All Forum Posts by: Makoto Hawkins

I presently rent in the nicer, updated of two units within a duplex. I have made an offer to purchase the property from my landlord. I would like to owner-occupy the dated unit and rent out my current unit that should fetch more in monthly rent. The tenant presently in the dated unit has a lease ending in about 5 months. He is a very good tenant from what I can tell living alongside him in the building and I'd like to keep him if possible.

Is it uncommon for a buyer/owner-occupier to move tenants into the more profitable units within their building? Are there strategies to doing this that minimize risk of turnover? I'd love to hear learnings from others on the BP forums.

Had a former roommate take a home owner to court over carpets. The owner claimed replacement carpets as a deposit deduction. The roommate won the case on the premise of a manufacturer's posted 7 year lifespan against a rental lease that spanned across 10 years. The court ruled that the owner should have replaced the carpet at its end-of-life. This case occurred in California; results may vary state to state.

...and I did not see any of the deposit returned to me. After he went through the process of going to court, I felt the roommate earned it.

@Cameron Riley to expand on your first question, I believe in PA the fund goes into a landlord escrow and is technically still the property of the tenant. You, the landlord, have rights to use part or all of the deposit fund after move-out if repairs are qualified. But it is not your money during tenancy. You are temporarily holding their money as a security.

As others have stated, tenant-caused repairs during the lease term are billed to the tenant independent of the deposit.

Hoping to hear some of your negotiation strategies when buying an investment property off of another investor. Both parties are profit driven. What are ways to offer added value to a seller in exchange for a price point that helps you meet your intended Cash on Cash ROI?

Off the top of my mind, a lease option is one method to lock in a workable price for a buyer while lowering the seller's monthly operational expense for the duration of the lease term. A little extra cash in their pocket up front and possibly cash in yours if you net a difference subletting. Plus you have the ability to lock in a price before any future appreciation may apply.

Thank you for the confirmation @Jen R.

Is Cash-for-Keys a tax deducible expense?

I'm going to also note that the bathroom has no electrical. Current owner had informed me that his electrician wanted to run a new line to the circuit breaker to be up to code. That he could not tap off of other room's electrical. Unit is on second floor of 50 year old rowhouse so likely a difficult job.

I'm making an offer on a MFH with two 1bd/1ba units and trying to determine the most bang for my buck in reno work. Hoping to hear from others on a few of my options for the partially updated unit (radiator heat was replaced by ductless AC and new stainless fridge+stove/oven).

A few improvement ideas in mind:

- Add a dishwasher (requires replacing older, painted cabinets)

- Replace existing granite kitchen countertop (cheaply installed w/ misaligned seams and rough cuts, traditional in style clashes with rest of home)

- Plumb in-unit laundry hookups (requires sacrificing kitchen pantry closet. Presently, tenant must exit building and walk around back to basement door for laundry)

- Remove tub for walk-in shower (demographic mainly college and professionals)

- Retile bathroom & replace sink cabinet + vanity (currently mint green, circa 1970. Bathroom lacks any storage)

- Open up kitchen to living room via wall removal, creating breakfast island w/ more storage (unit is approx 650sq.ft. and kitchen has very little natural light)

@Joe Sadusky Thanks for the response! To answer your question, I think my first purchase will be short-term. 1-2 years, enough to obtain sufficient landlord experience. From this point and hopefully with a more established financial situation, I aim to acquire another MFH, move out of my initial unit, and update the former unit with the ability to claim deductions.

To follow up on my question (as I might have found my answer), I figure I should look at my calculations both ways, living in one unit AND renting out all units. This way I can view my cash flow if I were to ever move out. I also read that when calculating my live-in cash flow, it is sometimes not bad to come up negative if this value is still lower than what one would be paying in rent elsewhere.

Please do correct me if my thinking is wrong or too narrow-sighted.

To expand on the topic, knowing that cash flow may be small or negative when house hacking, is there a tolerable minimum Cap rate before I should be seeing a red flag on a property?