All Forum Posts by: Rick Reed

...keeping an open mind, I also wonder if I should try getting the existing tenant to go through a formal application process (credit, criminal, income checks) and leave the place as is while they are living there. They seemed happy when I met them briefly. Could I offer a first right of refusal at a higher rent price? I'm not sure how such a thing would be executed either. Any thoughts on this idea as well?

Congrats and good luck. Keep us posted with your progress.

I'm trying to decide how best to approach an offer on my first rental purchase. The seller's agent states that the existing tenant would like to stay on a month to month basis, but has no application from them, they have a small dog (the place wreaks of urine), no security deposit, the owner is the manager without any maintenance records, and the rent is a good $200 month below market. The place needs a lot of basic work too just to make it rentable and meet basic code requirements. I haven't gotten an inspection yet because I'm still trying to figure out how to negotiate the deal, so who knows what other issues need to be addressed.

Is it possible to word a contract to specify that the tenant must vacate before closing? Do I just make an offer, close, then give notice to the tenant that they must leave after 30 days? I would prefer the tenant leaves prior to my inspection in case they do any damage because they were asked to leave.

How would you address this issue?

You hit the nail right on the head. I've seen a lot of that in Plano. Just wondering how other investors view those things. Personally, I would think every little bit helps.

I just made an offer on a small townhouse that I plan on keeping long term, so thanks for the HVAC and HW heater idea. I haven't thought that far ahead yet, I just started researching property management companies in case my offer is accepted.

I've been looking for my first rental property over the past few weeks. While looking for single family homes, I take an occasional break by looking for property management companies. Whenever I come across a new PM company I check out their listings in the same areas I'm looking to purchase in so that I can get a feel for how they are marketing their properties. The vast majority of the houses that are up for rent are very dated inside. Most of the less expensive houses in my surrounding area are typically built in the 70s and 80s, so I understand why they are dated. At first glance one can't help but think investors have purchased these houses, slap white paint on the walls and get them listed for rent as quickly as possible.

I can't help but wonder if updating such a dated house would help it rent faster since it looks newer inside. By updating, I mean simple things like trendy paint colors (pale grays, browns, etc...), painting over interior exposed brick around the fireplaces, neutral colored carpeting instead of the stained pastel blue carpeting, painting honey brown cabinetry white, replacing beat up brass light fixtures with inexpensive nickle or chrome fixtures, etc... Mostly all of the more expensive houses being built these days, in the same areas, reflect this style. Does it make sense to follow what new builders are doing since they seem to sell new houses very quickly?

The type of updates I'm thinking of could be applied rather inexpensively when compared to the loss of rent because of how long a dated property could sit vacant. I'm not talking about spending money where it isn't needed (replacing perfectly solid cabinets for example just for something more stylish).

I'm sure there is no right or wrong answer to this, but I'm wondering what you opinion is on updating a house and considering it as marketing.

In addition to what Ed stated, the numbers you provided look like they could put you in the red on a monthly basis, or only break even.

Have you factored in taxes, vacancy allotments, insurance, repair allotments, and (if applicable) HOA dues? Typically, with all of these factored in, your monthly rent should be a minimum of 1% of the total purchase price. This is just a general rule of thumb, but with all of the potential properties I've run numbers against, this rule has held true.

Welcome, Jim! Glad to see someone else from the area.

The folks here will definitely help you off the island. I'm much the same way, but thanks to the wealth of knowledge (and encouragement) from folks on here, I'm about to make an offer on my first rental.

Don't be shy about posting your progress either. Your experience will be invaluable to others, especially newbs like me.

Again, welcome.

Thanks for the input. I had a feeling that leaving the HOA dues for a tenant to pay would leave me too exposed for problems.

I have a feeling I've been over thinking this a bit too. As @Ursula B. said, I can just tack on some of the HOA fees to the rent. It doesn't have to be all or none.

Thankfully, only one other unit in the community is up for rent. The rest are occupied or owned so I do have some fudge factor with my pricing.

I'm looking to purchase my first rental and just found out that the HOA dues are $165 month. BUT, that amount covers exterior maintenance, water, and trash pickup. The property is a townhouse.

If I include the HOA dues in the rent and try to remain competitive with other rent prices in the same community, the numbers are very tight and only leave about $155 in monthly cash flow.

My question... Would you have the tenant pay the HOA dues directly since it includes water and trash removal, or would you include it in the rent?

If the tenant is to pay the dues directly and just decides not to pay them, could I face a lien against the property?

I have not looked that far out. Since this will be my first rental, I'm trying to stay in areas I'm familiar with. It doesn't hurt to look though, I suppose.