All Forum Posts by: Natalie Schanne

@Ben M. - What services do you need your PM company for?

Is your unit occupied or vacant?

Is it ready to rent / sell or does it need any construction management/turnover rehab?

Is the PM paid whether it’s rented or not? (Especially if it’s vacant now?)

Are there any fees to terminating the agreement early or selling with your own real estate agent? (One PM agreement I looked at said the owner HAD to list with the PM if selling for a commission of 6%, and that the agreement auto renewed for a whole year every October (whenever it was signed).

If the property is vacant, I feel like the right local agent with vendor / construction worker connections can help you get the house ready to sell. Not all agents will do any construction management (getting you bids, checking the work was done). Agents offer different services. Hungry agents don’t mind helping you coordinate a paint job on your dime so they can have a listing that looks great.

I PM several properties myself and it’s mainly about having a team of vendors in place like a landscaping crew, a handyman, etc.

@Jeff Halverson - the market is turning. I’ve seen some people say they’ve made $300,000+ profits on their Smoky Mountains flips. Consider listing it with showings by appointment (between guests only?)

Or if you're holding it, make sure that you have exterior cameras alerting you if the neighbor is going to do anything crazy while your guests are there, potentially ruining their stay. It doesn't take more than 60 seconds for some crazy guy to knock on your cabin door and tell you "incorrectly" that STR are banned in this area and he's calling the cops on you… for a guest to have a pretty much 100% negative experience and ask for a refund. At probably $500-1000/night, nobody wants this. I've heard of rabid neighbors telling str lakefront guests that they're not allowed to use the lake.

What’s the privacy between you and this other party? Can you erect a tall fence or more trees?

Would you offer to buy their house?

In my area in the northeast, if your neighbors were mad they could ultimately get code enforcement on your tail looking for intense renovations without permits or anything else. It sounds like you’re on the up and up with all of those items though,

The best strategy is probably to get a different person to interact with your neighbor. He probably doesn’t like you. Maybe the construction workers pissed him off with demo trash. I would make my “new property manager” the sweetest person there is someone he/she would feel bad to hurt. And hopefully they will leave you and your guests alone. (Make sure there’s proper signage so nobody goes up their driveway by mistake).

@Corey M. - Not sure what the problem is. It feels more hypothetical.

*** Fair Market Rents are up 25% over the past 12 months AND people will rabidly attack your rental opportunity once the pm posts it. *** I am currently getting about 10 calls, texts and online inquiries per day per fair market priced, average rental.

If for any reason the occupant is blocking your showings to re-rent it while they’re in it, then that’s a problem. If your PM won’t start to rerent it until it’s vacant, that’s also a problem. (I rarely have more than 1-2 days vacancy between tenants, but if you wait until they’re out to shoot new photos and rerent it, you could be vacant 15-60 days plus the month placement fee).

So, raise your rent 20-25% and re-rent it with showings while they’re still there. You will fill it before they’re gone.

You can require a 2 year lease of your next tenant, but any tenant can break a lease with military orders. I like military members because their paychecks and BAH are stable!

@Jean Wilner oriental - in Trenton city proper or the neighboring communities like ewing or hamilton?

@Giani Brussich - I’ve owned my first house (which is now a long term rental) for the past 13 years. I can tell you every story about what’s gone on in my block in the past 13 years from the time the neighbor’s roommate was selling drugs, to the time the thief was caught breaking into cars to steal GPS, to which old folks died and their homes were bought by investors and flipped (usually to young families).

It doesn’t take a lot of crazy parties or bizarre events to really disturb the neighborhood psyche. One of the main benefits of having neighbors or even annual renters is that everyone tends to follow a routine such as parking in “their spots” on the street when there is limited (unassigned) parking.

I had a complaint against my rental after one of my tenants went crazy against someone else in the house and the police, ambulance etc were called. This is why we try to screen for nice people, so we can maintain a nice neighborhood.

If I Airbnbed my whole house, it would probably be 30-50% vacant but then anytime I did rent it, it would probably have 2-4 surplus cars that don’t really fit on the little residential street without messing up other people’s “standard” parking. They’d probably make a lot of noise at night between arriving and going at all hours. Shrugs. I’m all for people being able to do what they want with their property, and I certainly like the returns I get on my Airbnb, but I don’t like if anyone is incentivized to mess up my quiet enjoyment of my personal home. And yes, most Airbnb stays won’t mess the neighbors up, but it only takes a couple strongly negative experiences for someone to have a strongly negative gut reaction. How many times does a restaurant have to screw up before you’ll vehemently avoid it and tell other people your bad experience? Once? Twice? It’s the same.

@Ekrem Bermek - seller hasn’t agreed to sell until they sign your purchase and sale agreement. Then you submit your earnest money and agreement to a title company and they make sure the seller has the right to sell, get the lien payoffs, and you bring the funding at closing to buy the house. If you change your mind during inspections, you notify both the seller and the title company and dissolve the contract. The seller signs a earnest money release and you get your money back.

My non realtor agreement is only 2-3 pages. Simple is good. If they want top dollar, I would offer a higher price but make sure the agreement says they're paying their own closing costs. Versus some guru courses say to advertise that you'll pay all their closing costs, etc. But then you have to offer lower to get the same net price. In New Jersey, they pay about a 2% realty transfer tax when selling. Additionally, if someone is out of state or the property is held by an LLC, an escrow holdback towards taxes owed is held (and some people don't like that because they want all their money, even if they do owe it to the irs/ state dept of taxation).

@John Walter - congratulations. Good job with setting up your house hack so you can live for free (or very cheap) in your own apartment in your own new construction duplex while it appreciates and your tenant pays down your loan.

1. What do you expect taxes to be after the abatement wears off? In my area, a property assessed at $500k might have taxes of $20,000 a year.

A lot of people message me off BiggerPockets wanting to do a similar house hacking deal. Without the VA loan benefits, they either have to apply FHA which can be hard for an agent to get accepted especially on a an older property. (Most NJ multi families are 1960 or earlier) or bring 15%+ down for a conventional loan. Usually without the tax abatement I'm finding the numbers pencil out to - in a duplex, you usually can get the other tenant to pay about 2/3 of your mortgage payment in fair market rent, so you end up paying 1/3 of the mortgage plus incidental expenses including vacancy out of your own pocket.

@Gargi Keeling - what are your numbers on the deal in terms of purchase price, total rental income and total monthly expenses?

Ie buy $300k, 25% down 5% 30 year fixed loan

Rent $3000/mo

Expenses $500/mo including maintenance, vacancy, water, sewer

PITI $2000/mo including taxes and insurance

Cash flow $500/mo ?

Are you happy to do 1031 exchange?

My recent New Jersey Princeton area customers got deals like

Buy 210k, rent $2500/mo, PITI approx $1700

Buy $300k, rent $4000, PITI approx $2500

Buy $200k, rent $3000, PITI approx $1650

Buy $210k duplex, rent $2900, PITI approx $1650

@Satya Dutta - it may be worth having your own attorney who can help smooth this over.

Some houses bought at sheriff sale have other liens that need to be cleaned.

However it seems like yours is free and clear.

When my clients buy or sell a property, the title company pulls for judgements against the name of the buyer or the seller. If there are judgements against the name, the seller or buyer usually signs an affidavit that the person with the judgement is NOT them. Or if it is them, they use some of the proceeds at closing to pay the judgement.

In recent deals, my client (name changed) William K Smith was told he had judgements, but they were in the name of William M Smith and William P Smith and he had to sign that they weren’t his.

@Bernard J. - J Scott said the DSCR lenders are up to 8-10% right now. I remember seeing Facebook ads and being quoted about 2 point and 5% in December 2021 in New Jersey. Do your numbers still work at the 8-10% interest rates? I know in my area of New Jersey (Princeton) a lot of the landlords are still trying to sell deals that are 5-8% cap deals, meaning if you paid cash, that's your percentage of profit after all expenses. So when you put a 2 points and 8% loan on that, it starts to get really thin $$$ wise unless the deal has some good value add in it.

Ie if my annual deal profit is $24,000 (cap 6% on 400k) and I get a $300,000 loan at 8%, my annual deal profit goes to “$0”