All Forum Posts by: Kevin S.

@Corinne Squires if it were me, I would assess the property as if I was financing it 100%. I'd be looking to see if the property still had a positive cashflow after financing and all other costs (capX, repairs/maintenance, vacancy, etc.) If it doesn't positively cashflow when financed 100% then all you are doing by paying cash for it is buying cashflow.

@Michael Jackman I've been on both the purchasing and selling side with FHA assessors, and it seems hit or miss depending on who you get as the assessor. Sometimes they nit-pick and sometimes they spend less than 30 minutes at the property and have no issues. The biggest thing I've seen them zero in on is wood-rot on the exterior, you can't have any for the FHA loan to be approved. Do you already have an FHA offer(s) or are you just trying to prepare for the possibility? I know some sellers will specifically decline FHA offers as they just don't want to deal with the hassle. Good luck with your sale!

@Alyssa Paros sounds like you've gone above and beyond with communicating with this person. I would just ignore any future messages from him, you've already stated that your property isn't section 8 approved. Eventually he'll get the message when you don't respond. Good luck finding a tenant!

@Aidan Mulligan maybe I misunderstood, but I thought you had combined your R&M and CapX into one line for a total of 15%? But if you look at the R&M lines on both of these calcs it's at 7.5%. Did you mean to say your CapX is in "Other"?

Besides that the numbers look like they've been calculated correctly, though scenario 1) where rent is $1700 would be too slim for me to be interested in a deal like that as you're looking at ~$62/door. I'm also skeptical that you'll get them to come off their price by $30k after only 46 days on the market. They may come down some but I wouldn't count on a 16% price reduction. And finally, there's the $30k - 37.5k downpayment to contend with, plus you should really have some $$$ in reserve in case of any immediate capX/repairs that need to be done. Overall, if I were looking at potential investments I'd probably pass on this one. But that's just my opinion.

@Aidan Mulligan sounds like you've already decided to pass on this, but just a couple of points to consider for the future:

- you didn't account (that I can see) for CapX, which is typically a totally separate category from repairs/maintenance. I typically budget 10% for CapX since these are ususally the larger expenses (roofs, ac, furnace, etc.). By including that in your estimate that takes you into negative cash flow.

- I notice that one of the rents is only $350/month and is month-to-month. Is there an opportunity to terminate that lease and get in a renter paying 650-700 (or whatever market rent is) instead? Have you checked to see if the other units are at market rent? Depending on what rents could be raised to, this could push this property from a "no" to a "maybe", although my guess is your CF is still going to be way less than $100/door.

@Shane R Smith I'd just check with a local attorney, I'm sure they can give you the answer fairly easily, however in my opinion (I am not a lawyer and this is not legal advice) based on the review of the Ohio legal code at http://codes.ohio.gov/orc/5321.16, it says "Any security deposit in excess of fifty dollars or one month's periodic rent, whichever is greater, shall bear interest..." Since you're security deposit is less than one month's rent it's my personal opinion that you don't owe your tenant any interest. Although this goes counter to @Nathan Gesner's opinion that you owe interest, I 100% agree with him that this is something you should already know as a landlord.  Also, is your tenant really going to put up a fight over ~ $90? Seems like small potatoes to me.

@Michael G. First off, I'm 100% with @Alex S. and @Thomas S., they can't (currently or otherwise) afford your rental so you need to stop wasting your time with them and move on, find someone who can afford it. My guess would be that even if they do manage to come up with the money initially, you'll eventually have a tenant who isn't paying rent on your hands, and who wants to deal with that hassle, especially when there are plenty of people out there with enough money, etc. to currently afford it. How long has it been on the market? Are you considering this person because you're having issues finding other renters interested?

Aside from that, have you checked to see if they meet your other requirements (income, credit score, etc.)?

Finally, lets address the deposit. First off, this is in no way/shape/form legal advice it is merely my opinion. But fairly confident that you CANNOT call it a deposit and have it not be refundable. My guess would be you'd have to write up something calling it a holding fee that you would retain upon non-performance (i.e. not signing a lease) and that upon performance it would convert into their deposit. Again, not a lawyer but that would be my best guess.

Overall, just pass on them and move on to the next prospective tenant, anything else is too much work/risk.

I just found a tenant for my rental, and like others have said I did get more responses from my FB ad than any of my other ads (Zillow, craigslist, etc.) but so many times it seems people just hit the "is this available?" button without even reading the ad. I basically just started responding with "hi XYZ, as the ad states...[word for word repeat the ad]" and 3 out of 4 people would either not respond or say they weren't interested. My favorite was the gal who said "is this available?" and then after I sent my canned response (which had no new info in it) responded with "Pass, but thanks for the offer" lol

Thanks for the advice @Christopher Lombardi and @Nathan Gesner

Hey BP,

Looking for recommendations on how I handle this, my first time going through the renter application process. I've received my first application, haven't done a background check yet because I'm already leaning toward denying the applicant. She was nice when I gave her the tour, however there was a very strong smell of smoke. This is a non-smoking property and she marked non-smoker on her application, and I'm not sure if the smell is from her smoking or from her workplace, all I know is I do not want my property to smell like a smoker has been living there. Would you just send an email stating you have chosen not to accept her application or something different? This is so far the only application I've received, and other than the smell of smoke her application meets all the general requirements so far (haven't had her pay for a background check yet as I'd prefer to reject her before she has to pay for it).