All Forum Posts by: Nicholas Rice

Personally, I would not cash out unless I had a plan for the money in the near future. If you do it now, you will have a higher mortgage payment and a lump of cash doing nothing. You can refinance once you decide your next move, paying less for your mortgage in the meantime, and you may be able to cash out for more than 50% of your initial investment depending on future market conditions. 

I really appreciate all of your responses, thanks for all of the great advice!

I ended up going with my gut and compromising to a $50 increase. She's happy and so am I. I'm pretty sure she would have stayed had I increased the full amount, so next time I think I'll harden up and stick with the original agreement.

@CJ M.  That's a good way to look at it. The duplex does cash flow more than I planned.

@Bryan Devitt  Its pretty close to market rate either way and she does have pets that I charge a monthly fee for so that makes up the difference too. Clean pets so far I should add, so I don't foresee major repairs down the road. I could easily fill the apartment with the leasing being up August 1st.  That would be a great way to explain it about not being able to afford the overhead!

@Colleen F.  It's a duplex, and there was no expectation of yard work.  I questioned whether or not I should reimburse her after she asked if she could plant some flowers, but she never asked so I didn't think anymore about it. Also, I should clarify: I posted the apartment for rent in January and signed this tenant on March 1st.  So more of a slow winter I guess.

@Jacob Sampson Great point and I completely agree, I'd hate to end up with a worse tenant if she decided to move.

Hi BP!

Just a little background, I signed this tenant in early spring. Since it was a slow time of year, I had the apartment advertised as a rent special of $950/month until August 1st, then renewing as a year lease at $1050/month. We signed a lease until August 1st with those terms, and she has been a great tenant. Always pays on time, easy communication, keeps the place clean, and even does some raking and landscaping.

My tenant has now asked if I could not increase rent, stating her yard work as a reason for keeping it the same. The yard work is negligible in my opinion. My first thought is to compromise and only increase her rent by $50 per month.  What would you do? Would you stay firm with the original agreement or negotiate with a good tenant to keep them happy and in place? 

@Kristina Heimstaedt I should have been more clear and given more information right away to avoid any confusion. I really appreciate your response, I did not consider that refinancing would cause negative cash flow.  Based on what you and others have said, I am really starting to see the pitfalls this property could bring me down the road. Thanks for the help!

@Jeshua Patrick That's a great point, what if the market changes. I could be stuck with no equity and a bad rental property. Thanks!

@Thomas S. I'm not quite sure how I'm stealing money from her, so maybe you could tell me what you mean. She knows what its worth and she knows that we were interested in renting it out.  Also I really regret using the word "sentiment" now. I did not grow up in this home, I am not attached to it. Thank you for being honest about it being a terrible rental investment, I think I needed to hear that. Also, I like your idea about the loan after selling.

@Kristina Heimstaedt Sentimental value was the wrong term to use, so allow me to clarify a few things. This deal will not be available to me unless I keep the property. It is contingent on that. She won't sell it to me if I'm just going to turn around and flip it for a huge profit a month later. Yes, I agree, it makes sense financially to flip right away, but in this case its off the table. I am not conflicted or hesitant because of emotions towards the house. I also do not appreciate you making assumptions of my personality, abilities, and preparedness based on such little information. I came here looking for advice and support. So, would you walk away from $70k in equity in a house you can't flip to find a better cash flowing property closer to home?