All Forum Posts by: Sheldon Zimmerman

Good Afternoon Anthony, 

This sounds like a good income property for you. That is exciting for you, great job.  I would definitely recommend doing that. But I can't speak into your financing situation because of a couple of things. 1. it depends on what your debt to income is. 2. How much you would be able to refinance after you are done with the rehab. But if you can get more properties that can create income for you. I would absolutely do it.  Especially if you can add value by the rehab you might be able to get into the property with minimal or no money out of pocket once you refinance it. Best of luck. 

Good Morning Gregg, 

Steve Sensening with Restoration Concepts is a great handyman to make repairs.

Good Afternoon, 

I feel the biggest thing before you would do this is to verify zoning. I live in PA, so laws will be different than Ohio. But that would be the most important part that the city is ok with renting by the room. Some cities in PA would not allow this. One tip, also I would say is the management side. With renting rooms out, you will turn into more management time. So there will be a lot of managing people and making sure they all get along. Sometimes you have no problem and all is good. But other times certain people just don't get along. So setting up your leases would be important to limit this time management. Great opportunity to get more cash flow, but can involve more time. So making sure your lease is set up to help eliminate that. Another tip would be not to include certain appliances. Appliances like Microwave and dishwasher. By not providing this can save you maintenance costs and utility. We have seen certain tenants start washing dishes in the dishwasher and they had a whole cup, spoon, and plate in it. Which causes you a higher water bill. Another one might be a refrigerator. We have seen tenants claim that when the Refridgerator went out they had lobster or other really expensive food. And they demanded a refund on the food they did not have. These are just stories of things we have seen. This does not by no means happen all the time. So your lease is very important to set you up and protect you for a good experience. 

Good Afternoon, 
Personally, I would lean toward using a hard money lender or private financing and buy it outright. Only because you have control of the asset. Now you can get a contract clause like you are asking. But I would get a local real estate attorney to write up the contract to where you feel like you will not lose the asset. Hope this helps, best of luck. 

Good Afternoon, 

I found that South Central PA market is a good market. That includes areas like York City, Pottstown PA, Norristown PA, and even into Allentown PA. Now, these are local markets for me and I know them well. But there are great markets all across this great country. 

Good Afternoon, 

Agreed, If you think the numbers work well. I'd offer cash for keys. Let them know you would give them "whatever dollar amount" and they will get it if they move out by a certain date and even every day they don't that amount gets smaller. And try to get them out asap. I'd also make sure they know all items must be removed from the home and no damage done to it. But make sure whatever number that is to get them out, that number is in your overall expenses for the property. 

Good Afternoon, 

I love this question. My wife was not really on board at first either. It took her a while to see the benefits of doing it. Now I would agree with Carlos, because maybe she sees it take your time and does not like that part of it. But once you identify why she does not like it that would help create a plan to solve that issue. For example, if she sees it taking too much of your time to manage it, maybe the compromise is to hire a property manager. Or she is concerned about the financing side of things. It took my wife about 2 years until she was on board. Once she could see the reduction in tax liability and the cash flow she could start to see the benefit of me being a full-time real estate agent and have more time at home with her and the kids. But definitely recommend sitting down and talking about why she might not like the properties. And then come up with a way to solve those concerns. I hope this helps. Have a blessed week.  

Good Afternoon, 

So there are a couple of things that go along with your question. So I'll talk about my experience. However, that is not the only outcome when it comes to low-cost buy-in properties. So it really depends on the area in which you are buying in. Will the tenants pay on time and take care of the home? If you say you can buy a property at 50k and rent it out to a tenant for 895 a month or higher is it worth it? Well on paper yes. Now we are also assuming tenant pays all utilities. So if that is the case on paper it is great. But how old is the home? Are there maintenance issues that will need to be addressed right away or a year or two down the road. I personally have found that if you buy a home that is older and a roof or heating system is required to be updated your cash flow disappears. Now if you do the work your self you could save money upfront but what's your time worth. So if you get the home in a place or buy the home in a place where there is minimal maintenance the home could cash flow well. I have over the last 2 years switched from buying this type of property to buying a value properties and in nicer newer neighborhoods. The reason I started to switch to this was for several reasons. 1. I like the appreciation. We are seeing a higher appreciation in higher-priced markets, which would make sense if on average you see a 2% appreciation in your market. The Higher the price the more appreciation. 2. tenants tend to pay on time, But this goes into screening your tenants and making sure you are picking qualified tenants. 3. Less maintenance on a home if it is a newer home. Now, this is all things that can be accounted for when you are researching your properties and to see if it's worth buying but this is why I tend to stay away from lower-priced markets. This is also a general statement and can vary market to market. For example, we have two cities 20 minutes apart. City 1 - for a 4/1 you could buy a home for 40k and rent it out for 795 a month. Taxes are 600 a year. Seems good, but City 2 - For a 4/1 100k rent it for 1200 a month. taxes 3500 a year. I own properties in both and my properties in City 2 outperform my properties in City 1 every year. Now with anything, there are variables. I hope this helps.  

Good Afternoon, 

Unfortunately, that is a number we do not track either. I would lean towards it being higher in rougher areas than in high-end rentals. But it does depend on the tenant. I would say me personally in the last year I had 1 out of 22 rentals that did a total trash out on the property where they did damage to it. So it is rare you have a total trash out. But you will have things tenants leave behind or don't clean the house after they move out. So we end up charging a small amount to do that repair. 

Good Afternoon, 

Yes, pro-rate the 2nd month. You want to make sure you get your money up front.