All Forum Posts by: Ryan Mancuso

Short Answer: 

I am going to answer this assuming you are not using a Realtor.

In Arizona it is the responsbility of the seller to pay their agent the commission and I would assume it's the same in Michigan, so really this shouldn't be your problem.

I don't know the specifics of the Detroit market, but where I am in Arizona, as a Realtor, I have access to a form called an "unrepresented buyer."  Therefore, if I represented a seller in the sale of their home and a buyer came as you did, I still have recourse to get paid my commission. 

You can always talk to the agent directly about this. They will really appreciate that you want them to get paid.

I would start with who you use for car insurance. If you don't like their rates, then I would move to an independant insurance broker local to your area.

I would also talk to other people who own homes in the area (neighbors, friends, family, etc) and see what they pay. Maybe it's more in your area because of the heightened risk of natural disaster.

If it's your primary residence, it shouldn't be more than $100 a month. I have a 1500 sf home and its about $60 a month. It also depends on the cost to rebuild it, and any upgrades to the plan you have.

It will be more expensive if it is a rental home, but $1900 annually still sounds high.

Good morning!

I am not a lawyer so any legal advice should be in conjunction with the advice of a lawyer or property manager in your state and local area.

With that being said, I was in property management for 6 years and managed over 300 doors at a time, so I understand your frustration. 

I would get them to sign a new lease. It's cleaner and holds them to a clear standard. If you are worried about them moving out, you can probably find another renter in no time and increase the rent (if your area is like most and rentals are in high demand).

I would also add in the new lease that you will do a mid lease inspection. This way you can keep them accountable to the conditions of their lease.

They don't have to be the best housekeepers while they live there, its when they move out eventually that matters and to cover yourself I suggest the following verbiage (again, this is only to be taken as advice, and not legal counsel). Also, for future reference, I would have them do a move in inspection sheet so that the condition upon move in is known and is a reference point for whenever they move out.:

The property must be returned in a clean and undamaged condition acceptable to the LANDLORD. The move out calculation (their deposit minus any cleaning and repairs you have to do to get the property back to "prior to their move in" condition) will be returned only after deducting charges for all required cleaning and/or repairs. Depending on your state laws, you ususally have 2-3 weeks to return the deposit to them.

SECURITY DEPOSITS:

I would just have one security deposit on file and make them work out who owed what. With all the transience of these tenants, you want to make sure you put the onus on them.

For example. Tenant A,B, and C that live there give you a check for the sec dep and if C moves out, then A and B have to figure out how they want to handle it, but that shouldn't be your problem. You should only disburse funds once they all (or the last remaining tenant) moves out.

Please reach out if you have any more questions! I am happy to help.

Investment Info:

Single-family residence buy & hold investment in Prescott.

Purchase price: $169,000
Cash invested: $34,000
Sale price: $450,000

A 3/2 I bought to house hack. When I bought the property, I put 5 other friends in it (I shared a room so I could charge more for the master bedroom). They paid the mortgage for me and I netted $150 per month, slowly fixing things as they came up. Living in it and being a landlord and friend was a hard balance,

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

I had friends who needed a place to live and I could live rent free and cash flow.

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

Through the MLS, I used an agent as I was not licensed at the time

How did you finance this deal?

Conventional

How did you add value to the deal?

I slowly changed the interior over time (paint, flooring, cabinets, baseboards, shower

What was the outcome?

I

@Bob Okenwa That is great advice. And the same advice that another agent gave me who is up here. I will look further into the property and see if there is room for negotiation. Thank you.

If a property has been on the market for a while (over 100 days) is it OK to "low ball them? 

Example. There is a duplex that has been on the market for 111 days listed at $244,900 in Prescott , AZ (about what they're going for). If I run the rental property calculator and my "home run" price is $185,000, is that too low of a price to offer? Will I gain a reputation as a lowballer? Or is it better to just offer and have them say "no?"

@Account Closed There are a few red flag, BUT I don't think you're naive to consider them. You should come up with strict criteria whether it is renting to these people or others. That being said, your gut will tell you a lot and should factor in. Here are questions I would ask (that you may have already asked): How was the house fire started? What are the felonies for? How is their rental history beyond the house fire? Do they jump from job to job, or do they have strong employment history and their boss will vouch for them. Do they make enough to cover rent plus monthly expenditures (3 times the rent is a good gauge), etc. There is a lot to consider when renting to people beyond their criminal history.  Trying to get a full picture of them as people and tenants should be the goal. And you can do all that without committing to them renting your house. 

I am looking at a flip or rent and hold in my area, but the MLS says "Property will be sold as is with no repairs made by either the seller or the buyer. No SPDS, no CLUE." Is this exclusion of SPDS and CLUE because they don't want to disclose, or because they never lived in the property and can have deniability regarding what to disclose? Would it be a good idea to look into it to flip with this clause in the listing?

Investment Info:

Single-family residence buy & hold investment in Prescott.

Purchase price: $169,000
Cash invested: $34,000

A 3/2 I bought to house hack. When I bought the property, I put 4 other friends in it ( up to 5 at one point and I shared a room so I could charge more for the master bedroom). They paid the mortgage for me and I cash flowed $150 per month, slowly fixing things as they came up. Living in it and being a landlord and friend was a hard balance, but it was worth it. I was able to upgrade the home a lot before I got married, because of the rent I paid myself instead of someone else.

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

I was tired of paying rent to someone else, I had the money to do it and I didn't want to waste it on something that would only go down in value. There was a lot of potential in this home and it was a great deal.

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

I had a friend who is a real estate agent who looked for me and sent listings my way. he knew what I was trying to do (house hack but I didn't know it was called that at the time). It was listed at $180,000 but because the home inspection showed some things that needed to be done and I knew they wanted to sell quickly (since the previous owner passed away and this was to settle the estate), I got them down to $169,000.

How did you finance this deal?

Since it was going to be my primary residence I just did an FHA loan. Nothing fancy

How did you add value to the deal?

My real estate agent friend sent me the listings and showed me the properties, but I scoured Zillow and the MLS (someone gave me access at that point since I did not have it) to research other recently sold properties to facilitate a deal.

Lessons learned? Challenges?

As with any older house, there were some things that needed work, like it had no A/C and only radiant heat (built in 1978), so dealing with that was tough while HVAC was installed, but learning to be a landlord was a great, but tough lesson. Getting rent, fixing things that were broken and listening to the advice of others helped me greatly.

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

Yes, I worked with Luther Kraxberger who is a friend of mine. Very sharp, reliable guy and I'm thankful for his help to find this deal!