All Forum Posts by: Richard Sherman

@Kristi Kandel lots of good advice above.  100% make sure you understand the process.  I would also shop prices for accommodators.  The best deal I have found was through the title agency I use and the accommodators have been AWESOME!  in the past 2 years we have done  3 successful 1031s ( 4 into 1, 2 into 1 and 1 into 7 (low priced Memphis houses using value rule for replacement properties).  Absolutely have an idea on the properties you will use as your replacement before you close and maybe write in some wiggle room on your sales contract with the properties you are selling if the buyer will play ball.

You are going to have a tough time finding loans greater than 75% LTV on purchases for commercial.

I would take a lease template for NY (BP probably has one) and modify it with an addendum, you can put in there whatever you want.  MAKE SURE YOU SIT DOWN and talk to them about it and everyone has the same expectations!

Agreed on NOT sub metering.  It is not worth the cost, especially for such a small complex.  MIGHT be worth it on much larger properties.  Implement RUBS (you will need an addendum for your lease as well.)  ALSO!  Be careful and check your state law, for example, in Oregon (I think this is common) you can not MAKE money on this, so you need to actually collect LESS than the actual bills.  Be careful and look at your state laws regarding this.

@Janet OrgillNowhere in the lease, form or anything else (starting and end dates of lease for example) does it indicate what they wanted it to be?  What does the tenant say about it?

When the new lease was signed was the rent raised from what it was previously?

@Ryan Mellon Make sure you check your state law regarding subsidized housing.  Another member mentioned avoiding renting to them.  I do not agree with this as in my State (Oregon,) it is ILLEGAL to base a decision on if they have a  voucher or not, so make sure you know the laws in your State.  There are good and bad in every group and at some properties, we have a high proportion of subsidized renters and in others (more expensive places) we have none.  There are pluses and minuses as others have said, you know a portion of the rent is paid every month on time and you have someone that in many cases can help manage a problem renter etc.  There is, of course, more paperwork and hassle though.

@Darius Smith Congrats on the deal!  This is not a big deal, you will have many tenant issues and just remove the emotion from it.  Here is some advice.

1. Get an exterminator service when you get moved in and keep it going, this is good preventative maintenance.  Make sure all exterior vents etc are properly sealed against rodents etc.

2. If he has been in the unit for a while I would do as Rebecca mentioned, raise the rents and let him stay if he wants.  Just know you could be forcing vacancy (which is not a bad thing, just be intentional about it..i.e. are you ready to turna  unit now or better to wait for spring .)

3. LEARN your city and state renting laws.  These are all easy to find and you need to know them!  Google renter rights for your city/county/state and read up!  It is your job to be an expert.  My guess, in Indiana, you can give 30-60 day notice for no reason if you want him out (in writing with proper forms which BP has and you can probably raise rents as much as you want (check other rentals in the area on craigslist to get an idea of what is really renting out there.

@Rebecca Arko Sorry if you answered this already, but whats the total debt, average interest rate and what the household income?    Those numbers may change my answer but I THINK I say go for it...4 unit (largest you can get that still gets a conforming mortgage, get a 30-year loan, live in one of the units, get the hang of it and repeat a few more times.  KEEP YOUR EXPENSES to nothing, no new cars, no fancy anything...every dollar you spend on things that go down in value represents thousands of future dollars you just have stolen from yourself.

@Will C.   I agree 100% with this.  ALWAYS collect an application fee and use some of that fee to process the application and run the background check.  

@Richard Lovering Agreed 100%!