All Forum Posts by: Morgan Porter

@Joe S. I included all major appliances but due to a lot of repair and replacement costs, I'm considering putting an "as-is" clause in some of my leases. This would be highlighted and only on the properties typically rented by students who abuse the appliances more. My issues are usually with washer and dryer and not refrigerators. I don't know if we could get away with NOT including a fridge in our area (Richmond, VA).

I’m looking for a new tenant and a nice couple applied. One of them is in the army and may be deployed in the next year. If that happens, my understanding is they can legally break the lease and leave. (At least that’s what I’m told.) Is this true?

I recently received an application from someone who is self-employed. They are claiming significant income but I have no company to call other than the applicant herself. Should I request a tax return, bank statement, or something else? 

Thanks for the reply guys! Let's hope we don't see a drastic dip in RE values over the coming months and years.

I'm a small investor with a few rental properties. I manage them on my own, including strong vetting of all potential tenants.

Long before coronavirus turned everything upside down, I started the refinance process on 3 of my rentals. I was planning to take some cash out in order to potentially start flipping some properties or simply use the extra cash for the down payment(s) on other buy-and-hold rentals. Now, of course, there is a ton of uncertainty about everything.

I'm still considering the refinance, but if I do it at all, I'll be reducing the total loan amount from what I was considering. I'm also not sure what to do with the extra capital since I am not comfortable buying in the short term. 

My big question now is, should I even do it at all, particularly considering I'm not sure what I'd do with the extra cash. Unless a killer deal comes along I wouldn't buy more real estate. If anything I might wade into stocks as the virus slows, but that, of course, is super risky. 

I'm expecting at least some kind of hit to property values and potentially tightening of credit, but that's always hard to predict.

Knowing this audience you'll want some details, but I'm not comfortable giving all the specific numbers, but here are some generals:

The 3 properties are 2 SFH and 1 duplex, and cash flow is strong (for now). I plan on holding them for the long term.

After I refinance, the total monthly payment would increase between $900-1200/month, but I'd also have an extra $130-180k in cash. (Right now, we don't hold a lot of cash, so it would be nice to have more of a cushion considering current circumstances). The new interest rate would be 4.5% which is about the same as it is now. It's a commercial loan so it would be a 25-year term. 

I'm currently contacting all my tenants to see if anyone has been laid off. So far, everyone is holding down jobs where they can work from home or are otherwise maintaining their income (but that could change). All of the tenants are higher credit/higher income (or have co-signers who are). So, I know some landlords are very scared right now, but I'm not overly concerned about losing rent .... for now. Over the next few weeks/months I think we all know the virus will spread more rapidly and conditions could get dramatically worse for everyone.

So, what would you do here? Should I leave the financing alone or should I take some cash out and give a little cushion and possibly put the money to work elsewhere?

@Jeremiah Akindele I’m sure there are some seminars out there that will give you some good advice and having a great mentor is priceless. HOWEVER, you never know what you will really get. If you have a friend who has already “made it” why not offer to pay them $100/hr for their advice and mentor ship? You’d get 400 hrs of their time.

@David Hulit my second primary residence allowed me to hold the first and rent it out. Primary residence is the only purchase you can make with a low down payment. I’d say get the next property with a low down payment (maybe even as low as 3%) and if it’s another duplex, let the other unit pay for the whole thing. You can always leverage your equity to cover big expenses if you have enough so make sure you keep plenty of equity in that first property if you don’t put much down on the 2nd.

Yeah we can all agree prices are high but we’ve all been saying that for years now. If rates stay low and other economic factors stay solid then property values will hold or even continue to increase a bit. Bottom line - do not try and time the market. Ever.

@Jon Crosby Definitely good advice and yes I’m asking generally about vacation rentals but hoping to find more pros and cons specifically about Lake rentals. (And if anyone out there is already doing this on Kerr Lake, it’d be great to hear from you.)

Definitely looking to “win on the buy” but the hard part is evaluating the rental income potential of a given house or the lake as a whole. My estimates on income for the last house I analyzed ranged from $13k - $40k per year. If it’s on the high end it would be a great but if we end up on the low end it’d be a big dud, or worse, a huge drain on our family finances. I’m just too used to the annual rentals which are steady and predictable so I’m nervous.

@Jaret Walker That’s an interesting idea! Unfortunately this lake doesn’t have many level lots. We’d most likely not have a lot of spots for RV parking. But I’ll keep an eye out for sure. Very good idea!

@John Underwood Thanks! You’re making this an easier “yes”. Anyone have some negatives to share?