All Forum Posts by: Scott Harlow

I have a few general questions about the timing associated with investing in and eventually selling SFRs. I only own 1 investment property (a 4-unit multi) but I'm on target to be adding another to my portfolio in the next 6-12 months. With multi family properties it's actually a selling point if the property is fully rented with good tenants (even if the rents are under market, a savvy investor might realize this and see an opportunity to increase NOI).

In the SFR market it seems like selling the property with tenants on a current lease automatically excludes most buyers that are just looking for a home. Do you wait for a lease to end so that you can clean, repair and/or stage the property before you sell? If the house sells quickly this would be no big deal, but that mortgage payment and no cash flow starts to hurt if the house sits on the market for months.

So, whats your method for selling an SFR that has been a buy and hold property?

Michael,

Thanks for your input. This makes complete sense to me and more or less confirms what I was starting to realize. I guess the question now becomes, should I just leave the back of the lot untouched or should I look into splitting it. Sounds like I've got some research to do...

I could split it and sell the lot to fund improvements/future investments, or develop the new lot and end up with two 4-plexes that could be sold separately. 

Bump

Welcome! Fellow ME here. I jumped into the whole REI thing last month with a 4-unit multifamily on an FHA loan. Owner occupying has been a great experience so far. I would highly recommend it to to anyone considering it as their way to get started. Best of luck!

An emergency number or numbers is a good thing to give tenants in case they can't reach you about an urgent issue. I would coach them through what would be considered urgent or not. Maybe even write the guidelines out on the same sheet with the emergency numbers. I put down the numbers for the local gas, electric and water providers so that service can be shut down if there is an issue, but I wouldn't authorize them to call in repairs without my consent or giving me a chance to assess the situation. That's just me though. 

Thanks for all the info everyone! I will have to assess the situation after he moves out. I agree that I don't think it will be nearly as bad as cigarette smoke. I'll follow up here in 5-6 weeks with an update on what if anything needed to be done to make it rent ready. 

This wasn't a surprise as it was very obvious during my inspections of the property. The previous landlord was aware of the situation and didn't seem to mind that the tenant was breaking the non-smoking lease agreement. 

I have a 4-unit property on a large double lot in an area of town that is seeing excellent growth. I see this is a long term investment, but plans can always change. The back 1/2 of my property is undeveloped. I have plenty of room and the correct zoning to add 3-5 more units depending on the size of each individual unit. 

My only concern is this would take the property out of the conventional mortgage realm (more than 4 units) should I ever want to sell the property. Adding the units, based on my current cost estimates would make this property a cash flow machine, especially considering I would be building without adding any additional monthly debt - I will be self building/contracting a few units at a time with cash savings. 

Has anyone ever been in a similar situation? Did you regret turning your 4 unit into a 4+ unit property? Is there anything else I should be weighing here aside from cash flow and resale potentials? 

Thanks for the replies. Yes, there is a small section of the lease where the tenant agreed that there would be no smoking inside the premises. It does not state marijuana specifically, just "smoking" in general. 

I bought my first 4 unit last month. I have given a month-to-month tenant notice that I will not be renewing his lease. His apartment is saturated with pot smoke. I'm assuming the apartment will need to be wiped down top to bottom to remove the odor. The apartment does not have carpet or fabric curtains, so that's a plus. Do you think I will need to repaint? I'm trying to get an idea of what should be held from his security deposit. Thanks!

Hi Jeff,

I'm closing on the property with a $200K loan. I will be occupying one of the units for the first year (FHA loan). Monthly rent roll is ~$2300. I'm talking with a few builders now, but I'm planning on ~$100-150K budget for adding the additional units. Similar 1 br units in the area go for $650-700/month.

The completed project will bring in $6200/month in gross rents.