All Forum Posts by: Ryan Morrissey

I own 18 units in the Fall River / New Bedford area and currently have 5 vacancies. 3 units are on market, and 2 more are being cleaned up and will be on market next week. A couple of the units already on market have been on for several weeks, and one of them has been on market for about 6 weeks.

My property manager has a rental agent in house who is responsible for placing tenants, but I just don’t get the sense that their tactics for placing tenants are super effective as it’s taking a long time to fill the vacancies and prospective applicants that they’ve sent me are not very good and I’ve rejected them.

I’m looking for ideas from other landlords/PMs in the area on how I can most effectively increase the funnel of quality applicants to my vacant units, or if there are specific resources/agencies that people have used to do so. I’m willing to pay for those placement services if it can bring me good, qualified applicants that get placed in the units.

Thanks,

Ryan

Have any landlords out there successfully executed any strategies for removing non-paying tenants aside from eviction?

We just tried offering cash for keys for the first time and that worked to get the tenants out quicker and they left the unit in better shape because that was part of the deal to get the cash. It still leaves a bad taste in my mouth though because i absolutely hate the concept of paying someone money after they just screwed me over for a months rent, but overall I would say it was pretty effective.

We did $500 for the cash for keys transaction and for the tenant to move out by end of month. That was for a unit where the rent was $850 and where evictions typically cost about $1,000 in attorney’s fees minimum, plus the judge usually gives them an extra month to move out. So we probably saved like $500 and limited the lost rent to 1 month instead of 2-3 months.

Has anyone tried any other strategies that have been effective? For others who have done cash for keys, how much do you typically offer?

I am invested in 18 units in Fall River and New Bedford, MA which, for those are unfamiliar with the area, would be considered a c-class investment market in my opinion. Early lease terminations and evictions are fairly common and from my experience, happen at a 10-15% clip without batting an eyelash. By contrast I also have some property in Boston, MA where non-payment of rent is something that rarely happens and has never happened to me in 4 years of being a landlord there.

I have a couple questions to ask other landlords in that area (or similar “c-class” areas):

1.) Do you bother trying to chase evicted or terminated tenants for non-payment of rent? Or given the dynamics of the market and potential low likelihood of recovery, do you not even bother? What factors drive your decision to pursue collections versus leave it alone?

2.) For those who have experience with collections services in the area, is there anyone you would recommend working with for this? I have several cases where I’ve been burned for more than a couple grand and am looking to recover as much as possible

Thanks,

Ryan

@Will Stewart need to correct my previous post. Apparently the SBA 7a express loan is not the loan product my colleague ended up using with HFCU. I confirmed it was a revolving line of credit with a 2 year revolving period and then a conversion to a five-year fixed that he did with HFCU, but it was not SBA backed. The SBA 7a express loan is very similar, but learned today that rental properties are an excluded business and do not qualify for that program.

@Gualter Amarelo thanks for the outreach, I’ll shoot you a message about connecting offline. It would be good to connect with another investor in the Fall River and New Bedford area.

@Will Stewart and others, a friend of mine who owns a sizable portfolio out in Gardner/Leominster area said he’s worked Hanscom Federal Credit Union to do an SBA 7a Express Loan which is basically a 2-year revolving line that converts to a 5-year fixed after 2 years. Interest-only payments are made during the 2 year draw period. I’m going to explore that as well with my current credit union.

@Charlie MacPherson Thanks for the recommendation Charlie. I will try reaching out to some of those local banks. I’ll do some research to try and pull a list of local banks and credit unions and just start making calls.

@Mike Buckley Thanks Mike. I am definitely going to talk with my credit union who I have the primary mortgage loans with about doing a cashout refi, but I have the same concerns about the equity available due to just 1 year of seasoning. Although since I don’t need much funding, that might be a viable option. Only downside is that I’ve got a great interest rate on the loans right now and would obviously lose that to squeeze out just a little cash for a short-term need. Not a great strategy from a long-term perspective.

I have a small portfolio of 18 rental units in Fall River and New Bedford (Massachusetts) which I purchased a little over 1 year ago. These buildings were in somewhat of a distressed state including several vacant units needing work and many non-paying tenants. The return on these properties once stabilized are really good, but getting there has been a challenge. At this point I am very close to what I think is a stable point, having evicted 7 tenants and turning over 12 of 18 units. New tenants that I’ve placed through my property manager have been much better.

Here is my question though...I am now running somewhat tight on working capital after a year of putting in all this work, and I still have another 3 evictions in progress that will require another $10-15k in investment to turnover. Is anyone familiar with any type of line of credit product that I could leverage to help get through this final phase of stabilization? Or are my best options going to be a personal loan and/or credit card advances or something like that?

Chris Eaker can you describe what you mean by the banks calling the HELOCs due? Is that assuming the borrower defaults on the loan agreement? Or are you saying they can somehow call the entire principal due at any point during the payoff period? The latter doesn't seem right to me, I don't know anyone that would enter into a loan agreement where the banks at any moment they choose could suddenly force the entire payment of the principal...I certainly wouldn't! My plan is to not use the entire HELOC balance for investing, but rather like 80% so that I have the other 20% to cover the minimum interest only payments (if needed) during development phase of my portfolio. But definitely want to hear more about if you've heard of arrangements where banks can just call the principal due without any default by the borrower, that would be scary!