All Forum Posts by: Quentin Mitchell

Wow nice cashflow on a super low purchase price! My property managers won't deal with section 8, so it's hard for me to look at cheaper deals like that one. Congrats on a great deal. Hope it continues to go well for you!

I love section 8 tenants and I personally manage all my properties right now, thank you.

@Quentin Mitchell - Congrats on your first multifamily!  Looks like you found a great deal and things went well.  What were some of your biggest challenges and what advice would you recommend to others who are trying to get their first deal done?  Finally, what's your plan for the future?

I am also with @Jaron Walling, Where was this property purchased?  Neighborhood?

P.S. if you need any help with maintenance in the Chicagoland area, shoot me a direct message!

The biggest challenges was finding the deal after missed attempt after missed attempt. The property is on the westside of Detroit which is where all my properties are located. The biggest hurdle was finding a deal that fit my price point.

The advice I would give is keep going, keep pushing through and you will find your deal and have some guidleines of what you are looking for to make it easier to navigate.

Plan is to continue to buy more multi families to buy and hold.

@Quentin Mitchell Where in Chicago did you purchase property for $15K? That is ridiculously cheap but the cash-flow looks good. 

This was in Detroit and there is where all my investments are, but I live in Chicago, IL

Great thread, and very thoughtful responses from many people. I have a similar situation right now and spent a very long time thinking about what to do. 

@Quentin Mitchell I considered all the things mentioned above, but I also took into account that the tenant is very low maintenance. I have a very small portfolio of single family homes and I also work full time -- so in my thought process the fact that he was very low maintenance was really important. I never hear from the guy. A high maintenance client can really disrupt your life and make you less productive -- especially if real estate is something you do on the side. I decided to raise his rent 4% this year and he was fine with it.

@Jordan Jones:

I think that is a great approach and you are right low maintence tenants are defintely worth alot in my book, I feel that there is no right one answer because all circumstances are different and people have to do what is best for personal situation and that is why different feedback from different people is good.

Great thread. Question, how often to raise rent on below market tenant? Right now my inherited tenant is 20% below market value and I'm doing a $50 increase when I take over. Tenant is on M2M lease.

Debating on a 6 month or 1 year wait to increase another $50?

@Mark Franks:

If you just inherited the tenant maybe wait until you get a better gauge of who they are as a tenant before you try to lock them up long term. After you see they a good tenant then gradually increase rent, also a few cosmetic enhancements can go along way in justifying the rent increase and their preception of the increase.

@Quentin Mitchell

If you’re consistently $100 below market rent, you’re losing $1,200 a year. $6,000 in 5 years. $12,000 in 10 years. In 10 years, investment returns of 7%, you’re losing $17,102. You just gave your long term tenant a $17,102 discount. That’s very generous of you.

My last duplex I just purchased had $1,100 rents

per side. I wrote up a purchase agreement that stated the duplex must be delivered empty. I did some cosmetic upgrades that cost me about $4,000, and had a 1 month vacancy for both sides. Now rents are $1,500 and $1,450. Short term losses followed by huge long term gains.

Having rents below market rent rate is just bad business policy. There are lots of great tenants out there. If your tenant can not afford the rent, they should move.

In an extreme situation you must raise rents and I agree that there are more good tenants out there, but for the lower end of the rent difference it could make more sense to keep a good tenant in there to help to continue to cash at the very least until make the comestic upgrades to make the transition to the next tenant easier. 

I tend to look at all parameters - if I raise rent and they leave how long will the unit be vacant - then I try to analyze the amount in my increase and see which brings in more $$. 

For example if i rent a unit for 1500/mo and i want to bring the rent up to say 1700/mo that is 200/mo. If the tenant leaves when i give that notice and the unit is vacant for one month it would take 8.5 months of increased rent to recoup that one month loss. 

So i always try to keep tenants and increase rent in small increments 

Smart and yes rent increases don't always mean more cash flow considering the above statement you made. Not mention good tenants definitely hold alot of value.