All Forum Posts by: Randy Landman

What "type of house" is it that cannot cool down below 78% of the outside temperature?  Is it a 2 story?  They are usually hot upstairs unless the have 2 units, 1 for each floor.  An older house may need more insulation in the attic or more roof vents to let the hot air escape.  Sizing an AC can be tricky.  If it's too small then it will not keep up on the hot days,  but if it's too big then it will cool the house off too quickly, leaving it still humid.   It's not uncommon for a properly sized AC to run nonstop on the hottest days of the year, but I would still expect it to get cooler than 78 degrees.  I would definitely be getting a second opinion.  See if the utility company offers an efficiency inspection.  Some do for free or really cheap.   

I'm having trouble picturing it in my head from your pictures.  Is this a one piece shower surround, the kind you mount directly to the studs?  Or is this one of those cheap glue up shower panels that glues to a backer board?

 I like your idea Jerry.  Maybe he is just bluffing.  After all, there is nothing but trouble coming for his career if he pursues this plan.  If he is currently a licensed and practicing lawyer, then he stands to lose far more income by losing his license, than he will make in free rent.  Maybe he thinks he can bully you into not filing or is looking for a substantial cash for keys number, like over 10K.  Or maybe he just like power trips.  I think I would call his bluff and proceed with the eviction as fast a possible with a lawyer experienced with evictions in your area. 

I like your plan.  You live for free, but you keep putting what would have been your monthly rent into savings.  Use it to pay down the principal, make a down payment on another property, or reserves for an emergency.  But you have to account for expense.  That $720 a month cash flow you mentioned only accounts for your mortgage and I'm guessing taxes and insurance as well.  You also will have repairs, maintenance, and vacancies.  Are the units metered separately for water?  If not, you will have a water bill too.  See if you can get an expense statement from the former owner of what those expenses were over the last few years.  That will give you some idea of what to plan for.   

I have a full time job and I don't pull any cash flow out of my business at this point, so I have a different situation. But I do have 15 year mortgages on my properties that are mortgaged plus a small HELOC, and I can have 1/3 of my property vacant and still make my minimum payments and basic repairs. So I could withstand a 12 month period with no income on one property plus legal fees. I'm not saying it would be easy, my profits for the year would be basically zero. I'd be working for free, and it would delay our business growth plans by a year. That would suck and it would make me rethink the whole landlording thing. But we did plan for a disaster, and again I'm not relying on the income anyway at this point. If I was doing real estate full time, then I would probably go back to work part time to offset the lose rather than lose the house. That would suck too. It comes down to how much you're leveraged. I'm not fully leveraged at this point, which many investors would say is a mistake. But less leverage allows for you to weather a storm.

it just depends on your market. I have some cabinets that look exactly like that in a rural lower income "C" neighborhood. The tenants are fine with it. But in a "B" or "A" neighborhood I would replace them.

So sorry to hear that Chris.  Thanks for sharing.  It's a good reminder to us all that our vacancy budgets need to also reflect the potential for dead beat tenants and not just vacancy.  Offering cash for keys or pursuing the eviction as quickly as possible is really the only options. 

As far as entering the property, is there a really good reason you need in there?  I understand the need to do inspections, but if I'm having trouble with someone, especially if it is heading in a legal direction, I tend to stay far way from the property.  I don't want any accusations that I did anything illegal.

As far as selling it, that will not force him to move either.  You would just be passing on a bad tenant to another landlord.  I inherited a bad tenant once.  Then I quickly realized that the property went up for sale about a month after the tenant moved in.  I suspect they realized they made a mistake , jumped ship, and made the next guy (me) fix their problem.  I ended up getting them out without too much pain and I love the property, so all is well.      

I see your doing this full time, so I'm assuming you have other properties.  Is there enough cash flow from other properties to allow you to keep the house?  That would be terrible to lose your house over this guy.     

Start downloading the Bigger Pockets podcasts.  Even if the topic is outside of the business model you are interested in, download it anyway.  You will still learn something from every one of them.  Listen while you drive, work (if possible), clean the house, or do laundry.  I'm listening to one while I mow my yard this morning.   Have you picked out an area in St Charles to focus on?     

He didn't keep track of them? They would be in his taxes, did he file taxes? If he didn't keep track of his income and expenses, then I would bet he also didn't take very good care of the property. Be sure to estimate high for you repairs and cap ex for the first 5 years while you fix his mistakes.

Ok then here is my real answer. It would depend on other factors. I actually got started with no money down, but I had a great paying and stable job, no debt, good credit and plenty of collateral. I didn't need the cash flow right away and was able to pay down the 100% financing with my income. So if I still had that situation plus $30,000 I would start off the same way I did with a duplex close to home. I would do a duplex over a SFR because if one tenant moves, you're only losing 50% of your monthly rent instead of 100% with a SFR. What I would do different is to be more patient. Don't be in a hurry and buy something just to get started. Don't overpay. Wait for a good deal, or make some low ball offers. But if I had $30,000, a bad income, and a ton of debt, then I would use the $30,000 to improve my personal situation first.