All Forum Posts by: Nathan Emmert

If you have stuff in place and functional, I wouldn't spend money to change it... allow them to ruin it first, then replace it!

Now if you need new flooring anyhow... etc... here are some thoughts.

No carpet... it's cheap the first time but not when you have to replace it after every other tenant.  Go with a laminate hardwood type product.  Looks good and is fairly bullet proof at a low price point.

No vertical blinds.  They seem cheap the first time but you'll forever be changing them out, adding slats, etc.  Leave the windows uncovered for the tenants to add curtains... or put in your own curtains.

Do the entire unit in one paint color.  I forget the finish, but not flat.  One of the enamels is "washable"... gives you the opportunity to just scrub the walls versus repainting the entire home between tenants.  You don't want painters switching colors for every room, make the entire place one neutral color and call it a day.

For me, the main difference between B and C areas is the schools.  You go from average to above average schools in B areas down to slightly below average schools in C areas.  

Income in C areas will be a little lower, there will be a little more crime (though mostly non-violent) and there will be a bit more drug use.  But if you have sub-par schools, I classify it as C straight off personally.

D areas are where the violent crime is higher... more graffiti, much more drugs, gangs, etc.

You can look at everything... but frankly, income, drugs, everything else tends to follow the schools pretty closely.  You can make your life a lot easier by just tracking that one thing.

If you have a Property Manager, why are you meeting with the tenants?  Worse, why are you meeting with the tenants without her?

Maybe commercial is different, but I haven't spoken to a tenant since hiring a PM company.  The only people I speak with are at the PM company.

The prior leases stay in effect.  You can try to get them to sign updated leases but they are under no obligation to do so.  I'm not sure if there are any legal ramifications to trying.  Generally it's a good idea just to sit down with them and let them know expectations.  No new people living there, no pets, etc. 

A lease doesn't prevent anything you've described... it simply gives you recourse against the tenant in the form of an eviction if they do those things.  Evictions are painful for you (cost money, create repairs and vacancies)... you're better off avoiding the situations all together through conversations.

Minimize your down payment... cash makes real estate easy... it's possible to invest without it but SOOOOO much easier with it so conserve it when you can.

To get a conventional Owner Occupied loan you're generally expected to live in the property for at least a year.

Go with a 30 year mortgage.  The rate difference between 15 and 30 years is minimal.  If you wanted to pay down debt faster you could optionally pay extra each month.  Given today's low interest rates, most would say to simply save up the extra payments and use it for another property versus paying off the debt.

Understand with CAPEX and other expenses, few duplexes would cash flow with you living in half the units. You might want to look a bit larger (up to a 4plex) where you'd still get 75% of the rent. If you can find a solid enough investment on that front (say 2% of purchase price in rents)... even living in 1 unit, the other 3 would provide enough income to cash flow. They also help you maximize your leverage (10 $150k loans versus 10 $50k loans).

Originally posted by @Mike Purvis:

Originally posted by @Scott K.:

Come for a visit and I will show you the good and the bad of Detroit and the inner suburbs.  This is not set up like Canada.

LOL something really cheap like that but you somehow think it will have low vacancy.  Do you see how silly that sounds for a 20k property

I have basically no experience in the US market so no. I'm not really sure why you would laugh at that? I'm just trying to figure out what I can expect in different markets in the US by asking questions.

 He laughs because you're asking for Nirvana.  You want your cake and you want to eat it too.  When you get high rental prices at low purchase prices you're buying other problems... if those problems/risks didn't exist, the purchase price wouldn't be that low.

Learn to do your own inspections... watch the progress and don't focus so much on what goes right but instead on what goes wrong... what were the warning signs, what are the gotchyas, what are the WHOOPSes.  If you're planning to do any flipping/rehabbing, those things are what will break you... preventing them (or budgeting accordingly) is big.

Originally posted by @Stanley Okazaki:

So the structure was built with the purpose of being a garage?

I wouldn't allow anyone to live in the property if I were you. I'm not sure what your state is like but in CA you can get into a lot of trouble. Garage's aren't built to the same code as a single family residence. These codes are put in place so that people living in the structure can stay safe. Feel free to rent out the garage with the purpose of extra storage but advertising it as a place to live is a no.

I got the impression he wants to rent it out as commercial space (working space during the day).  There might still be some code issues with conducting business there but I'd guess that's a much lower bar.

http://paycheck-chronicles.military.com/2010/03/06/spouses-and-leases/ Spouses appear to be protected, I'd be nice and apply that to a gf as well personally. Sounds like there is a process... Follow it and everyone gets out fair.

I would consider a text message "putting it in writing" but it's probably in the gray area of the law system which hasn't done enough to keep up with the electronic age.  If it's not 30 days, I wouldn't give them the money back.  Did you check to see if him deploying allows the gf to break the lease?  If not, another reason not to refund it.

It's not about being greedy, it's about an investment.  There is a significant cost in turning over a unit.  You have a right to recoup some of those costs if a tenant doesn't meet their commitments.