All Forum Posts by: Chris Lieder

Avi Garg this is an apartment, 2 Bed/ 1 bath, 776 square feet. The unit is a duplex. From the front the property looks like a SFH. There are two front doors, one that you just can't see in the picture. I've actually had other people think it was a SFH as well. When you looked at my listing, what made you think it was a SFH? Maybe that's part of my problem, $850 would be a steal for a SFH in my area.

Hi guys, I've got a duplex that I've owned for about 5 years. I've got a renter moving out and so I've posted that unit on Zillow/ Trulia/ Hotpads. Within just a couple of days I have over 50 interested people in the property, probably more! I've got literally dozens of phone calls and voicemails, I've actually just stopped answering the phone. I can't possibly follow up with this many people to find a good applicant.  My question, what is going on here? Is my rent too low?  Am I doing something right or wrong?

Here's the listing:

https://www.zillow.com/homedetails/3329-N-Fowler-A...

I think it depends on what you buy. You get what you pay for I believe holds true for this. The kind of LVT I bought has worked great for me. It was $1.29/sq ft. It is snap together (tongue and groove) floating (no type glue required) tiles which has worked well for me.

I put the LVT in the entire unit, except the bedrooms. I find that most renters have dogs, so having this type of flooring has been great for me.

I just recently bought a duplex and have signed my first lease with a tenant. This is my first property, so I'm pretty new to all this.

She is a great tenant who can more than afford the rent on her own. She signed a 1 year lease with me for the unit.

She would now like to bring in a roommate on a month to month basis who would pay her an amount that they agree on per month to live there. She is willing to continue to take all responsibility for the property, paying rent, with no changes to the lease. I would collect the full rent from her alone. The idea of brining in the roommate for her would be so she can save money and pay of some loans from school. She can more than afford the property on her own like I said.

She will collect rent from the roommate at her own discretion and the roommate's time there will also be agreed upon by them.

I think I am okay with this. I am still doing a background check, credit check, reviewing previous tenancy, etc, on the new roommate.

The question I have is how do I work this out logistically and contractually? Do I sign a new lease? Do I just let her move in? Do I add her to the current renter's lease as some sort of dependent? How do I do this in a way to protect myself and to keep control in the future in the event something goes sour? I obviously don't want this to become a norm for either of them, so they think they can just bring in whoever they want whenever they want to live there, like boyfriends etc...

Any direction you guys can give on this would be very helpful.

By the way, I'm paying $660 a month, mortgage, taxes, and insurance and I'm renting one unit for $850. I live in the other unit. I'm making a net $190 a month and have a free place to live to boot!!! I think there might be something to this real estate thing.

Kyle J. and Ray Harman: Good points on the time to get approved for Section 8. I guess that's probably out of the question....

There is a lease in place with the current property owner, however it is currently month to month, the last lease they have is from 2000. I assumed I can just put a new lease in place. Is this a bad assumption?

Tom C.: I think I will be fine with the emotional aspect of it. It may be difficult since I will be living righ next door to them for a bit.

Shuai Zeng: I will definitely offer them the choices, but I think it will inevitably turn into an eviction. He won't be able to move out. There will be no one who will lease him an apartment with his income. Unless we go section 8 of course. My concern with that would be, will section 8 allow someone who is already in the unit to go section 8 if they were not already section 8. Kind of an odd situation.

Sorry, this is long, but there's a lot going on here...

Tenant Issue/ Section 8 Question:

I'm in escrow on a duplex that I will live in one of the units on. I am still in my due diligince period, which ends on 11/26. The back unit is occupied by a long term tenant who has been there for 15 years. They currently pay $440, which is way below market rent. Market rent for that unit should be $750, it's a 2 bed/ 1 bath with a backyard. Under consent of the owner and agent, I met with the current tenant to discuss their plans and to collect a rental application and income verification from them. They currently struggle to pay the $440 a month. Because of this, I am led to believe their income is not very much. After reviewing their income, my assumptions are correct. As a family of five, their 2011 tax return shows about $14,000 gross income for the year. He is self-employeed with an insurance/securities company, so has no pay stubs as he is paid on commission. My assumption is that his income this year is even worse than his income last year, as he did not write in a current income amount on his application, but rather just gave me last years 1040.

My concern is this, there is no way he can afford $750, he can hardly afford $440 and his income proves this. If I follow through with this purchase I am basically signing up for an eviction. I know he is not going to be able to pay and I ask the family to leave, they likely will not be able to. Where would they go, since no one will let him sign a lease with that kind of income? Eviction is inevitable.

One way out of this I am thinking would be Section 8. Is it feasible to get them to go apply for section 8, list the unit as section 8 and then get them to rent under section 8. They seem to be great tenants and take care of the property, so no problem there, they just can't afford it. How would I go about doing this and how long would it take? I'm assuming it will take longer than I have before my inpspection period is over. Are there any requirements regarding the condition of the property for section 8. If I went this route and they qualified for section 8, we would sign a new rental agreement at the higher rent and I would also ask for a larger security depost than what is transferable to me from when they first moved in back in 1997, which was $200.

Or should I just leave it as is and once I take ownership of the property give him a 30 day notice, hope he complies and if he doesn't take it to an eviction?

The seller is giving me a $3,000 credit to deal with this tenant issue by the way. Not that I want to deal with it.

Deal Evaluation:

Purchase Price: $130,000
Gross Rents: $17,700 ($750 and $725 for each unit respectively)
Expenses: $8,500 (50%)
Repairs/Renovations: $10,000
20% Down at 3.5% APR for 30 years = Debt Service at $467.01
3.5% closing costs

Cash on Cash Return = 8% (not stellar)
Cash Flow per door = $135

This is obviously not a killer deal, but at least its better than throwing away $715 a month on rent in a one bedroom upstairs apartment which is what I'm currently doing.

Considering all... what do you guys think? Should I follow through with it and pull the trigger? Let me know if I forgot any details or if you have any question. This will be my wife and I's first rental property and home. We plan to purchase another multi-family property a year after this one.