All Forum Posts by: Shawn S.

I am beginning to look outside of my area for more properties. I came across a triplex that is in more of a rural area. All units are currently occupied. I did not physically see it yet but the listing shows it as average. I did an analysis on this and for me the numbers look pretty good. My real estate agent believes that the numbers only look good because of the rural area and age of home. I took that in account even though it was listed as "average" so a lot of my numbers are higher than I would normally choose. Even after I still thought the numbers looked good, my agent however seems to disagree. When it comes to determining vacancy, M & R and CapEx my confidence on my numbers falls short so I am hoping for a double check.

Current income $1650/month

Property price $60,000

I am still newer at this so I would likely mortgage it.  I factored 20% down at 5.5% interest over 30 yrs.  Mortgage about 275/month

Taxes shows to be about $2,000/yr.

Insurance 600/yr.

This is where I start throwing numbers in that make me unsure of myself

Vacancy 10%

PM 10%

M & R 10% 

Cap Ex 15%

My numbers come out to 

Cash flow: $434/month

Cap rate: about 14%

Cash on Cash: 27%

ROI: 57%

Do you believe this is a good deal and would you buy it if it is really an "average" condition property.

If not a reason why would be greatly appreciated!

Just wanted to give an update....

We discovered a similarity in every post that was different than the way we were thinking.  We kept taking the nice/friendly approach before the business approach.  We also learned a valuable lesson in keeping a tightly wrapped agreement in check.  We thought maybe they were taking our kindness as weakness.  

I am sure most will think we are wrong but we decided to try one last thing before we evicted.  We decided to try approaching them much more firm to see if they handle things differently.  Worse case if they leave it wouldn't matter anyway.  We sat down with them and told them what the expectations are.  We put them on month to month and we provided no options to them, no flexibility and was sure to emphasize the importance of what we were saying.  We even emphasized the importance of them fixing their poor communication issues.

I know its only been 3 months but since that time they have acted like different tenants.  Pay is straight and so is the communication so far.  We just had our inspection which we did a walk through and the rental is well kept (for a rental).  

Since we are thinking differently now if they choose to slip back to their old habits we are ready.

Thanks to everyone. 

Thank you all for all the replies.  This has been great to get other opinions.  As you can imagine it is frustrating from time to time when we are dealing with people that pay erratically and are horrible communicators.  

The main reason why we have been dealing with it for so long is because so far, somehow they keep getting back to a $0 owed point, pay late fees like its not a big deal, and don't complain about anything the whole time they have been there.  Last time I was the house it was decent too but that was about 6 months or so ago.  As a previous poster stated the tenants could be so much worse and we get that..... that is whats making this so much more challenging.

 As for doing a walk through about a month or so ago we tried asking them the best time to do it to try to be fair and they responded as if no time is a good time because he works 2+ jobs and she works a full time job. As a response to that in the email we responded by telling them that we will give them ample notice and we are walking through with or without them. The lease states we will give them notice before entering.

In the beginning we were charging a late fee based on the lease. And every month they were paying it without complaint. To me it was the strangest thing. When we started going weekly they were doing well so there was no need for the late fees. Now that we are month to month and they are falling behind we mentioned applying a late fee which was the monthly late fee divided by 4 since we were potentially going to continue a weekly payment schedule. We have not given notice to quit. We simply told them in an email that we will have to take further action if they do not respond or pay.  Thank you for the link.  We will definitely be reviewing it.

In case you didn't read my profile a short understanding of us.  We have been renting for 8 years and we have been learning this as we go.  We have recently started using Bigger Pockets which has been a HUGE help so thank you for everything so far.

I'm sorry this is long winded - I wanted to explain as best as possible because we sure could use help with this one and I wanted an answer based on a full understanding

We have a tenant that has been late almost every month for the first 6 months of the lease term.  Normally every payment was less than 15 days late.  We went to them about the 6 month mark and looked to see what the problem was.  By the end of that meeting we agreed that the tenant would pay weekly and  we set up a quarterly schedule and they had to abide by it or the eviction process would start.  From then on they did pretty well.  Finally at about the 11 month mark they only paid a partial weekly payment and then one of the weeks in the 12th month they missed completely!

Now they are month to month.  Last week I was pretty annoyed that my wife told me they fell behind because I feel we bent over backwards.  Last week I sent them a letter via email telling them that they have the next week to catch back up and to set up another quarterly schedule.  We even gave them the option to go back to paying monthly but we told them the flexing is over, its due pay it or leave (obviously nicer than that).  We told them we needed the decision by yesterday and they never responded.  But last Monday they paid a full weekly payment?!?!  They are still behind though.  They act as if the missed payments don't exist.

In summary we are still trying to work with them because as we have experienced they will eventually catch up and break even.  I just dont like that they do it on their terms rather then the terms agreed to.  Now we can't get them to respond to an email on how to proceed! I sometimes feel its not worth it to continue this because every week its a guess if they will pay. Am I wrong for this?  If not and the next step is to evict how do I go about that with the special circumstances we are in?  Also they are currently not a full month behind only about 3/4 month behind, can we still evict based on that? 

I appreciate any feedback as I am starting to think our biggest mistake in this was being nice in the first place.  Again we are still figuring out how to play all the different situations throughout the years.  Because of this situation we are far more strict with the second rental we just felt that we needed to try to at least finish out the contract with this one.

Shawn