All Forum Posts by: Sheena R Roth

Hi Jeff, 

Thanks for your input!

Interestingly enough, her place looks like almost like a model home. They gave it a carpet/paint job about 10 years ago but one of the cleanest and tidiest unit I've ever seen on an inspection walk-through. That's a big reason that I'd like to point her in the direction of some aid rather than just encourage her to leave. 

Unfortunately the waiting list for Section 8 is closed right now so I can't even get a real timeframe on a voucher, but, it sounds like we're talking several years. 

Even so, we don't necessarily have to raise her rent to market value overnight. This unit is only 1 of a 12-unit package purchase and our lender has given us the option for a 12 month interest-only payment to help us cashflow even while make any needed repairs and get rents bumped up to where they should be. Luckily, the other 11 units are all rented much closer to market value. So it's not like this deal will go bankrupt if we don't solve this on day 1.

@Devin H. Devin, how attached are you to your CPA? It seems like strange advice you’re getting there.

If you got a 10% down vacation home loan and the lender understood that you intended to use this as a vacation home part of the year and rent it out as a STR part of the year, there would be rental income associated with that plan, right? So seeing a 1099 for rental income (although I understand in this case it is long term rent) shouldn't throw up any red flags for the lender that I can see? Unless I am missing something?

@Mike Lynch Mike would you have to pay off the mortgage if you kept it as a rental? If you need to pay off the mortgage for reasons related to acquiring your next primary residence, have you looked into refinancing this home info a new mortgage and even possibly getting some of your equity out of it to put to work elsewhere?

Just based on the market value of $250,000 and rent potential of $1,500 or less, it sounds to me like it would be pretty easy to find somewhere else to make the same or better return and possibly with a lot less hassle. Even though you’d be cash flowing with a renter in there, once you consider your return on equity the deal is probably not going to look very attractive.

In short, based on the info you’ve provided, I would really think about selling… especially considering you can avoid cap gains.

If you don’t have a lot of experience analyzing rentals send me a message and I’ll gladly walk through the analysis with you. I am an engineer by trade, this kind of stuff is right up my alley :)

Thanks Scott! These are exactly the type of ideas I was looking for. I'm just compiling a list of possible sources of aid to hand off to her and let her take it from there.

Thanks to everyone who has been contributing to this thread. I think we got into the weeds a bit - I was mainly hoping to get some ideas to bring to her as a starting point on some rent or other financial assistance options that she may want to pursue, because:

1. I'm sure that even if she were to move out of her current building, she won't find a nice clean and safe place to live by herself for under $600/month, so unless she's able to find someone else to live with, she'll likely still be in a position where she could use some kind of subsidized rent.

2. Considering that she doesn't have a computer or a smart phone, I know her skills to research options are quite limited. So I thought I'd take a little extra effort to collect some research for her.

Also, I know several people mentioned that it might be a bad idea to buy the building. The thing is, this conversation is only about one individual unit in a large 6-building package purchase that overall still makes a lot of sense for us to buy. 

Thanks again!

Hi Bruce, I have actually taken on several properties that had little or negative cashflow at purchase... mostly due to mismanagement and/or rents that hadn't been increased in a decade or more. So far, we've been able come in from a value add position, catch up on any differed maintenance, get the rents up to market and now they cash flow handsomely. I consider the current cashflow when I make offers, but I typically buy more-so with the stabilized property in mind since I plan to hold these properties for a very long time. 

I definitely want to add this property to my portfolio, even with this initial barrier. I was just looking for some helpful ideas to offer up to someone who isn't as tech-savvy to research herself as most of our world is nowadays. :)

Wow. You wouldn't even present the new rent and give her the chance to find a roommate or figure out some other way to get the rent paid? It seems like that would actually be shooting myself in the foot to kick out an otherwise great tenant before even presenting the new lease options or investigating possible solutions. 

 Sean - She has not asked us for anything. We met her through our initial walk-through inspection and she told us she knows her rent will probably go up and she eagerly whipped out her budget and calendar to show us that she could afford to pay about $100 more per month (which is obviously still way below market). I'm going to meet with her to talk about the actual rent increase in a couple of weeks, just before we close on the property. I just wanted to go to that meeting prepared to present to her with any options I know of that may be helpful to her.

We are under contract on a side by side duplex near our hometown in Ohio. We just found out that we are inheriting the sweetest 80 year old tenant who has lived in the place for 20 years.

Market rent is $950+. This little lady is paying $475… there’s no way we can afford to pay market price on the purchase and keep her rent anywhere close to that low. We basically have to get her to $750 to break even on her unit but she can’t afford to pay that much on her SS income.

She has no computer or skills to use one. I can’t bear the thought of raising her rent and leaving her to try and figure out her options by herself so I’m trying to line up some options to bring to her.

The most obvious choice would be to find herself a roommate.

The only other option I’ve found is Section 8. However, I’ve been told that it could take years for us to get the both her and home into Section 8 program. They also mentioned that since she has a place to live right now she would be placed low on the waiting list.

I struck out on the Agency Center on Aging. United Way, and misc charities in our area.

Any other ideas for possible rent assistance specific to senior citizens?

@Courtney Kelly I stumble across a new method for finding off market deals last week. A nice side by side duplex came live on the mls and I asked my realtor to call the listing agent to tell him we’re preparing an offer and MOST IMPORTANTLY see if the seller had any other properties they’d be interested in selling.

Turns out the seller was a recent widow who didn’t want to manage her husbands real estate portfolio. She had two other duplexes just down the street, even nicer than the first, that she was planning on bringing to the market soon. We were able to write up a package offer on all three.

The agents both agreed to reduce their commission on the two off market properties and the seller accepted our package offer to save herself the hassle of listing the remaining two properties and to offload the burden of property management asap.

We got a total of $60,000 off her asking prices by structuring our offer like we did.