All Forum Posts by: Wesley W.

@Dawn Anastasi This was an estimate from my RE broker who saw the unit and its condition.  It needs pretty much everything after these people leave.

@Account Closed - it's only been 4 months and I am already sick of the drama.  I was more tolerant of it before her belligerant attitude began last week.

Thanks for the feedback thusfar.

Just as a bit of information, between her and her husband they make about $65K per year, so it is clearly not a case of not being able to afford $600 a month.

I guess I really threw up a red herring with some of this information;  what I'm really wondering if this is acceptable behavior for a tenant?  (the bard-laden text messages)

Do your tenants treat you that way?

Hey folks,

I'm new to the investment game and I've come across a situation I need some input from the current landlords on.

I've got a tenant that has paid late each of the three months I have owned the property.  As per my lease, I have served a "pay or quit" notice after the 8th (5 day grace period from the 1st).  Each time, they have paid before I pursued anything further.

In the lease, they must pay $50 if they don't pay on the 5th, and another 5% of the balance after the 8th.

I bought the property from a lazy landlord that was too lenient with this particular tenant, so I am trying to condition her to my reasonable expectations.  Every month there is a different story; this month her car broke down, blah blah and she would not have the rent on time (this was before the 5th).  I reminded her via text that after the 5th there would be a $50 late charge and another $35 tacked on after the 8th.  She asked if I could waive the second late charge since she was "telling me ahead of time" and was "telling me the day she would pay" (the 12th).  I basically told her that my late fees were to offset my costs of any legal processes I need to begin for non-payment, and that I would have no choice to send out another 3-day notice on the 9th if there is no payment.

She responded with what I can only call a "litany of sarcasm" - about how she appreciates how understanding I am and "way to undermine your tenants' attempt to make rent" , she resents jhaving to pay installments on pet fee for cats she's had for years, etc.  She ended up telling me should would pay on the 8th, despite the hardship.  (As an aside, as I type this she has not paid, and I sent a 3-day notice this afternoon.)

My question is how would you deal with her conduct?  I have been nothing but professional and courteous with her, as I enforced the rules of our written lease.

On one hand, I think "I'm the professional" and should not dignify her conduct by responding at all, while the other side of me does not want to set a precedent where she can use me as a verbal punching bag during her residency.

Another piece of information that might be germane is her unit it totally trashed (she has lived there for 10 years) and would take about $6k to turn it over.  Her rent is about $100 under market (I raised it $50 when I bought the place in July), so I'm mitigating my losses on that unit as long as she continues to pay (albeit late).  To be honest, if the unit were in better shape I'm not sure I would tolerate her drama and BS.

Your thoughts and input as always is graciously appreciated!

Thanks to everyone who offered their advice. You've certainly given me someplace to start.

For those that are curious - we are looking to relocate and change careers, and I would (at least initially) be managing the properties - so I do, in fact, need to live where I invest. ;)

The plan is to wait a few more years to build up our funds (we both have very good jobs here in upstate NY), but are honestly getting sick of the winters, taxes, and restriction of freedoms (not necessarily in that order).

My wife has a career that makes her marketable in most places in the US, and we like the southeast. Shooting from the hip, I'd guess we end up in SC or GA when we make the paradigm shift.

I've now got some tips that will help me do some more research.

Hello All,

My wife and I are looking to relocate in about 5 years or so, and we'd like to move to a state that would positively affect establishing a RE buy-and-hold portfolio.

I realize that landlord-tenant laws is one element that would influence our relative success, but I also imagine there are others - such as taxes on income from real estate, property/zoning laws, small business laws, etc.

Since we aren't real estate investors (YET!), there are some aspects to the business that we don't even know we should be using to evaluate our potential move.

I guess what I'm asking is: what sort of things should we be looking at in choosing a state (realizing that within a state, things can vary widely - but we have to start somewhere).

Our intended destination is somewhere in the southeast, if that helps.

Thanks in advance!

Thank you to everyone who weighed in with their opinion. I killed the deal this afternoon. I knew that was the right thing to do. Our $30K down payment went from yielding us $500/mo. to $250/mo. Which meant we'd have to save another $15K to get the same return on the original investment.

So, we're waiting for the next deal to come along. Thanks again!

Yes. My realtor (whom I really like, by the way) tells me that it would be very difficult to get each seller to produce the swath of paperwork required during the approval period prior to submitting an offer. He also says that that's what the att'y approval period is for. I put up $2K in earnest money. Not sure why that is germane. Please explain!

Hello, all!

Well, we are under contract for our first of hopefully many multi-family investment properties to create a buy-and-hold portfolio.

Here's the issue. The seller grossly underreported the taxes, insurance, and water expenses for the property (they were listed on the MLS). So, during the attorney approval period, we get copies of the paperwork and discover the discrepancy.

How much were they underestimated? By $3000 a year. This cuts into our cashflow significantly - our analyses showed a little more than $500 positive cashflow a month (it's a 5-family unit), and these new figures will cut that in half.

After speaking to my realtor, he says we should ask for money back at the closing for the difference over a few years. (He suggested $4000-$6000.) basically, the seller writes us a check at closing for that amount.

Here's what I totally dislike about this notion: after 2 years, we are still going to have those expenses (hell, they'll almost certainly be higher by then), and we'll have a few more decades of debt service to pay on the property.

I'd like to call upon the collective wisdom of the BP community to ask: given the situation, would you walk away? If not, what would you ask for as compensation?

I'd be happy to provide additional details if it helps make a more informed decision.

Thank you in advance!

Hi Michele,

Thanks for the feedback. Yes, my vacancy estimate, like other parts of my worksheet, are overly conservative - which, I guess, makes the deal look marginal. My goal in doing that is to not lose money by unexpected expenses.

The insurance in upstate NY is out of control since two major storms (Irene, Sandy) hit in recent years. My personal residence has seen a 45% increase in premium over the last two years, and believe me I have shopped around! One of the many great reasons to leave NYS, in my opinion. But, I digress...

The insurance broker I will probably use charges a 40% premium for a circuit panel with fuses (which this property has). I plan on upgrading it, but left in the higher premium in the meantime.

The mortgage rate was accurate as of a month ago, but rates have risen since then, so no - the debt service is probably low on the worksheet.

The street is posted at 30 mph, and is a typical "city street", yet it is getting more use these days with chib fab plant up the road. There is not much of a front yard, but has a very nice back yard.

Regarding "rentable features" - it needs a bit of upgrading (see OP), but it is probably close to par for the course. My idea was to make it a BIT nicer than others, as the vacancy average in the city is around 9%.

Floor plan isn't non-traditional; one unit's kitchen does not have any countertops or cabinets, just a built in hutch for dishes. The tenant uses the kitchen table as a counter, I guess! I've planned for that update in my rehab costs.

And yes, I was thinking of totally throwing a low-ball number that would work, all things considered. Which I may do, but I think I am going to hold for a bit and let the seller come back down to reality. In the meantime, we may begin working with a realtor and looking for some larger (5+) multi-unit properties and see where that leads.

Please accept my continued gratitude for your past and future input!