All Forum Posts by: Kevin Rowghani

For those who are new to property management or tenant screening some times you be approached by someone who has a bunch of CA$H and wants to move in immediately. This is great but, first do your due diligence and qualify tenant. Once you take the money it's like a marriage.  

Good point Jen! Defining the criteria will support your decisions even if an applicant  decides your being unfair. In court, your application will show that your consistent on selection. 

I have rejected many perspective tenants who gave false information and or missing information. Missing  information is sometimes an indication of something cooking...

Thanks Kirk!

Your reason of rejection needs to be clear. I typically don't send a letter since I don't want a paper trail and the time to send the document. My approach to rent a property is as follows which has bee helpful. Step 1) create an application to capture tenant information, include specific property information, what utilities tenant will be responsible for, defining tenants desired start date, minimum income requirement, credit score, down payment (first, last , sec) application fee and defining holding fee. What docs tenant need to provide with application. This is a must! I tell them they need to provide their most recent pay stubs and it needs to be minimum 1 months worth 2) post prop on line 3) pre screen tenants over the phone (why they want to move, what do they do for a living, income, what do they pay now for rent, etc 4) schedule showing if they pre qualify (prefer one trip with multiple showings) 5) Pre call 1 hour prior to showing to confirm 6) show and review application if they are interested 7) schedule meeting to obtain app and all supporting doc with app fee. App fee will save time on ones who are not that interested 8) review app with tenant prior to leaving to look for blank spots or missing info 9) start review of app by checking local municipal court docs (no cost) 10) cross reference landlords phone number on google. You typically see landlords advertisement or you get pre-pay phone numbers. 11) check public records of landlords name on record to application. This will tell you if your going to call the real landlord or owner. Jot down date of purchase or purchase price to check landlord. For instance I ask at the end to verify when they bought the property and for how much. If they don't want to answer it's a red flag. 12) call the human resources dept of tenants employer to verify income and employment status. 13) I use ntnonline.com to find evictions and crime info 14) if all checks out, collect one months worth holding fee from applicant which is non-refundable ( cash, bank check or money orders). If you are going to sign lease in a few days it's cash only. Checks may take two weeks to clear. 15) schedule lease signing and inspection of condition and take pictures for the as-is condition

I have never invested in Real Estate outside my local area. I would be cautious since a lot can go wrong. I suggest having all agreements reviewed by experienced folks. Choose a partner you feel is honest and also experienced.

Drew and Brie,

Thanks for the reply. 

Property Management - Rents will be sent to my Sister-in-law then she will cut a check to Equity Trust. Repairs/landscaping will be managed by a local handyman that I currently use. Re-renting when needed will be performed by sister-in-law. There isn't much of any landscaping except for an area of 20 ft by 25 ft of grass. 

The three units are legal. The third unit is in the basement. It meets all code requirements.

All three units are rented out.

Seller is selling since he has multiple properties and he is over 75 years old with no kids. He is looking to sell his inventory. He also has an interest in not being cashed out due to long term capital gains.

The reason I am interested in this deal is that the Seller is willing to provide seller financing. Getting financing through a SDIRA requires a larger down payment (40%) and possible other restrictions such as square footage of each unit. Another factor is that the financing through a SDIRA must be non-recourse. Most or almost all local portfolio banks will not give non-recourse financing unless you have a long term relationship. I have called about 30 local banks. The IRA lending banks offered interest rates from 5.5% to 8%.

I prefer 15 yr fixed rates since I will pay less interest over time and the seller was looking to be paid out in 5 years which I said was not possible at my end. This is also going to be in a ROTH IRA which future income will be tax free. I think my goal will be to pay him off in 10 yrs so I can then pursue a second property 10 yrs from now.

The maintenance of this property will be minimal over the long haul which will be great retirement income. 

Hi All

I have a multi unit under agreement and this is my first multi-unit. I have experience in Single Family homes and rehabs. I would like to get your analysis of the terms currently under agreement. 

Specifics (delaware county PA)

Row home constructed with brick and has a flat roof (both above avg condition) New windows with capping, hardwood flooring in good condition, wired smoke detectors, old water heaters and two old furnaces. Updated electrical panels. No AC. No washer and dryer but laundromat walking distance.

Split out electric, gas and water meters (tenant pays)

Strong tenant history, near major highways, public transportation etc.

2-2 Bed Room, 1-1 Bed Room, 1 garage also rented for a total monthly rent of $2455 or $29,460/yr

Taxes ($6,000) per yr

Insurance ($1200) per yr

Vacancy 8% per yr ($2356)

Maintenance ($1800) per yr

Other expenses ($500) per yr

Purchase price $180k at a 9.81% Cap rate

25% down using a Self Directed Roth IRA

$135k Seller financing for 180 months at 4.5% ($1032.74/month) non-recourse, no pre-payment penalty

Settlement is on Jan 30th 2015

Feb 2015 rent is buyers

First payment to seller is due March 1, 2015 

Inspection resulted in some minor issues which I need to submit my request of repair/credit

Would you proceed, kill the deal or re-negotiate the price?

Am I missing any other factors or are my maintenance and vacancy numbers not enough?

Any and all responses are welcome.

Kevin

J Martin and M Waldrup thanks for your advice. I agree with knowing your own numbers. I guess experience and local market specifics is critical.

I am looking to make a purchase and have been approached with a property from a whole seller. He gave is ARV and Rehab costs and a suggested price for his sale to me. The question I have is to what extent should a property be rehabbed to? Do you ignore minor repairs? Do you make your property in the top 1 or 2% in the neighborhood? Do you go cheap using vinyl and bland appliances even for a first time home buyer market or do go with tile and stainless steel to attract and be the out front property?

I am being told to ignore some of my scope list stated below. This far I have done 1 flip and hold many rentals.

Scope of work for a single family in PA

2nd Floor
Bathroom
New tub and flooring and possibly drain and faucet replacement
New vanity and fixtures
Bedrooms and hall way
Windows? some were old
Some Doors
Patch and Paint
Some moldings were old style? may need to update

1st Floor
Front Door needs replacement
Kitchen
Tile Flooring
Appliances
new Sink, cabinets etc
Recessed lights
Bathroom
Update flooring, vanity, toilet
Fix ceiling in family room
Flooring in family room (engineered hardwood flooring)
New electrical panel (200A)
New back door to kitchen

Outside
Roof has shingles missing from the weater either replace or repair.
Lower roof on addition is old
Missing downspouts
Replace back down spout
Back patio is out of date and either needs replacement or recoating
Pressure wash siding and paint entire house
New cement walk way
Landscape front and side of house
Replace driveway with new black top
Remove old tree out back
Update old shed out back with new wood
Fix wire fense
Capping two outside windows.

Concerns
Moisture issue and rot in crawl space
Termite or pest inspection in craw space
Electric heat
Flow from front door to family room is odd

It's a great idea but you need to be careful since there are rules around this option. Google Equity Trust Company. I use them and they do fine. The process to move money or pay bills is slow. Home Depot and Lowes do not accept 3rd party checks. Don't take cash out of your 401k because you will pay high taxes.