All Forum Posts by: Kristina Heimstaedt

@Taylor Hawkins As someone local to the market, I'm going to go against the grain and say hold. I'd ask what your mortgage structure is on the current property because $2800/month seems quite high if your purchase was closer to $500k. If my guess is correct about neighborhood, (probably westside), you should be able to collect as much as $3500/month depending on particular location and remodel. I manage a portfolio of properties, many of which are condos in Newport Crest which were all purchased for around $500k and all have mortgage payments plus HOA, plus property taxes and insurance around $2800/month.

My ultimate push for keeping the property is keeping the eye on the prize of being able to utilize the sale of this property down the road into a 1031 exchange for a property that has more units and cash flows significantly better. If you use the funds for your next purchase, you do get some tax benefits as mentioned by @Mike Dymski. However, as Vanguard University, OCC and the Chargers coming to the area continue to grow and positively impact the neighborhood and people aren't thrilled with the Taylor Morrison projects, you have a commodity that not everyone else has: land. 

Either way, you've made a great investment and congratulations on this wonderful position to be in: profit or profit?

@Sylvia B. I wouldn't stress about preparing the property for your buyers. They've contacted you looking for an off market deal. If someone is looking for an off market deal, they typically know that they don't get to be too terribly flexible with how a property gets delivered. More often than not, they're dealing with sellers like yourselves: could sell, but really don't need to. 

Just say that you are selling the property as is and keep it that way. Who knows, maybe they want to keep the tenant because they're more comfortable handling whiney tenants over no tenants. Everyone has their deal breakers. If the buyers don't have whiney tenants as one of them, let them deal with your tenants. 

Just remember, they want what you have. Let them have it if you got your number.

We've encountered similar situations. @Roy N.definitely apply the one lease, one payment system. Even for accounting purposes as you grow, this system streamlines systems. To add to this, I ask that all communication with tenants be in group format that way there is no "he said, she said" issues. 

For the tenant who is paying, I would approach that one and mention that you cannot renew a lease for both tenants seeing as "tenant b" is no longer paying. However, you can renew the lease for the tenant that is paying and that you can sign a lease with the one that is paying and that he/she can look for a new roommate if need be. Team up with the tenant to achieve your mutual goal which is to have a successful relationship including between the tenants and the relationship you have with them. Renewing your lease with the tenant who is paying gives that tenant some control/power in the situation and rewards good behavior (i.e. paying rent on time). Check out this article as well for establishing good relationships with tenants: https://www.biggerpockets.com/renewsblog/tenant-retention/

I'm a huge fan of providing tenants options and structuring the deal such that it works to your benefit. The difficult part is that clearly they want/like all of the amenities that they have added to the property and you don't. Given this, I might pose the following options:

1. They remedy all of these violations and damages in "x" number of days in exchange for another lease with little to no rent increase. Also, new lease acknowledges that there will be a built in fine if anything like this were to happen again. 

2. They don't do anything about it and they are hit with a significant rent increase in order to stay when their lease comes available in October. I'd even make the argument that as a result of the extra storage that they are using on the property, their lease doesn't accurately reflect what they are currently using and it needs to be adjusted if this is to continue. I'd also spell out exactly how much their rent would increase. I would also make the argument that as a result of their occupancy, it is making it more difficult to rent the other unit. 

Ideally, the rent increase is significant enough that they are encouraged to clean up the yard and make it easier for you to rent the other unit and improve the appearance of the property. Best of luck!!!

@Troy H. the squeaky wheel tenant is in a duplex with a different unit on the same property. I agree that it could make things complicated if tenants were in the same type of unit and one had a dramatic increase while the other didn't. However, there are apartment complexes where there are many tenants and they all pay a slightly different rent rate based on a number of different factors. 

Hopefully these points answered your question. 

@Cameron Campbell You might consider re evaluating the structure on your loan. I'm a huge believer in finding cheap money and using it to your advantage as best as possible. Talk to a bank and see if you can't look into refinancing with a low interest rate loan and decrease your equity share that way you can use the funds to purchase something else and not get hit with a capital gains tax or go through with a 1031. 

I manage a portfolio of properties that generate 10%+ rates of return in Newport Beach. The return rate is so great because of timing, but more significantly it's because of the type of loans on the properties. Most of the properties have monthly payments below 2k/month with income at $3500/month or more. The properties have increased in value by nearly 75% and are prime opportunities to cash out and refinance the loans with the expectation to by more property. 

I definitely agree with everyone about looking for more units in your next purchase, but not a terrible thing to try to hold what you have in southern California for the sake of appreciation and turning that property into your bank with refinances. Don't hesitate to reach out if you'd like to discuss more!!!

@Christian Tallet I agree with @Kim Meredith Hampton. No need to rock the boat too much. The other thing to consider is whether or not you were planning to update the property at all. If you were, you might even consider a 10% increase and negotiate down if necessary. The thought behind a 10% increase with the intent to rehab is that it's a win/win. If the tenant decides to stay, you get an extra 10% for just saying that you wanted more. If the tenant decides to move and you wanted to rehab the property, you have the opportunity to do so and rent it for more in a month or two. 

If you weren't intending to rehab the property right away, I would keep the rental increase closer to 5%. You can always make the argument that it is to keep up with market rents.

There are a number of different ways to go about something like this. 

1. Contact a title rep in your area. It is their job to know who owns what and their mailing address.

2. I personally use a site called Spokeo for finding owners contact information. For about $5/month, get 100 searches per month. I think they give you x number for free until they start charging you. The site does its best to provide phone numbers, emails, addresses, etc. 

Hopefully this helps!!!

I always like to give options and this isn't pretty, but this is how I would structure it. 

1. If the current tenant moves out August 31st, she get's her whole security deposit back, no questions asked. 

2. If she tries to stay after August 31st, let her know that you will be forced to evict her and it will negatively impact her credit.

If option 1 isn't sweet enough because the security deposit isn't large enough, you can always sweeten the deal with an extra $500 or whatever you see fit. I've never not had this work. More often than not, tenants don't want to leave because they are getting a screaming deal. The cost of moving and finding a more expensive place is a drag. A little upfront cash usually calms them down and gets them moving away and out of your hair.

Hi @Hector Bastida. It takes time. I look at the following:

Active Data: Volume, low price, high price, average price, median price

Leased Data (last 30 days): Volume, low price, high price, average price, median price, average days on market.

More often than not when you're looking at leased properties, there's a magic price number. It's not typical that a landlord lists their property for rent and then pulls it from the market because they've changed their mind. That's an income property and a body who can pay rent, needs to be in there. As a result, there are some adjustments in price, but it's typically more about the days on market and getting someone in there to pay your mortgage. 

You can try to pull old data, but that's challenging. I recommend tracking it yourself via any rental market site. You might be able to find some data through some of the larger commercial real estate companies, but I like to be hands on and specific. 

Hope this helps and don't hesitate to reach out if you have any other questions!!