All Forum Posts by: Marco G.

Jeff Gates so are you saying you don't renew anyone? Meaning at the end of the lease you notify them that they have to vacate? And then you bring in a new tenant with a higher rent and more expenses for them?

Jeff Gates so are you saying you don't renew anyone? Meaning at the end of the lease you notify them that they have to vacate? And then you bring in a new tenant with a higher rent and more expenses for them?

Turnover is a killer. What is your average turnover? There are definitely differences depending on the type of property (SFH, Duplex, Tri, Quad, 5+) and regional variances.

Thanks Wesley Williams I will check out the podcast. If I could have the tenants average 2.5yr stays it makes the difference between a loss and a gain.

Nathan W. I know you estimated 40% of rent as costs (I think), but just make sure you'll be ok if you get a vacancy. How much will a vacancy cost you? They end up costing me between three and six months rent between lost rent, make ready, and new tenant leasing fee depending on the unit/condition. I did the same as you're proposing, using HELOC for the 25% down payment, but on a much larger scale (six doors), and it has proven to be stressful at times. Times like last fall when it took two months to fill a vacancy that cost three months rent to rehab and one month's rent as a new tenant leasing fee. Will you still be ahead in 31 months as opposed to doing nothing? Probably. Just make sure it's all worth it. If you've only made a few grand but experienced a ton of stress, a REIT may be a better option. No matter how you make it, the money is still green.

I purchased a number of adjoining properties mid last year. This unit came tenant in place on their first year lease. My first lease renewal of 2016 comes up next month and PM suggested a 9+% rent increase. I was very apprehensive about such a large increase and discussed it with them and they didn't think it would be a problem, and if it was, they'd ask for a "counter offer" now that they knew I was willing to be flexible. All of this seemed contrary to how I would do it myself, but the increase would bring it up to par with new leases over the past few months AND I'm really trying hard to not be such a micro-manager. I also expressed my apprehension especially because the property will require a month of vacancy and a few months worth of rent in rehab/updating with what needs to be done. Oh yea, and the leasing fee. Tenant immediately put in their notice to vacate. Tenant always paid on time and never made any frivolous service calls. I let them talk me into it against my gut feeling and feel like an idiot. I'm sure I'm not the first, has anyone had experience salvaging the tenant relationship in this instance? I feel like I can't really go back and say "just kidding, no increase for you"...

Yes - I ran into this issue as well. It's a Fannie Mae guideline, I believe. Let the seller know and see if they will just cut you a check outside of escrow. That's what we did. I did not tell the lender this information, just had them make the adjustment with escrow.

I purchased some property last year that was tenant occupied and being managed by a large company. The actual manager who interacted with the tenants left shortly before my purchase to start her own company. I was thrilled since I am too small for the large company to have as a client and this would provide continuity for the tenants! I asked for a proposal and received something like yours. I never responded because it was so ludicrous, especially the full month rent for a renewal! I could never work with that person because they abused my trust from day zero. As to your person, do you trust her? I don't believe the initial agreement was a mistake. Did she make any mistakes with the purchase contract? Contracts are her profession! She would have happily double charged you if you signed off on it. With that trust broken, will you trust her when you get a large repair estimate? Run, don't walk! Trust is paramount in these relationships. The PM will be your eyes and ears.

David Krulac is the window requirement the standard in defining a bedroom? I always thought a closet was required, hadn't considered the presence of a window.

Originally posted by @Douglass Benson:

Originally posted by @Marco G.:

Let's say the bubble deflates. For those that have experience when that happens, what happens to rents historically?

I don't think we will have the same massive mortgage defaults as mid last decade, but did people experienced declining rents then? When DO rents go down?

 Our rents actually accelerated.  The damaged housing market put so many new tenants into the field, that it was like a bidding war.  

 Helpful, thanks for sharing your experiences.  I own duplexes exclusively, in B and C neighborhoods.  Have had good success increasing rents past few years, no intent to sell in the near term.  If/when mortgage rates drift up, I don't see it affecting my tenant pool in any way.  Just gotta hope the neighborhood continues to be developed.  We have a new mass transit stop within a few miles coming online within the next year that I'm hoping will lead to additional commercial development!