All Forum Posts by: Robert LaPrelle

I have lower-income units where a stable, responsible tenant is an incredible asset. Unless they have been in place for at least 5 years, I almost never raise rent on good tenants. I believe that I get returns on the relationship greater than raising rents would bring. For example, I get about 1/3 of my tenants through word of mouth from existing tenants.

I'm trying to transition away from managing all of my properties myself. Mostly that's going pretty well, but I'm running into one big problem. Every now and again, someone leaves a mess in one of my units. This can run anywhere from dog feces all over the basement carpet to 6 inches of clothes covering the top floor of the house. My costs for clean-up are WAY higher than I feel like they should be.

Back when I did everything myself, it wasn't a huge deal. I just took care of it. I think the longest I every spent cleaning up a unit was nights and weekends for about 2 weeks. After taking care of the random trash and the dog feces, I'd bring in professionals for flooring, painting, detailed cleaning, etc. All of my old contractors are still doing great work, but my Property Manager can't find anyone to deal with the bulk messes like what I mentioned above. I sometimes end up paying contractor rates just to get someone to throw away used furniture. I recently had to throw away a perfectly good refrigerator because it was cheaper to buy a new one than to hire someone to clean the mold out of the old one. I have moved out of state, so dealing with it myself is no longer an option. 

My question is this: Who do you call to manage the random, disgusting, and sometimes bizarre messes that tenants leave behind?

Similar to @Yoann Dorat, my first approach would be to try to get the tenant out as soon as possible. Extensive repairs are much more difficult (and more expensive) with someone in residence. You will also get a better quality tenant once the repairs are complete. If she refuses, then your next step HAS to be taken with good legal advice (can be a Property Manager instead of a lawyer), but I always recommend doing your very best to act in good faith which in this case means just accepting the loss of rent until the repairs are complete. I don't know the laws, but I would hope that you would eventually be able to recover all lost rent if you were genuinely dealing with the maintenance backlog as fast as you can.

This sounds like a really unpleasant situation and I'm sorry that you had to deal with it this soon into your REI journey. I can only say that the more you deal with this kind of thing the easier it gets and that if you're doing your job, it won't happen very much in the first place.

Good luck!

Am I wrong, or do most of the differences of opinion here come down to differing definitions of what "wholesaling" actually means? I recently bailed out a friend by getting a contract on his house, doing $25,000 worth of work to it, and then selling the contract for a profit. I certainly hope that no one would accuse me of doing anything illegal or immoral. On the flip side, it seems like there are a lot of "wholesalers" who are just trying to get around normal licensing requirements, in some cases with the specific intention of exploitation.

If you're upfront with both the buyer and seller and you actually intend to follow through on the purchase whether or not you can assign it, then I think it can be a useful way to structure a deal and there's nothing wrong with it.

I think @Matt Devincenzo is probably correct and the lender isn't including rental income in his calculation.

If not, you could always consider bringing in a partner (I like to work with family) where they put the loan in their name for a small ownership share.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Christiansburg.

Fresh out of college and with my first professional job nailed down, I was living in the finished basement on one side of a duplex in a rent-a-room situation. I called the PM to get the owner's number and called him to see if he was interested in selling. He was! Two years later, I looked at my monthly bank statement and realized that after renting out the other side of the duplex and renting the other rooms in my half, I was living rent-free and even pocketing a little every month.

What made you interested in investing in this type of deal?

Three things:
1) After we moved when I was a child, my parents rented out our old house so I had seen RE work before.
2) I am a mathematician and I'm compulsive about running the numbers, so I knew it was a good deal.
3) I always knew that I wanted to get rich.

How did you find this deal and how did you negotiate it?

I called the Property Management company for my rental and asked for the owner's phone number, then called him to see if he was interested. I ran the numbers with my dad and he helped me come up with the price I wanted so that I could go to the meeting prepared. When I met the owner, his asking price was EXACTLY the same as my number. I was young and didn't think to negotiate, but in retrospect I think it would have just hurt me as I ended up buying many more properties from the same guy later o

How did you finance this deal?

Traditional bank loan for 80%, savings for about 10%, and family loan for the remainder. The family loan had a slightly higher interest than the bank loan in order to motivate me to pay it off.

How did you add value to the deal?

The Property Manager had not been maintaining the property. I was young and enthusiastic and I lived there, so it wasn't that hard for me to clear it out one problem at a time. It also helped to be physically there to keep everything ticking along nicely.

What was the outcome?

I still own it and make good money off of it. I kept in touch with the seller and ended up buying three more duplexes on the same street from him over the next two years. 5 years after that, he passed away and his estate contacted me to see if I was interested in the rest of his holdings in the neighborhood. I was.

Lessons learned? Challenges?

I am amazed by how much value I got out of being willing to dive into any job. I once talked to a colleague who had had a tenant who had let their dog defecate on the basement floor. He spent thousands of dollars and it took him about six-weeks to get it cleaned up. The last time I had that problem, I drove over to the house and ripped up the carpet myself, threw it in the back of my pickup truck, and drove it to the dump. The next day I had new flooring professionally installed. Just under$1000

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I didn't appreciate it at the time, but the lawyer was a gem. I meet too many lawyers who think that their whole job is filling out forms.

Your program:
a) Does everything that I need.
b) Looks MUCH better than what I would have made.

Can't wait to try it out! Plus, supporting the Richmond software scene is a big bonus for me!

I own a handful of rental properties, some on my own and some with partners, and keeping my books in order has become way more painful than I think it should be. I usually have one property in active management with the bulk of my properties handled by a PM, so I don't have THAT many transactions every month. I learned Quickbooks early on, but when they moved to a subscription model, it got very expensive very fast. I used Quicken for Property Management for a while, but (while it was great for taxes) the Single-Entry Accounting didn't really track enough for me.

I feel like my needs are simple:
1) Set up a chart of accounts for double-entry accounting
2) Ability to look at whole company or break things down by groups like city, property, or unit. (In Quickbooks, I used classes for this.)
3) Quick, painless entry of data
4) Good reports, charts, and graphs
5) Easy to send data to my Accountant in a format they can use for taxes

Some things I DON'T need:
1) Billing and Invoicing.
2) Tracking vendors
3) Tracking payroll

I work in software, so I can't help but wonder if there is a need in the market for a simple, low-cost, easy-to-use bookkeeping tool?

What tools have other people used? Would YOU be excited to see something designed specifically for REI that lacked all the bells and whistles, but made data entry fast and easy?

The easiest is always friends and family. Barring that, you can look for a local REI meetup.

First of all, congratulations on getting started in real estate investment. Dealing with family can be fraught, but it can also be VERY rewarding.

This is only one possible way to set up the deal, but you could:
You treat the property as a business and any down payment as a private loan to that business. Since you are providing 1/3 of the start-up capital, you own 1/3 of both properties with your daughter owning the other 2/3. You each accrue interest on the loan you made to your business. Your daughter rents her half of the duplex from the business at market rate. All rents collected go into a common pool out of which all expenses (repairs, mortgages, etc) are covered. At the end of the year, if you have more money than you need for a safety fund, you pay down the private loans that you each made to your business until those are cleared away, then you make proportional disbursements. If you're daughter wants to make improvements on her half of the property, then just raise her rent to accommodate.

Lots of ways to make this deal work, but this is certainly one.

Good luck!