All Forum Posts by: Michael Seeker

If it is month-to-month the lease can be terminated at any time by either party with proper notice.  The notice information should be contained in the lease but is typically 30 days.  The tenant has the same rights as under a longer term lease with the exception being that the lease can be changed or terminated at any time.  The landlord could decide to raise the rent or term the lease whenever they like.

@Philip W. - I typically charge a higher rate for tenants going M2M.  If your landlord doesn't seem interested in just letting your lease go M2M when it expires, then you might let them know you are unsure whether you'll still be in the area in the next 6-12 months and would be willing to pay $X more per month to go M2M.  It never hurts to ask.

As for the timing, I would reach out to them early to mid March if they don't reach out to you first.

@Brad Fausett - $250+/mo/unit is a little high in my neck of the woods but I can speak for your area.  Generally speaking, the higher you want your numbers to pencil out, the closer you get to warzones (assuming you keep the 50% expenses static).  I buy in high-demand, high-rent areas and keep expenses around 30% which nets me about $200/unit/mo.  It all depends on where you're comfortable investing.

Regarding your reserves, $20K per property seems insanely high to me.  I had a rule starting out of a minimum of $1K per property but no less than $5K (so $5K starting out, then upping it as I accumulated more properties).  I haven't come across any great guidelines around this, but $20K per property is just way too high unless you're in a very high cost area (HI, CA, NY, etc)

@Kevin Raye - How much could you sell the property for?

@Steven Mitchell - I wasn't expecting your question to be related to a city I'm familiar with, but just so happens it is.  I'm closing on my first rental property in Memphis on Monday and was actually a bit surprised to find the tax rate higher than expected on it.

My property is in the Midtown area and taxes are just shy of 2%.  Here's a site that I found tremendously helpful in deciphering the overly complicated tax situation here: http://memphis.about.com/od/midsouthliving/qt/propertytax.htm

For my property in Shelby Co, the rates end up being .85% for city taxes and 1.0925% for county taxes.  Rates will vary depending on location...

Property taxes are going to be dependent on where the property is.  The assessment of property values can change from one city to the next and tax rates can and will vary significantly depending on where the property is located.

If you are looking for rates for a specific city, mentioning it might get you a better response from somebody who invests there.

@Christopher Collins - In the absence of a clear response here, I'd suggest calling your local code dept or property inspector and asking them what is required as it could vary by locale.

We had issues with chimney liners on a property and it ended up being more cost effective to replace the water heater and furnace to more efficient units that could be side vented than to redo the liner (basically cost was the same either way so made way more sense to replace).  We kept the water heater for use in another property and were able to get the furnace swapped out since it was brand new.

This might not be economical with 4 water heaters, but just throwing out a possible alternative if costs get too crazy.

@David O - do you have much experience with PM companies in your area?  I've purchased property and looked at tons of property managed by the main companies where I invest.  The sad reality is that most of them are terrible at management, terrible at business and terrible at being a landlord (the buildings managed by good PM companies don't come up for sale nearly as often).  Typically when somebody indicates they had issues with their current/past landlord, I try to find out what shape the property is in and who the PM company is.  If they have been renting from one of the PM companies that I know are terrible then I don't hold past landlord issues against them.  

Then your best bet is to put together a solid business plan (including information on your background and what you bring to the table) OR find a great deal and get it under contract. If you have a deal ready to go, figure out how much capital you need then start asking anybody and everybody (BP, local REIA, friends, family, etc.). If you don't have a concrete deal with numbers to share, then you'll probably need a very well fleshed out business plan to get somebody to commit to funding future projects.

I'm about to close one at 4.75% whereas the rate on my primary residence about 3 mos ago (prior to recent rate increase) was 4.25%.  The rates will be slightly higher but not egregious if you find a good lender and you are a qualified borrower (good income, low debt, track record, etc)