All Forum Posts by: Phillip Faries

Hey @Tarcizio Goncalves i couldn't find the link for it but i just sent the document to you via PM.

Congrats on the new venture!!!

Inheriting tenants isn’t necessarily bad. Have you listened to the latest Bigger Pockets Podcast? @Meghan McCallum touched base on this. This is a business relationship and their these actions could/are affecting your business. As the new owner you should go in and set expectations for them to continue living there going forward.

Regarding your bullets, I too am facing the same thing now (inherited tenants) as I am going to be closing on a 2 flat (going to convert to a 4 flat)

After I close I am going to make it clear that I will be moving into the building once its renovated and I will be looking to make/take the building and over all living condition to a much higher standard. In order for me to do this I need your cooperation and thus the following changes will be made. In my case:

• Brand new coin operated laundry facilities (now its free but the w/d’s are on the verge of death)

• Fully renovated back yard – meaning your dog can’t use it as a bathroom any more without you picking it up…….

• Your items in the basement will need to be relocated as I am turning the basement into a gym/laundry and another apartment

• Both their units will be renovated with new kitchens and baths. (once the basement is done, I will have them temporality moved there, should they wish to stay)

Once I paint the picture of how I am trying to make the building better they should get on board, and if they don’t, come 9/30, non-renewal there lease.

I don’t think you need to be an A-hole, I start my relationships with my tenants very cool and calm and simply layout the rules in my lease addendum. However, there have been a few times where I’ve had to get aggressive and the tenants reaction is like “crap, he’s never like this….. maybe I’m in the wrong.” (mainly pets or painting the walls). Be fair but hold your ground per your lease, it’s your greatest tool in telling them no, but also your enemy if you do it wrong.

Saving turnover cost is great, but I bet your nervous about having to find/pick a new tenant should you non-renew. (better to deal with the devil you know kinda thing) However, if they leave this maybe a good thing, fix up the inside to get more rent or if rent is below market, now is your opportunity to get the rent to market levels. BP has a greatt tool for finding new tenants, a yes/no system which I use and haven’t had any issues finding a tenant that works for me.

Sorry I don’t recall the book but I’m sure someone on here will!

Again good luck and welcome to the team!!!

Any questions just PM me.

@Tony Keri No problem, sorry I don't know the answer to that question. I think ill asked my accountant and get back to you. 

Ive been using Tenant Alert for the last few years. They do a credit, background and eviction check, and give and over all score for the renter. 

The also have the option of sending the link to the potential tenant for them to complete so you don't have any of the tenants personal information (SS #) which can put you at risk if you miss place the info.

Within my ad I list my minimum standards, i.e. 700 credit score, 1 year or more at the job, rent cant exceed 33.33% of over all pay, etc. This weeds out a lot of people. 

From there 9 out of 10 times the people who come to view my place will more than likely qualify to rent from me. This great since I know I'm not wasting my time showing the unit.

After the showing, I ask if the place is somewhere they would be comfortable living in, if its a no, they leave, if its a yes, I ask if I can ask them a few questions. (They always said yes)

I pull out the application and just go down the list of questions while filling it out in front of them.

By the end of it, I've spent a good 10-20 minutes having a conversation with my potential new tenant and got all my questions answers. In addition, right away I can tell them if they qualify or not, pending the credit/background/eviction check and pay/job/reference review.

I find this is the best way for me as they know where we both stand and we can make fast decisions if we want to move forward . the added plus is I'm not following up for the app.

@Daniel Lehrman No problem, definitely sucks if the person is messy, I had the worse guy last weekend. I walked in and his stuff was scattered across the livingroom, food all over the kitchen, his first words to me were "i'm going to clean it up", not hello........ A day went by and still he didn't do anything, so I had simple talk with him about shared living space and he cleaned up no problem. After he left, when I when to clean the room, the bed was in the wrong place, sheets and pillows everywhere and the towels in the bathroom were drenched.... 3 towels.... god know how he did that. Needless to say that sucked cleaning up. Now I've also had some amazing guest, from a skateboarding granny who did real estate law for 50 years, a professional computer hacker, and 2 awesome girls who just wanted to hangout drink wine and eat pizza. All great guest and people. I think doing Airbnb while living in the unit with the guest will definitely make you a better landlord as you see first hand the type of tenants you want and how destructive some people can be. 

Regarding my condo rentals, so far I have been very lucky, my biggest complaint is with the increase in the HOA fee every year coupled with tax increases every year, I cant increase my rent to match the increase as I'm already getting market to above market rent.... so its slowly chipping into my profits. While I love my condos and the locations, I do think its time for me to move on to bigger units, I'm actively looking for 2-4 units buildings with a 2 unit under contract now (with space to make it a 4 unit). The end game will be to 1031 exchange my condos in to multi unit buildings going from 3 units to 6-16 units.

I agree with @Sean Walton , start with a low price and an awesome product to get the reviews, and after increase your room rate. A lot of people I get now start by saying "you have great reviews" and then ask a question about something nearby.

Hi Daniel, 

Every condo I buy I house hack and then Airbnb the second bedroom while looking for my next deal to house hack. 

Few things Ive learned (assuming the HOA is cool with it)

Some people are messy - like disgusting, after they leave you have to clean up. (unless you have a cleaning service which will cut into your numbers.)

Its a lot of work..... on average I have 15-20 days booked a month, 7-10 guest, that's cleaning the place 7-10 times, plus laundry so at 2-3 hours per guest you're looking at 14-30 hours a month. I don't even work more than 10 hours a year on my other 3 rentals combined. 

Competition & Time of year - From my experience, there is a ton of competitors, i'm always watching what their prices are and adjusting mine accordingly trying and beat the competition to get the place rented. (more time, not included above) The time of year is also important, in the winter i'm looking at $40-70 a night and in the summer i'm looking at $99-$150 a night. Your monthly income is never the same month over month. 

Cash flow - Not sure about any other Airbnb'ers but at most i can only get 50-60% of my expenses covered, its better than nothing but i've yet to do Airbnb where it covers all my expenses like a rental does and then some. (15-20 day vs a full 30 day is more than likely the reason coupled with price fluctuation from timing and competition)

The Plus side, 

Im living in an awesome place only paying for 40-50% of my expenses which is helping me save fast for my next deal. 

Ill have the places to myself for 10-15 days a month so its like having a roommate that's not always there so i can enjoy my place and my hard work. 

All my expenses are now tax deductible, from the Mortgage, Heat, Electricity, HOA fees, all expenses, this will come in handy during tax time as it looks like i took a massive loss.

Hope this helped

Phillip Faries

Zillow is also killing me on renting my unit. I'm marketing it for $1,400 per month with a deal saying for the first 3 months rent is $1,300. Market rent is $1400-$1500 per month, Zillow has my apartment at $1,150 per month. Out off the 10 showings, 7 people have asked I lower the rent because its high based off on Zillow and propose $1,150 or lower........ 

Hi @Anja Wehrmann

I use them for both my rental properties. Luck for me i haven't had any claims, so i cant be of any help there. 

That said, should i have any questions about my policy and ways to improve it, they are very responsive and helpfully from that standpoint. 

Phillip

@Eric Hu

I agree with @Samuel DeMass, HOA are a pain with their rules and can risky if the right research on the HOA is not done (typically by the loan officer), i only deal with them because i don't want to move more than 15-20 minutes from work.

I have been targeting Condo's with HOA in the City as well. But my HOA needs to be under $350. I actually just closed a similar place around $100k. With a mortgage, ill cash flow just under 3K per year, that includes 1 month vacancy, a HOA of $280, a annual repair fund of $500 (just gutted, its all brand new) $300 for insurance and $1300 in taxes. Assuming your Taxes are $1500 and your HOA is $560, you're Cash flowing just over $5k. I'm getting 3k with a mortgage and when I've paid it off, my cash flow will be just over $8k, around $9.5k with no vacancy. Where yours is a Cash buy, and just over $5k, $6.5k with no vacancy. Its very important your run the numbers and make sure you can live with the HOA rule and maybe surprises...

Phil