All Forum Posts by: Philip Cutting

Hi Neil,

With a triplex I wouldn't just look at cap rate, but it's a reasonable start. What is the address? (private message me if you like and I'll see if I can find any comps with my system or at least get a good idea of what is around it).

What is the vacancy rate for the area? How many properties for rent/sale in the area? I'm guessing there is a strange mix in the building. What is it, a 3 room, 2 room and studio? What is the eviction rate? Have you been to a landlord association meeting, to see what people are facing as far challenges in the area?

The returns might be great, but they might be low (it looks like it's a low income rental and for that the return looks low). Have you asked around to see what other investors are making for returns?

Sorry for all the questions, but from this info I cannot tell if it's a good long term deal. If you are looking to flip it, i still cannot tell if there are multipliers (like rent being too low, or improvements you can make to raise value, ...) that would make this a good investment.

The end question I would like to know is if you can sell it later and not take a big loss (or even make a gain).

Phil Cutting

Hi Scott,

In general I do it in two parts. Once in the lease and once in an additional addendum that I have the tenant sign.

The lease says something similar to yours, except that the property was inspected prior to them moving in and that they can be charged to fix the problem immediately (just just at move out). The one page addendum to the lease states a similar thing, just worded a little different so that I really get their attention.

Something like the following in the Addendum:

"EXTERMINATING

_______(initial) Lessee has been given a home free of any ROACHES and BEDBUGS. Lessor WILL NOT be responsible for ROACHES and/or BEDBUGS. THIS WILL BE THE SOLE RESPONSIBILITY OF LESSEE(TENANT). The home was inspected for insects, pests and rodents prior to the Lessee(Tenant) moving in."

In the addendum it states that they are responsible to keep the property clean of trash, insects, rodents and pets. Also I remind them that they will be charged for treatment if bugs are found in their house. Also, if a person is very messy or keeps bringing in bugs, I'll evict them.

For some locations I do get an official/professional inspection first. If the last tenant had bugs, always get a professional inspection before they move in. This will carry weight if you get sued for bugs or they try to blame them on you.

It's not such a big problem with my SF houses, but you have to be more strict with the multi units.

I'm not an attorney, this is just what I use.

Good luck.

Phil Cutting