All Forum Posts by: Luke Cullinane

 Thanks Everyone!  I really appreciate you taking the time to read and respond!  Hopefully, I’m not being “too nice” by saying that.  Clearly, I have a lot to learn…looks like I came to the right place.  At least I got that right!  

 Ok, thanks for the insight.  

Thank you for the response.  Rental is in Virginia.  I communicated I needed higher rent after the initial 6 months.  I agreed to the MTM situation thinking they would look for somewhere else they could afford.  They never paid any security deposit.  There is a 3 bedroom on the same road renting for $2700 and there aren’t any 3 bedrooms available for less than 2k a month.  

I have a single family home that is occupied by a tenant at the end of a 1 year month to month agreement.  Initially, We had a 6 month agreement at $1500 a month.  They stayed the 6 months and then a year, so 18 months total at that rent.  I expressed the need to raise rent given higher interest, taxes, and the need for improvements on the property (roof and decking need replacing).  I offered a 6 month rent at $1800 with full security deposit.  I got a lot of attitude and BS but no lease or security deposit.  I have offered “cash for keys” ,$500, if they can move out and I’ve explained they have the right to vacate at any time.  I think they will try to ride out the previous terms as long as they can because $1500 is cheap for a 3 bedroom in my area.  I want to validate the lease I presented that is dated Oct. 1.  I gave 30 days notice.  This tenant complains about the condition of the house constantly, yet they will not move out.  They have paid their rent but they have been late a few times.  I appreciate any advice you could share.

Thanks

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $75,000
Cash invested: $30,000

This was a damaged property that was in bad shape and was owned by a family trust that didn’t want to take on the rehab.

What made you interested in investing in this type of deal?

The property had potential to be a great home if someone was willing to do the necessary work.

How did you find this deal and how did you negotiate it?

The owners asked me to consult because they knew I was a licensed contractor and had experience in remodeling.

How did you finance this deal?

I got a HELOC loan on another property and was able to make a simple offer to the owner that they accepted.

How did you add value to the deal?

I had to gut the basement and treat mold. I installed a new HVAC system. Sealed and painted everything. Opened up some compartmentalized hallways and closets and changed the floor plan a bit. New appliances. New paint.

What was the outcome?

This has been a solid rental with minimal vacancy. There are very few rentals available in my area.

Lessons learned? Challenges?

I’ve made the mistake of bartering with renters. Labor and services for rent. This affected cash flow and had questionable results on overall property value. Renters tend to do what’s best for them. That isn’t always what’s best for the landlord or the property but I felt it was necessary as construction costs, particularly plumbing are astronomical in my area.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No, this one was a simple sale. I should have re-financed when interest rates were low but unfortunately I missed the opportunity. Interest rates have risen 11 times since the current renter took occupancy. The property needs further improvements, roof and exterior and new deck and railing. Unfortunately, I haven’t budgeted enough for capital expense. Still the rent easily covers the loan payment, probably should be charging more to cover upcoming capital expense.

Investment Info:

Single-family residence buy & hold investment.

1 Bedroom cabin on 9 acres on Paris Mountain

What made you interested in investing in this type of deal?

This was the first home I was able to buy. I lived here for a year and a half and then moved to another property and began renting it about 10 years ago.

How did you find this deal and how did you negotiate it?

I found the property online and purchased through a local realtor.

How did you finance this deal?

Traditional Mortgage

How did you add value to the deal?

I built a new deck, about 1000 square feet. Fresh paint interior and exterior. New appliances. Remodeled Kitchen and bathrooms and cleaned up storage spaces, added shelving and interior trim where I could.

What was the outcome?

This has been a solid rental with minimal vacancy. The rent covers my mortgage and creates modest cash flow. I also was able to use the property to get a HELOC loan and purchase another rental property nearby.

Lessons learned? Challenges?

Screening Tenants. I’ve had a couple learning experiences. I now look for high credit scores and responsible tenants.
Capital Expense. I had to replace the old cast iron sewer line in the basement. That was really labor intensive work that I was able to do myself. The sewer was backing up and I paid way too much money trying to get others to clear the blockage. Ultimately, I had to break up the basement slab and run new PVC sewer line in the basement, then pour new concrete.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Initially I worked with local realtor but I found they didn’t properly screen the applicants and didn’t devote much time or energy. I now use online services to handle applicants and only interview applicants that I think will be a good fit. I require would be renters to go through the online application process which requires them to pay a small fee. This helps weed out tire kickers.