All Forum Posts by: Lucas Thomas

Quote from @Lucas Thomas:

Quote from @Kevin Sobilo:

Quote from @Lucas Thomas:

Quote from @Kevin Sobilo:

Quote from @Lucas Thomas:

Quote from @Kevin Sobilo:

@Logan M., a MTM agreement probably does make sense in your situation.

However, in other situations I think a 1 year lease makes better sense. I live and invest in what I consider a neutral state (PA). Fair to both landlord and tenant.

For me leases make sense because I want good tenants! The difference is I can attract good tenants which is perhaps different than your MHP. If I rent a B class SFH, I can attract a good tenant, BUT a good tenant has worked so that they have choices in life. So, I look carefully at the "value proposition" I offer a tenant. I want to not only attract them but also keep them 2+ years to reduce vacancy/turnover.

A tenant wants stability and a good tenant has CHOICES. I want that good tenant to choose ME and want to STAY WITH ME! So, a 1 year lease is more attractive to them and also to me.

A lease is more attractive to me because I have never needed to try to evict for any reason other than failure to pay and have had no difficulties doing that. I suspect that 99% of evictions are failure to pay so the ability to nonrenew a tenant isn't any great benefit for me.

I do understand with a rougher tenant pool, you may need to more actively manage the tenant's and their behavior. So, I can see how MTM probably makes sense and it would too for me if I was renting D class rentals in my area.

Depends on the state!

In Phoenix, I do 2 year leases and discount the rent a bit if they sign it. 

But the court system works wonders there. 

Excellent! I would do that as well. I tried offering 2 year leases for a little while but tenants were leery of the long term commitment maybe because they were new to me and a longer lease seemed "unusual" to them and therefore scary.

If my typical tenant was a little more sophisticated financially they probably wouldn't be so leery about it but I typically get good decent working class people even in my B class rentals.

 The strategy to sell it is this: 

I offer a 2 year option and I'll discount your rent by $50 a month. That's a $1200 savings and I offer it so I don't have to track a millions renewal each year and it stops me from unreasonably raising your rent in 1 year or giving you a 30 day notice at the end of the year. Why wouldn't you want that protection? 

This strategy has worked for me as I don't like one-and-done tenants and this gives the "Lifers" to identify themselves. HA. 

Landlords lose all their money on turnover. 

Maybe I'll try it that way. I forget if I offered a discount or just no increase. I typically rent a little less than what many other landlords do. So, I could easily advertise $50 higher and offer the discount without sacrificing interest in the property based on the advertised price.

I also try to avoid 1 and dones. I scrutinize the value proposition I offer tenants pretty heavily so that I can try to exceed a 2 year average stay and I definitely exceed that. I just did some quick math and my current tenants have been with me an average of about 3.2 years and that number is skewed low because of a couple units more recently bought and put into service.

EXACTLY!

Bake the Discount Into the Price. 

You deserve a Premium for taking a one-year contract. 

 I end all of my ads with: 

Sign a longer lease, get a discount on rent. 

Quote from @Kevin Sobilo:

Quote from @Lucas Thomas:

Quote from @Kevin Sobilo:

Quote from @Lucas Thomas:

Quote from @Kevin Sobilo:

@Logan M., a MTM agreement probably does make sense in your situation.

However, in other situations I think a 1 year lease makes better sense. I live and invest in what I consider a neutral state (PA). Fair to both landlord and tenant.

For me leases make sense because I want good tenants! The difference is I can attract good tenants which is perhaps different than your MHP. If I rent a B class SFH, I can attract a good tenant, BUT a good tenant has worked so that they have choices in life. So, I look carefully at the "value proposition" I offer a tenant. I want to not only attract them but also keep them 2+ years to reduce vacancy/turnover.

A tenant wants stability and a good tenant has CHOICES. I want that good tenant to choose ME and want to STAY WITH ME! So, a 1 year lease is more attractive to them and also to me.

A lease is more attractive to me because I have never needed to try to evict for any reason other than failure to pay and have had no difficulties doing that. I suspect that 99% of evictions are failure to pay so the ability to nonrenew a tenant isn't any great benefit for me.

I do understand with a rougher tenant pool, you may need to more actively manage the tenant's and their behavior. So, I can see how MTM probably makes sense and it would too for me if I was renting D class rentals in my area.

Depends on the state!

In Phoenix, I do 2 year leases and discount the rent a bit if they sign it. 

But the court system works wonders there. 

Excellent! I would do that as well. I tried offering 2 year leases for a little while but tenants were leery of the long term commitment maybe because they were new to me and a longer lease seemed "unusual" to them and therefore scary.

If my typical tenant was a little more sophisticated financially they probably wouldn't be so leery about it but I typically get good decent working class people even in my B class rentals.

 The strategy to sell it is this: 

I offer a 2 year option and I'll discount your rent by $50 a month. That's a $1200 savings and I offer it so I don't have to track a millions renewal each year and it stops me from unreasonably raising your rent in 1 year or giving you a 30 day notice at the end of the year. Why wouldn't you want that protection? 

This strategy has worked for me as I don't like one-and-done tenants and this gives the "Lifers" to identify themselves. HA. 

Landlords lose all their money on turnover. 

Maybe I'll try it that way. I forget if I offered a discount or just no increase. I typically rent a little less than what many other landlords do. So, I could easily advertise $50 higher and offer the discount without sacrificing interest in the property based on the advertised price.

I also try to avoid 1 and dones. I scrutinize the value proposition I offer tenants pretty heavily so that I can try to exceed a 2 year average stay and I definitely exceed that. I just did some quick math and my current tenants have been with me an average of about 3.2 years and that number is skewed low because of a couple units more recently bought and put into service.

EXACTLY!

Bake the Discount Into the Price. 

You deserve a Premium for taking a one-year contract. 

Quote from @Lucas Thomas:

Quote from @Kevin Sobilo:

Quote from @Lucas Thomas:

Quote from @Kevin Sobilo:

@Logan M., a MTM agreement probably does make sense in your situation.

However, in other situations I think a 1 year lease makes better sense. I live and invest in what I consider a neutral state (PA). Fair to both landlord and tenant.

For me leases make sense because I want good tenants! The difference is I can attract good tenants which is perhaps different than your MHP. If I rent a B class SFH, I can attract a good tenant, BUT a good tenant has worked so that they have choices in life. So, I look carefully at the "value proposition" I offer a tenant. I want to not only attract them but also keep them 2+ years to reduce vacancy/turnover.

A tenant wants stability and a good tenant has CHOICES. I want that good tenant to choose ME and want to STAY WITH ME! So, a 1 year lease is more attractive to them and also to me.

A lease is more attractive to me because I have never needed to try to evict for any reason other than failure to pay and have had no difficulties doing that. I suspect that 99% of evictions are failure to pay so the ability to nonrenew a tenant isn't any great benefit for me.

I do understand with a rougher tenant pool, you may need to more actively manage the tenant's and their behavior. So, I can see how MTM probably makes sense and it would too for me if I was renting D class rentals in my area.

Depends on the state!

In Phoenix, I do 2 year leases and discount the rent a bit if they sign it. 

But the court system works wonders there. 

Excellent! I would do that as well. I tried offering 2 year leases for a little while but tenants were leery of the long term commitment maybe because they were new to me and a longer lease seemed "unusual" to them and therefore scary.

If my typical tenant was a little more sophisticated financially they probably wouldn't be so leery about it but I typically get good decent working class people even in my B class rentals.

 The strategy to sell it is this: 

I offer a 2 year option and I'll discount your rent by $50 a month. That's a $1200 savings and I offer it so I don't have to track a millions renewal each year and it stops me from unreasonably raising your rent in 1 year or giving you a 30 day notice at the end of the year. Why wouldn't you want that protection? 

This strategy has worked for me as I don't like one-and-done tenants and this gives the "Lifers" to identify themselves. HA. 

Landlords lose all their money on turnover. 

 WARNING: 

2 Year Leases - This Strategy only works in STATES that Have Good-Working Eviction Court. MANY STATES DON'T!!!

Quote from @Kevin Sobilo:

Quote from @Lucas Thomas:

Quote from @Kevin Sobilo:

@Logan M., a MTM agreement probably does make sense in your situation.

However, in other situations I think a 1 year lease makes better sense. I live and invest in what I consider a neutral state (PA). Fair to both landlord and tenant.

For me leases make sense because I want good tenants! The difference is I can attract good tenants which is perhaps different than your MHP. If I rent a B class SFH, I can attract a good tenant, BUT a good tenant has worked so that they have choices in life. So, I look carefully at the "value proposition" I offer a tenant. I want to not only attract them but also keep them 2+ years to reduce vacancy/turnover.

A tenant wants stability and a good tenant has CHOICES. I want that good tenant to choose ME and want to STAY WITH ME! So, a 1 year lease is more attractive to them and also to me.

A lease is more attractive to me because I have never needed to try to evict for any reason other than failure to pay and have had no difficulties doing that. I suspect that 99% of evictions are failure to pay so the ability to nonrenew a tenant isn't any great benefit for me.

I do understand with a rougher tenant pool, you may need to more actively manage the tenant's and their behavior. So, I can see how MTM probably makes sense and it would too for me if I was renting D class rentals in my area.

Depends on the state!

In Phoenix, I do 2 year leases and discount the rent a bit if they sign it. 

But the court system works wonders there. 

Excellent! I would do that as well. I tried offering 2 year leases for a little while but tenants were leery of the long term commitment maybe because they were new to me and a longer lease seemed "unusual" to them and therefore scary.

If my typical tenant was a little more sophisticated financially they probably wouldn't be so leery about it but I typically get good decent working class people even in my B class rentals.

 The strategy to sell it is this: 

I offer a 2 year option and I'll discount your rent by $50 a month. That's a $1200 savings and I offer it so I don't have to track a millions renewal each year and it stops me from unreasonably raising your rent in 1 year or giving you a 30 day notice at the end of the year. Why wouldn't you want that protection? 

This strategy has worked for me as I don't like one-and-done tenants and this gives the "Lifers" to identify themselves. HA. 

Landlords lose all their money on turnover. 

Quote from @Kevin Sobilo:

@Logan M., a MTM agreement probably does make sense in your situation.

However, in other situations I think a 1 year lease makes better sense. I live and invest in what I consider a neutral state (PA). Fair to both landlord and tenant.

For me leases make sense because I want good tenants! The difference is I can attract good tenants which is perhaps different than your MHP. If I rent a B class SFH, I can attract a good tenant, BUT a good tenant has worked so that they have choices in life. So, I look carefully at the "value proposition" I offer a tenant. I want to not only attract them but also keep them 2+ years to reduce vacancy/turnover.

A tenant wants stability and a good tenant has CHOICES. I want that good tenant to choose ME and want to STAY WITH ME! So, a 1 year lease is more attractive to them and also to me.

A lease is more attractive to me because I have never needed to try to evict for any reason other than failure to pay and have had no difficulties doing that. I suspect that 99% of evictions are failure to pay so the ability to nonrenew a tenant isn't any great benefit for me.

I do understand with a rougher tenant pool, you may need to more actively manage the tenant's and their behavior. So, I can see how MTM probably makes sense and it would too for me if I was renting D class rentals in my area.

Depends on the state!

In Phoenix, I do 2 year leases and discount the rent a bit if they sign it. 

But the court system works wonders there. 

Quote from @Logan M.:

I bought my first Mobile Home Park in 2018 and started to realize that every tenant was on a month-to-month lease. At first, I thought this could be a negative but I started realizing a few benefits.

1. Many tenants in MHPs don't care about keeping their credit up when life gets hard and are willing to break their lease regardless of length. You can't force someone to live somewhere or to pay if they just can't.

2. The flexibility to boot problem tenants far outweighs being held hostage by the bad ones.

3. It allows a lot of flexibility with future highest and best opportunities.

4. You can decide when to increase rents.

5. There is nothing cheaper to rent in my market so there are ten potential tenants for each space and because of this, the tenants would be happy being on a month-to-month lease for ten years than finding another place to live with a year lease.

I know some of these sound a little brutal but I would rather leave it up to me to make decisions than have my hands tied. 

Yes!

I'm a landlord in several states and have found some states, its almost a requirement to only rent month-to-month because either the court system doesn't work well, a smart tenant can game a 1 year lease, and the judges can take something as "black and white" as "Non-Payment" of rent and make it a NUANCED conversation. The Judges can't nuance a 30 day notice that ends the lease and ends tenantship.

L. Thomas

Quote from @Daniel Vanhala:

Hi! Is this possible and/or common? Thanks!

DSCR are a "Non-Qualified" Mortgage. Which means they don't have to follow strict government regulations to be sold to Fannie/Freddie.

Because they have looser guidelines, its up to the originator of the Loans to include an assumability clause. So potentially any DSCR could be assumable. The issue is getting access to the promissory notes to see if they have such a clause. You would have to ask the current borrower on the note for a copy of the promissory note to see if it has an assumable clause. You can also ask a mortgage broker to ask his network of lenders if they have assumable clauses as boilerplate in their loan products so you can just ask who the originator was and know before searching the Promissory Note.

At the end of the day, you always need to find that assumable clause.

Quote from @Ophelia Wilson:

@Lucas Thomas the area is low income however it has me doing more hands on than i want to. Killeen overall is a melting pot and I do have homes in nicer neighborhoods that do require way less attention. I think it boils down to preferences.

If you do it right, it doesn't have to be hands-on. 

I manage 30 doors in 5 states and I'm unsure where a few of my actual properties are... but they make money so it isn't terribly important! Ha

My example for this is.... does the owner of the Subway work at his Subways? 

Which is why you have to create "Landlord Systems" so you never have to set foot in town. 

You can message me directly if you want and I can share more.

:D

L. Thomas

Hello!

I've been an Exclusive Landlord Real Estate Agent for a Decade! An Asset Manager, House Hacker, and Landlord for that Decade as well!

Top 3 Things You need in Your Investment Real Estate Agent

#1: Experience: You really need an agent with a property management/Investor background as most have no experience with what your trying to do. Especially in the Rental Portfolio market as Agents are terrible at getting comps on rent, have never rented to Section 8 tenants, and really have no clue on what they are doing when it comes to Rentals. I've converted and corrected hundreds of mismanaged properties into rentals and cash-flowed all of them. Evictions, Cash-for-keys, rehabs, etc. Experience is the hardest to come by as you can only get it by doing it! 

#2: Landlord Mentor: They need to be willing to teach you basic landlording skills such as Contractor Stable(Finding, Maintaining, and Gut-Checking Contractors), Standard Operating Procedures for dealing with Crises (Collapsed Sewer Lines, Blown off roofs, Hot Water Repairs, AC Out, Mold, Tenant Disputes, etc. etc.), and Debt-Collection/Evictions (How to Bleed a Rock.) I've mentored many many landlords in my career and always try to be there source for Landlord issues along with a local attorney. 

#3: Knowledge: You need someone who has the experience, the willingness to teach you, and has the knowledge to survive in that rental market. They need to know the general costs of every repair, the base rent for any bedroom count from Class A-Class D, how easy are the evictions (Self versus having an attorney), and can be a source for you after the close with any questions you may have. 

I've exclusively represented landlords for the last decade and can tell you, these are the 3 most important things. As many times agents will disappear after the close which is why its important to ask a lot of questions about that agents post-care of his clients after they purchase rentals. Can't let them abandon you and get fed to the dogs. 

Hope this helps!

L. Thomas

Hello!

I am a Licensed Mortgage Broker who specializes in DSCR.

The guy doesn't understand the product and probably isn't a landlord. 

I'm a Landlord and use DSCRs exclusively in my business!

Their are lenders who will go under the 1%, but usually the investment isn't good as then you are barely breaking even on the rent vs. mortgage. 

The best thing to do is start looking into multifamily 1-12 units and to look out of state if your current market isn't accommodating you. I'm personally buying in 6-7 different states due to this issue. 

What are you looking for in your investment?