All Forum Posts by: Kyle Benham

@Lynde Klein

I dealt with German cockroaches a couple years ago. After the tenants moved out, I had to have it sprayed by a professional company every two weeks for a month, so three total times. I left the unit empty for 6 weeks. I know this isn’t ideal, but you want to make sure you get rid of all of them. They reproduce every 12 days or so, that’s why it’s important to treat the place by an exterminator every two weeks. Removing the food sources (empty house/apartment) plus spraying every two weeks for a month (3 times), will hopefully do the trick. Good luck.

This learning experience for me now has me account for pest control monthly on all of my units, it’s a small cost for having a quick number to call at any time.

@Brian Kantor

This just happened to me today, and it was the first time I’ve experienced it. The guest was very kind and even said they didn’t expect anything.

I decided to give them a 50% refund of what would have been paid out to me. After they cancelled the booking in their side (so it didn’t hurt my metrics), I gave them a 100% refund after they first paid me via Venmo half the pay out. This was the guests idea. Without giving a 100% refund, they still would have had to pay the lodging taxes and fees despite not staying a single night.

I didn’t owe them anything, but I believe in good business and helping out where I can. I won’t be able to book all those nights that are next week, but maybe I’ll get lucky. I generally agree with what everyone has said about the cancellation policy, I just put myself in their shoes and offered what I could while still running my business.

I always tell them “No problem, just fill out this application form, provide name, SSN, address, phone, etc… and I’ll start with a credit and background check.” They never respond for some reason.

@Vanessa Hammonds

Hey Vanessa, I’m no expert, but I did venture into new construction on my 2nd ever deal, which I am nearing completion on. However, it wasn’t all new construction. I am located in Phoenix, bought a property September 2021 that had a 1924 2-bedroom house (not livable at all), and a casita that was entirely burned out, nothing left to be saved except the brick exterior.

The property is zoned for multi-family with some restrictions on size of structures and number of dwellings, but this is what intrigued me. A full renovation on the existing two structures was maybe break even at best. I had my contractor give me numbers on turning the casita into a duplex in the back of the property. I mean, we already had to re-run the plumbing to the city, bring in the electrical, and the gas, so if the hardest part was already being done, I thought why not just double the casita size and turn it into a duplex?

Bottom line, it took about 3-4 months to get my plans approved, I used a designer/architect to manage all the plans/approvals (about $7k), and my contractor gave me an estimate at $167k for everything, totally re-doing the main house, I mean everything, and then tearing down the casita, minus the brick walls, and then expanding it and building a duplex (350 sq Ft per unit, so small) including an entire new roof for both units. We are just about done, maybe two weeks left, I’m already marketing it for rent, and the final cost came out to $201k for the whole project, the increase was due to inflation and the cost of materials sky rocketing during the project such as lumber and concrete (new driveway and brick fences). I just wanted to provide some numbers and details for you. It’s totally doable, but you really need to know the cost of the build before getting started. I never would have bought the property if I didn’t have those estimates and a relationship with my contractor from a previous project.

@Kyle Benham

Sorry, $150k in equity, I messed up my numbers, so what the previous poster said, between 5-6% ROE. My opinion remains the same, except you could only get a $600-800k property by selling.

@Chai Jonn

I would say you're in a position where you could go either way. Assuming the $750 cash flow monthly is after putting aside CAPEX, reserves, etc… then you're cash on cash return is above 13% at $66k invested. That number is really good. However, your ROE (return on equity) is obviously much lower, assuming about $276k in equity with a $425k value. Your ROE is about 3.2% if I did the math correctly. So I agree with the previous comment, if I was in your situation then it would depend on the tenant. If the property is on auto pilot and doesn't require hardly any attention, I'd keep it and reevaluate in a year. If I was having to keep tabs on it all the time, I would sell it and look to find something around $800k to $1M in value using the equity.

@Travis Heppe

Travis, that sounds like an awesome project. I am currently adding a new build to an existing property in downtown Phoenix. It’s zoned R-5, j bought it from a wholesaler. Originally, the property is a 2/1 with a casita in back. The casita in back is completely destroyed due to a fire. So I thought it was a great opportunity as we demo the casita (keeping the original brick exterior for the historic neighborhood) to expand it into a duplex. So now we will have a 2/1 main house fully renovated and upgraded, as well as a duplex in back, both 1/1 units. So overall going from 2 units to 3 units. The cost of adding the additional unit comes to about $80k per my contractors bid. All the ground work for the main house and casita would need to be done regardless, so why not take advantage of adding that infrastructure and add on the additional unit? I hired an architect/designer to handle all the permits and design, and they are working my contractor to keep on timeline.

@Lisa Caracciolo

Lisa, your rental valuations seems pretty close for the size of the places and located in class C. I have a class C property over by GCU, so obviously a different area, but I have consistently gotten higher than what you find on Zillow for comparisons. They are 2/1 units at 750sq ft, so larger than yours. My rents are $950, $975, $1000, $1025 and arguably low now that most have been in place about 2 years with only a $25 increase per year to those rates listed. My latest turnover was the $1025, I listed at $1075, had tons of interest but actually took a qualified referral from another tenant and cut the rent $50 because the tenant referring them new tenant has been great and I have no regrets so far, because class C can be tough.

The price the wholesaler is offering it to you seems to be market rate, not low. A quick search on Zillow shows your property just sold in August for $289k. If this is true, then I think you should dig more into the current tenants. Why would someone buy two months ago, and sell so quickly no for no profit, and actually a likely loss, especially in today’s market? I’m afraid you could be looking at problem tenants, and potentially not paying. And if that’s the case, what is the guarantee they leave when the lease is up so you can move ahead with your renovation?

Lastly, I would check your renovation numbers. My last renovation of a 2/1, 750sq ft done over the summer cost $20k compared to $16k a year or two ago. Material prices have increased. However, I did do very nice finished (close to class A finishes on the class C). I did this to attract a better tenant and the numbers worked to do so from when I bought a couple years ago.

Of what I mentioned, my biggest concern is what is going on with the current tenants to make the seller want to get out after just two months and at a loss. Good luck!

@Alejandro Patino

I’m no expert, but I do have a current project going on with something similar. It’s a 1925 2 bedroom 1 bath home in Phoenix with a casita in back. My contractor I’ve worked with for a couple years now is charging me $2500 for the new 200amp electrical panel and $6500 for all the new wiring in the main house (not the casita we are turning into a duplex, that is separate). It’s probably a little high looking at some of the other quotes, but I have a history with my contractor and am happy to pay slightly more for the relationship so that he’s there when I need him. I did not ask for any other quotes.

@Justin Hoggatt @William Moya

Thanks for taking the time to comment and share your experiences. And thanks to everyone else as well. This kind of info and response is exactly what I needed to make some changes and do them rationally than just a knee jerk response. It will also help me as I look into my next property and run my numbers for acquisition should I feel I need to incorporate similar measures. This site has been awesome and this was my first time starting a discussion looking for advice and I am overwhelmed with the responses and support, thank you all. - Kyle