All Forum Posts by: Stephen Stokes

@Darshil Parikh Always do what your gut is telling you is the right (honesty & integrity) thing to do. If you have to ask "is what I am doing or planning to do even legal", you should probably not do it. My take is this is unethical and you will set the tone of being a greedy landlord at the outset. We (landlords) serve as investors to benefit for our own selfish gains but have to balance that with the role as a public service provider, housing the community. If you do your market analysis correctly, you should be able to set rents at reasonable figures when you advertise. Just remember, pigs get fat and hogs get slaughtered, and do onto others as you wish to be done onto you. Heck, you may even send all of your applicants away by even trying to pull a stunt like this. Then you will be back to the drawing board and you will incur the cost of lost rent. You bare full responsibility for how you decide to run your business and it takes a lifetime to build a reputation and seconds to destroy it. I never want to see anyone saying I act in a manner that is not defensible especially in a court of law should it ever come to that, as we operate in this litigious society of ours.

@Dan Burstain I have seen you posting these figures of small single digit declines are the worst case scenario for Austin and citing historical impact from the Great Recession. What is your source because as someone who lived through REI in Austin in the timeframe you are citing, I can personally attest from direct experience that was not the case.

@Austin Nicoson I started in REI with "house hacking" (didn't know it was a thing at the time). I absolutely recommend utilizing a lease agreement as it helped me immensely when dealing with issues. Even though my "tenants" were actually friends of mine, we decided that any disputes that came up we would reference the terms of the lease agreement and that is just what we did on several occasions. I used the ABOR form that a real estate agent friend of mine was kind enough to generate for us but anything is better than nothing. Wishing you all the best in your investing!

@Chris Schorre call the folks over at 1031 exchange corporation @ 512-419-1031 and ask them this question. 

@Sean Byrd wishing you all the best and hope it works out for you! Thank you for your service and sacrifice to our country.

@Sean Byrd best of luck. Sounds like you will be deep in the hole every month. Betting on appreciation only at entry price that high is a tough one. What is the cap rate on that property? I am guessing it has to be sub 3%

Four unit dwellings do not require sellers disclosure so any seller completing a sellers disclosure is just opening themselves up for more lability in the sale. Many sellers of these units are not able to complete an SD because they have never been to the property (out of state or otherwise absentee owners). 

How on earth are you only putting $5k into this deal? 

So you bought a video game token for $50? Was there a contract associated that grants proportional ownership rights? Was the contract notarized and filed with the county? How is the deed to the property secured to ensure your ownership rights are upheld? If none of that was done, you just made a $50 voluntary donation to someone....I suspect it will be a matter of time until the individual that received your "donation" receives a visit from the FBI for wire fraud. 

@Yuki K. Only reason I would ever invest in a negative cash flow property is if I am putting little to nothing down to acquire ownership. For example, taking subject to existing mortgage or owner financing with 0-5% down. CASH FLOW IS KING. Without cash flow you are not investing you are speculating.

@Sarah Davis

If it is a good deal, problem tenant should not matter. Cash for keys before closing is how I have dealt with this situation. It is also unethical to allow someone to stay in a position they truly cannot afford. The longer the problem gets pushed down the road the bigger the issue becomes. Giving them some cash to move and offering to hire movers is the right thing to do for everyone. You also mentioned you will be living next to them and lack of distance will also hang on your heart strings. Make the right decision now and avoid the pain later.