All Forum Posts by: Michael H.

There are a lot of rentals in Waldo. I did a flip there and really should have held onto it. There are good eats around, grocery store, cvs and Walgreens, bars, coffee, bus line. All in walking distance.

I purchased 5 duplexes in August. All but 3 units were on month to month leases. I’ve raised rents on 3 so far because they were ridiculously low. I have 3 others that I need to raise as well. Two of them need work and are in the same building. Each of them probably need $3k - $4k worth of work. They are at $775 and $750. The area rent for the same unit is $950 for a clean and updated unit. The question is... do I raise them to $825 or $850 to build up reserves and and not lose a months rent from each side or bite the bullet for something I won’t see the returns on for a year and a half or two? Thank you for your insights

Unless this is a fantastic deal I personally would walk. From experience I learned not to force things. No deal is better than a bad one as they say. That doesn’t mean I quit easily though. I’d want to know and understand what those issues/concerns are that are holding it up before proceeding too. When you sell the house what title issues will you run into that will increase your holding costs? Do you completely trust the attorney or is he new to you? Best of luck on all your decisions

My thought is to raise them $100+ immediately and then selectively choose tenants one at a time to raise rents higher to meet market prices in the next six months. My fear in getting yearly leases immediately is that if I raise too high to quick I won't be able to control the amount of possible vacancies and work to get them filled. All of these tenants have been here several years. Make sense?

Last month I purchased five duplexes. Seven of the ten units are month to month leases. I'm looking my to raise the rent for these seven immediately as they are $200-$300 a month low for the area. I'm considering having them sign month to month leases vs a full year lease to give me more flexibility in raising rent and not losing too many tenants at once. What are the pros and cons you've seen of month to month vs yearly?

I am setting up a new LLC for rental property. My wife really won't be doing anything for the business at this time. Is it beneficial to add her as a member regardless? I would assume I would have 51% controlling interest? Thanks

I've had good quotes from SafeCo

@Cody BarrettI am still working on this deal. The seller and I were in a small stale mate as she didn't want to sign the real estate contract and I wasn't going to get the appraisal until she signed it. We had a meeting and she signed an agreement for me to get exclusive rights to purchase the property for 30 days if I got them appraised.

The offer I made to her was this.

$925,000 for five duplexes, 5% interest, 30 year amortization, with $50,000 down (5.5%) and for me to refinance and payoff in five years.

The appraised value came back @ $844,000 for an $81,000 lower value. $50,000 of that is condition of "average/good" compared to comps of "good". I really was surprised by this because beyond a little paint and carpet there isn't much to do. Most of the units have new furnace/AC/water heaters too. All five buildings have a roof less than 6 years old. Additionally, all 10 units are three bedrooms and the appraiser deducted $20,000 and marked them two bedrooms.

I have a call and email to the appraiser for clarification on the bedroom deductions. I purchased a report on Cozy for rents and it said rents could be $1100 a unit. The seller currently averages $800 a unit. The appraiser told me he thought Zillow was amazingly close on rents and agreed that they are horrible on sales. Zillow also says $1100+ a unit. Rent-meter is even higher. He came back with $800 a unit.

I have a lot of experience in remodeling and done a couple flips. I can do all the work on these units. I'm not looking for a lot of cash flow but a long term investment as the tenants will be paying the debt down for me with only $50,000 in. My calculations show there to be $170,000 in equity after five years and $47,000 in vacancy, management, and capex.

I plan on going to the seller and showing her the appraised value of $844,000 and seeing what she says. I am confident she will not sell to me at that price. With $50,000 difference in conditions and $20,000 in possible errors in bedrooms deductions don't think I have a problem of paying more $875,000 or more.

So I come to the professionals for your input. @Mindy Jensen

@Dan Bryskin

Thank you

What is your reason for choosing October? You will not be able to write any of the incurred costs for 2017 unless you sell and close before year end. Are you in a position to do that?

There's a reason term is cheap. The insurance companies only pay out about 1%. The actuaries are all over it. Sure there's a risk something can happen to you and your family will need that insurance. When your older the rates sky rocket and become unaffordable. Then you're left with nothing. I vote whole life over term. The Wealthy Family by Chase Chandler is a great read. So is Michael Isom's book on the Rockefeller's.