying out-of-state in other areas of the country where properties are still relatively cheap but still appreciating a ton.

LA has an been appreciating incredibly fast. I'm already pushed to the edge at 850k. I might not be able to afford anything in a year or 2 anymore in LA.

1 Vote

Los Angeles County, California

Quote from @Tim Ryan:

Hey Kevin,

I say continue to buy rentals and of course needs to be out of state because of where you live. You can build up good cash flow and equity. Los Angeles is not the only place to gain appreciation - although it is really good - but you pay for it...

Anyway, I have stories about people who focused on rentals before buying their primary home and they've done great.

Hi Tim,

I see. Yea, it would be more financially sound to stack up on income producing assets over a liability. Where are the people you know investing out of state?

0 Votes

Los Angeles County, California

All Forum Posts by: Kevin L.

Kevin L. has started 3 posts and replied 11 times.

Post: How to raise under market rent for a 4 plex in Bridgeport?

Post: How to raise under market rent for a 4 plex in Bridgeport?

Post: How to raise under market rent for a 4 plex in Bridgeport?

Post: First Primary Home

Post: First Primary Home

Post: First Primary Home

Post: Should I buy in Los Angeles before it is too late?

Post: Should I buy in Los Angeles before it is too late?

Post: Should I buy in Los Angeles before it is too late?

Post: Should I buy in Los Angeles before it is too late?