All Forum Posts by: Kevin R.

I'm pretty new around here, so I'm not 100% sure this is the right forum, feel free to correct me if I'm wrong :)

So I'm new to this and working on my first Lease. I've read tons of example leases from actual landlords in my area. So I wanted your opinion if the following is worded right and if there's any maintenance issues I am missing (this is for a SFH on a .44 acre wooded lot):

MAINTENANCE. Tenant will be responsible for: all stopped up sinks, showers, tubs, toilets, or drains; burned out light bulbs; all exterior landscaping and lawn maintenance including but not limited to: the care of shrubbery, landscaping, mowing, and providing for prompt garbage removal. If Landlord deems that lawn care or garbage removal is necessary, then Tenant agrees to pay $100.00 for each time lawn is mowed and $100.00 each time garbage is removed. If Landlord must provide lawn care or garbage removal, such shall constitute a breach of the Lease by Tenant and is grounds for eviction.

Tenant shall not remodel, paint, structurally change, nor remove nor add any fixture from or to the premises without the written consent of Landlord. Tenant will not trim or cut trees. Tenant will not remove nor plant exterior bushes or plants without the written consent of Landlord and the proper execution of a Tenant Remodel Addendum. If consent is granted, ownership of any fixtures or appliances affixed to the premises or plants planted in the ground shall convey to Landlord with no additional consideration granted by Landlord.

Except in an emergency, all maintenance and repair requests must be made in writing and delivered to Landlord or its Agent. A repair request will be deemed permission for the Landlord or its Agent to enter the Premises to perform such maintenance or repairs in accordance with ACCESS BY LANDLORD TO PREMISES herein unless otherwise specifically requested, in writing, by Tenant. Tenant may not place any unreasonable restrictions upon Landlords or Landlord's Agents access or entry. Landlord shall have expectation that the Premises is in a safe and habitable condition upon entry.

No, I guess I didn't figure out how to accurately @ someone.

@Michael W. - Thanks for the reply. I don't anticipate another loan with such favorable terms. (I think I just figured out that @ business).

Any future deals will need to be using more traditional bank financing.

This is a "trial house" to see if this is even something I want to be involved with. My career gives me a TON of flexibility and my wife is a stay at home mother. This area also seems to have a lot of long term tenants so hopefully we won't be churning tenants too often. I don't mind a second job, I don't want a second career - if you catch what I mean.

At the end of the day this ALL about tenants buying me equity in homes.

Thanks Justin, it's good to hear the perspective of another Arkansan. I have zero cost basis as everything in the loan - zero down and I'll finance any repairs too. Just for fun, I put $1 of my own money into the deal and calculated an annual cash on cash return for that dollar of 127,375.21%.

I figure if it cash flows $1 a month it's a free dollar for me (with a bunch of other free dollars in equity in the house). Obviously there is work to do, so it's not REALLY free money. If it cash flows $100 that's gravy.

Thanks for the reply. It is impossible to get a 2% of purchase price for rents in my market. I have talked to three friends that are landlords and they consider 1% to be good. One told me that he rarely gets to 1%. We are in an area with one of the lowest costs of living in the country.

Does the 50% rule apply if there are no management fees - I would think it would be more like 40% if you are self-managing?

Also, since I am primarily interested in the equity in the house 25 years from now, I don't need cash flow beyond what I would need to maintain the property and cover vacancies and evictions (I won't need a lawyer for evictions - I've been told it's crazy easy to evict someone in Arkansas). With that in mind is the 50% rule applicable?

Also, regarding expenses, Arkansas has some of the most landlord friendly laws in the country. Tenants take properties as-is and a landlord has no obligation to repair anything that isn't explicitly spelled out in the lease (if something is not up to code the tenant can complain to the building inspector). Obviously on a buy and hold you would want to keep the place up, but for instance, if the dishwasher goes out, I wouldn't have to repair or replace it unless I wanted to do so to keep the tenant happy. In fact, Arkansas is the only state with no implied warranty of habitability. Of course, I have no interest in being a slum-lord and plan to maintain my property. My point being that in some instances, it will be the tenants responsibility to do repairs and maintenance and I would think this would improve my margins some.

Oh, and I will not be paying $80k. The place needs quite a bit of work so I'm looking at a $65k purchase price now.

Hello, I am pretty new to the forum, but I've lurked for a while. Let me tell you my goals and then a bit about a potential deal.

I want to buy a rental home to hold. I am concerned primarily about building a nest egg of equity for my retirement in about 25 years (with tenants paying for the equity). If this goes well, I'll buy more and keep at it.

I have no interest in making a career of this, I already have a career that I love.

So I have the opportunity to buy a house. The asking price is $79,900 and I anticipate I could probably get it for $73-75. But let's pretend I am buying it for a straight $80k. The house is in foreclosure and sold for $95k about five years ago. It is in really good condition and is only about 6 years old - it will probably need about $300-500 in touch ups to get it to local rental standards.

The property tax is $850 a year. Insurance is $625 a year. I will manage the property myself.

I am putting $0 down and getting a 2.5% loan amortized at 20 years so my P&I is $413. It's a private party loan, the property will not be encumbered and so to everyone but myself and the lender it is a cash sale. It's a family thing - the lender isn't in it for the money but to help me out.

The property will rent for $750.

Do you think this deal matches my goals?