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All Forum Posts by: Kristina Heimstaedt

Kristina Heimstaedt has started 6 posts and replied 256 times.

Post: House Hacking in Southern California

Kristina HeimstaedtPosted
  • Real Estate Agent
  • Newport Beach, CA
  • Posts 259
  • Votes 293

@Hector Bastida The comment that I would add is that your best value as an investor, no matter where it is, is know your rents. As an investor, your income comes from your rent and your relationship with your tenant. I had a client who passed on a vacant property because he was unsure of the potential rental income. I tried to tell him that we could look at a property down the street that I had just rented and he was just not ready to pull the trigger. As a result, he missed out on a 6% return rate on the peninsula in Newport Beach. Because my client missed out on this opportunity, I've made a point to track rental rates throughout all of Orange County. Those numbers are your best indicator of your bottom line, not the "under market value" or the "pro forma" numbers. There are many ways to skin a cat, but the rents are your proof in the pudding every time.

Post: The rich always think in terms of delayed gratification...

Kristina HeimstaedtPosted
  • Real Estate Agent
  • Newport Beach, CA
  • Posts 259
  • Votes 293

The other approach to take is that there is a strong correlation between "successful people" and "delayed gratification". Disappointing that this seems to be common knowledge, but not applied in the school system.

Post: ORANGE COUNTY REAL ESTATE INVESTORS MEETUP!

Kristina HeimstaedtPosted
  • Real Estate Agent
  • Newport Beach, CA
  • Posts 259
  • Votes 293

we ought to make one. I'd be in. Anyone up for meeting in Newport?

Post: Returning Deposit: Sending Certified Mail vs. Bank Deposit

Kristina HeimstaedtPosted
  • Real Estate Agent
  • Newport Beach, CA
  • Posts 259
  • Votes 293

See if you can't talk to your bank about figuring out how to trace the funds. I know I've done that with tenants in the past and it's never been a problem. The other option would be to meet them in person and create a receipt for your records with their signature (in person version of certified mail). 

I've personally never had an issue when it goes through the bank though.

Post: Laminate versus luxury vinyl plank vs tile in rental

Kristina HeimstaedtPosted
  • Real Estate Agent
  • Newport Beach, CA
  • Posts 259
  • Votes 293

Vinyl Plank!!!! It's fantastic. There have definitely been other posts about this topic. Do a quick search and you'll find lots of opinions and recommendations.

Post: Should I get a HELOC?

Kristina HeimstaedtPosted
  • Real Estate Agent
  • Newport Beach, CA
  • Posts 259
  • Votes 293

When you find the right HELOC lender, make sure you ask about any restrictions on access to your HELOC. During the recession, I had a client who couldn't access their HELOC because they had never used it and therefore never had any financial history with it. On the other hand, I had another client who HAD used their HELOC in the past and had not problem accessing it during the recession. Maybe something to discuss and be aware of.

Post: New Landlord - How to Handle Rent Increases

Kristina HeimstaedtPosted
  • Real Estate Agent
  • Newport Beach, CA
  • Posts 259
  • Votes 293

My fear about being up front about the rent increase is that they will take their time to find the right new opportunity and move out at their convenience.

Stick to the introductory letter especially explaining where you expect them to be paying rent and maybe even ask if there is any deferred maintenance on the property that they feel like should be addressed. The latter of the two might especially provide some insight as to which tenants are a pain versus which tenants are great. I have one tenant in particular who likes to be the squeaky wheel and the amount of time she demands from me is reflected in her rent increases. 

I'd be more inclined to send the introductory letter letting them know that you look forward to a wonderful working relationship and that you want to bring things up to snuff. With some notice. I might be inclined to allude/tell them about your rent increase at the end of winter that way you appear kind. I would also consider a flat 10% increase which only requires a 30 day notice in the state of California. Doing so gives you a fully occupied property with the opportunity to stay occupied because a 10% bump is only a little painful and more than likely won't cause them to move. If they do move, you have the opportunity to fix up the units where tenants move. 

I might also consider staggering the leases if all the units are identical. Tough to go from 60 to 0. You could leave one on month to month. Leave two on the same schedule and bump back the fourth. It also might behoove you to talk to the tenants after you suggest a rent increase. They might stagger their leases for you based on their ability to find their next spot if they move.

Post: Disclose Contract to Third Party Neighbor - Bad Idea?

Kristina HeimstaedtPosted
  • Real Estate Agent
  • Newport Beach, CA
  • Posts 259
  • Votes 293

Seems odd that he would approach you directly unless Illinois is like Texas where the sale isn't public record unless you disclose it.

I would personally be more inclined to put him in touch with whoever did your title for the sale. I'm always inclined to keep my cards close to my chest and I prefer to refer things out to maintain a layer of privacy.

Post: Rent increase after 2 years...

Kristina HeimstaedtPosted
  • Real Estate Agent
  • Newport Beach, CA
  • Posts 259
  • Votes 293

@Vanessa S.We always give our tenants options. They can choose to be on month to month, but at a higher rate because it leaves you as the landlord in an insecure position with tenants who would potentially move out just prior to the holidays and leave you potentially vacant for as many as 3 months (November, December and January). Personally, I would much rather have a tenant who is contractually obligated to pay me over the course of the next 12 months as opposed to one who wouldn't. The difference is typically a 10% spread between M2M versus a one year lease. 

I have a tenant who chose to sign a one year lease despite the fact that they knew they wanted to purchase a property. They have about 10 months left on their lease and they're very accommodating to showings because they want me to find a new tenant and get them off the hook for the next 10 months. They are fully aware of the fact that if I cannot replace them, they are on the hook for rent. 

The other bonus about being on a 12 month lease is that my tenants beg for new leases and know that their rent will be increased by about 2-5% because that's what we do every year. I think what is most important is that you are consistent. There is nothing like being able to provide consistency/predictability in your business. I think it makes for a smooth working relationship and allows you to reference your rules/systems/laws and then show restraint. Your tenant will become your ally as opposed to your enemy and it's always nice to have cooperative tenants.

The final bonus is that when your tenant chooses and then they're upset about their choice in 3 months, you get to say "it was your choice" as opposed to taking the position of "it's my way or the highway". Letting tenants know that they made the bed that they're laying in oftentimes ends that part of the conversation very quickly.

Post: Rent increase after 2 years...

Kristina HeimstaedtPosted
  • Real Estate Agent
  • Newport Beach, CA
  • Posts 259
  • Votes 293

I'm a fan of incremental increases. 16% is definitely aggressive. I understand your concern about catching up to market rents, but I would incrementally increase rents, say 5% per year. This way when you are up for renewal and they're complaining again you've incrementally increased rents and they're still somewhat under market allowing you to exercise your strong landlord guns of the "take it or leave it" position. 

2 years isn't very long. I'd echo @Dan Schwartz's position of calculating your turnover cost. Keep in mind that if you start with a 16% increase and negotiate down to a 10% increase, you're going to seem like the good guy and you might hear fewer complaints from the tenants because you showed restraint. It's always nice to look like the good guy when you're a landlord because it's easier to work with happy tenants rather than bitter tenants.