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All Forum Posts by: Chris H.

Chris H. has started 17 posts and replied 69 times.

@James Gates how did you get conventional 30 year financing with both of you on the title?  Or did you structure it differently?

Originally posted by @Scott Kuhnert:

Not to take anything away, but I just want to make sure I understand the numbers here.

Your investor risked $128k to earn 1/2 of a $155 monthly cashflow (0.7% annual ROI) and 50% of the equity when you sell it in 7-10 years?

Seems like you got the much better end of stick.


 On the flip side, he got all that return and got his principal back.  So his actual cost was ... zero? Or six month’s lost interest? Even if you value that at 10% annual interest, or $6,400 for six months.  Half of $155/mo is a 14% annual return on $6,400, plus he has the equity.  

I get that the level of risk (100% financing!) would make this unacceptable with a stranger. But it might be fine with a trusted and reliable partner.

Hi James,

I’ve been thinking about doing an extremely similar partnership arrangement, actually! There’s just one thing I am unclear of (and not sure of even after reading your post) - how do you handle financing  and the title?

Whose name is on the title- the Financer, the Rehabber, or both partners? Whose name is on the loan? It would seem like a conventional bank would not do a 30 year conventional fixed loan on a property with two separate owners right? If they would, what do you do if one of the owners already has 10 financed properties? 

Thanks for your thoughts!

Originally posted by @Kyle J.:

The most serious allegation is that the boyfriend is messing with the electrical panel to the point where power is flickering and/or actually shutting off.  That's not a scenario where you'd want to issue a 20-day notice or wait to do a non-renewal.  That's an urgent situation that needs immediate attention.  I would go over there immediately and inspect your property to confirm if the electrical has in fact been tampered with.  Check your state laws but almost every state has some allowances for a landlord to inspect with 24 hours notice, or even no notice, in the event of an emergency.

The rest of the stuff can be dealt with after you determine the extent of the problem you're dealing with.

Agreed here, but here's the question- if the electricity has been tampered with, what can I do about it?  I'm giving a 20-day notice regardless; if I find evidence of electrical tampering, can I evict sooner?

Originally posted by @Thomas S.:

Check your state codes, learn them now before you get into this business any deeper.

First find out if your state allows you to non renew a M2M lease, if so then simply non renew and the problem is gone unless they force you to evict which will be unlikely.

If you can not issue a non renew begin the eviction process immediately. Tampering with wiring is illegal since they are not th property owner...grounds for evicting.

My state laws allow me to give 20-day notice on M2M, sooner if they don't pay the rent or if there are significant violations of the rental agreement.  I'll have to comb through it as it wasn't my verbage.

Worst part- I'm going to be out of town for two weeks (and the 20-day notice will land in the last few days of my trip) and I haven't converted this over to my property manager yet.

I'm thinking I should put in the 20-day notice to start, then call the police for opinions and schedule a walkthrough - I had told them I was planning to do some safety checks on the electrical system late last week anyway (this was an accident- I texted the wrong tenant) so that works perfect.

Originally posted by @Karen Rittenhouse:

@Chris H. Check your rental agreement to make sure that it states that all occupants over the age of 18 must fill out a complete application and be approved to live in the property.

I had a similar issue once with drugs in the house. I wanted the tenants out before things got really crazy because, believe me, this situation is not going to get better. I sent them a letter saying that the police department had informed me that my property was under surveillance for suspicious activities.

They were out within the week.

:)

 This is tempting, but are there legal repercussions if it is not true?

Full story below: Skip to the bullet points for the tl;dr.

I purchased a few properties to be a rental properties from another landlord, who is something of a slum lord and was willing to offload some houses that need work for a great price with seller financing.

There was a miscommunication between him and his property manager, and the manager put a new tenant in one of the properties about a month before closing (shortly after we signed the paperwork). The tenant is month to month. I am in Washington state, and not in one of the big urban centers like Seattle that have unique tenant laws.

He was apologetic about it but the rent was high enough to cover the payments so it didn't kill the deal- I just figured I'd give them notice down the road when it was convenient for me to make improvements to raise the value of the property (and if they were great tenants, maybe leave them in for a while).

Well, we closed early last month and the seller gave me the pro-rated rent. I decided to make a few minor safety repairs off the bat (including carbon monoxide detectors and smoke alarms- I'm not kidding when I say he was a slum lord!). The tenants are two sisters who cosigned. The the first tenant, who I will call "A", was professional, composed, and gave me a good impression. Her sister, who I will call "B", was tattoo'd up and looked a bit less professional and didn't talk a lot, but left me with a neutral impression. They had children in the house of varying ages (one late teen, one likely around 10-12, etc). I'm not sure whose kids are whose. One of the times I stopped by there was a an adult male in a bed in the living room sleeping.

When my contractor went to do some fixes, he mentioned to me that he found their living arrangements strange; he had to put up a smoke detector while the older teen had a man in the bed, for example.

Over this weekend (approaching the first month I would be collecting their rent myself), Tenant "A" texts me, and then we have a phone conversation. She relays the following information:

  •  "A" makes just enough income to cover the house herself. "B" does not. "A" is also going to college currently to go in to a better career.
  •  Her sister, "B", decided to allow a man/boyfriend that she had only met three weeks ago to live with them. He pays no rent.
  •  "B" has brought drugs and guns in to the home.
  •  They have had multiple disputes about what room "A" is to sleep in because of this.
  •  The other night, she twice lost her homework due to power flickers because B's boyfriend was messing with the electric panel so he could install hardware to grow weed in the closet.

As a result, "A" is giving an ultimatum- either boyfriend leaves, or she does. She asked if I could take her off the lease if she moved, and I, of course, told her that I could not. She also wanted to know if I, as landlord, can tell her sister that her boyfriend has to go.

I obviously don't want this guy in the house. However, I'm a little worried; my mother, a few years ago, gave a similar ultimatum to a renter who was growing weed, and he trashed the house in response. (Luckily, this one needs renovations.)

I also don't know my rights as landlord. Do I have the right to tell tenants who they can/cannot have as guests? Can I threaten eviction (ending of the month-to-month lease) if he does not leave?

tl;dr: bought a house with a newly-placed month to month renter in it. One of the renters tells me the other renter is letting a drug dealer live in the home who is modifying the wiring and wants me to kick the drug dealer out. Can I make this specific demand under threat of eviction/termination of month-to-month lease?

Post: Seeking connect in the Spokane area

Chris H.Posted
  • Investor
  • Spokane, WA
  • Posts 71
  • Votes 24

I know Spokane very well, especially the north side.  Are you going to be buying remotely or looking to come down in person?  Are you looking for a turnkey (or near turnkey) or a full fixer-upper (value play)?

Your numbers are a bit overgeneralized.  $700 seems 'normal' for a basic 2-bedroom apartment, and a single family would go for more; on the other hand, I've got 2-bedroom duplexes with garage that rents for $800-850- and they're not even in premium areas.   It heavily depends on the neighborhood and amenities.    We're going through a bit of a rent surge at the moment due to low vacancy rates.

Keep in mind: as a general rule, in Spokane, with multifamily, landlord pays W/S/G, but with single families, the tenant pays W/S/G.

Post: Direct Mail and/or Paid Per Click Marketing???

Chris H.Posted
  • Investor
  • Spokane, WA
  • Posts 71
  • Votes 24

What's a Zip letter?

Post: When $100 a door becomes a risky proposition

Chris H.Posted
  • Investor
  • Spokane, WA
  • Posts 71
  • Votes 24

The value of $100 per door depends heavily on the circumstance.

It should be after PITI + 10% property management + 10% maintenance reserves, IMO.

I always do 80% of rent minus PITI and consider that my profit margin, these days.  If I self manage, that's gravy.

Would I do $100 per door in that case?  Maybe.  Really depends on the ratios, which determine your risk.

For example: A rent of $1500 on a house with a $1100 mortgage?  I'd be unsure.  You'd have a $250/month cashflow after your property manager.  Every vacant month blows away 4.5 months of your income!  That's a high risk one for me.

But, a 5-plex of $600/mo apartments with $100 cash flow each?  Every day.