All Forum Posts by: Thomas C.

no felonies or anything that would automatically disqualify him from renting. credit isn't terrible just not much history.

I'm fully aware it sounds very sketchy, that's why i'm looking into options that might offer me enough protection to take the risk. It seems unlikely i will be able to make it work but thought i'd explore available options. Curious of downsides if he agreed to lease option.

I have an interesting situation where i am considering proposing a lease option and would appreciate some feedback and hopefully point out any aspects of the situation I might not be considering.

I was approached by a prospective tenant about leasing and/or buying my duplex. It would be a young guy his wife and 2 kids who just moved here from out of state. He claims to be in the entertainment business and sells cars on the side. He can't verify income but offers to pay for a year of rent in advance. His criminal and credit history are borderline but passable.

He says that he really wants to buy the whole duplex but would like to rent one of the apartments for a year first. His reasoning being that he wants to get to know the area as well as the property itself before buying.

He also mentions wanting to upgrade the floors and cabinets. I explain that it is simply not a good investment for me and that any upgrades he wants, will have to be paid for out of his own pocket. He claims he will replace all the floors with new carpet and hardwood for me at his own cost because he wants to buy the place eventually anyway and makes it clear that money is of no concern to him. Obviously my instincts tell me to turn and run the other direction but i'm trying to come up with a possible solution that could protect me enough to make it worth any potential risks

As far as I understand them, the laws are pretty limiting as far as how i can make this deal work. In NC 2 months rent is the maximum I can take as a security deposit and if he moves out early i would be legally obligated to return the prepaid rent. The only solution I could see working is setting up a lease option for him. Sell him the option to buy for around 5% of my desired selling price (a little under 200k) while leasing for 1 year. This way he has some skin in the game and if anything happens to the apartment he's out 10k.

The way i see it, this situation becomes a win win for me. If he does end up exercising the option I am selling at a price that I am very happy with and don't care what he does with the place. If he does not exercise the option I keep the 10k. The option money along with the security deposit should cover any conceivable damage even in a worst case scenario barring him intentionally destroying the property.

Please point out anything I might be missing or feel free to just tell me i'm an idiot for even bothering with this guy. I would also be interested in hearing any possible alternative options that people might come up with.

Thanks for the input. I don't expect many retail buyers to be interested considering it's a duplex with 3 bedrooms 2 baths on each side so I don't see it ever be converted into a 6 br 4 ba sfh. Vinyl seems pretty standard for the neighborhood so I can't see that being a problem. Although I agree with Jon that staining could increase rents slightly by helping its curb appeal, I can't see that being significant enough to cover the added maintenance expenses.

I feel that I should overall be trying to make this the best rental property possible since that is what I, and probably any future buyer will be using it for. This makes me lean towards vinyl but i would love to hear any additional thoughts on this matter.

I recently bought a duplex that was built in 1986. The last owner stopped maintaining it a while back and the cedar siding needs some work. It hasn't been stained in 10+ years so my options are to do minor wood repair and stain it, or cover it in vinyl.

It's looking like it will take around 7k to repair and stain it all. Or i can put vinyl on it for around 9-10k.

I plan to hold it as a rental for a long time (10+ years) but am fully aware that circumstances could change and I may end up selling sooner. Its high quality cedar siding that I think would look very good again after staining. However the cost of maintaining cedar siding just doesn't seem to make sense for a rental. I understand cedar will need re-staining every 5 years whereas vinyl should be be good for 20+ years.

I'm a little worried I could potentially hurt its resale value using vinyl since the cedar siding is generally thought to be higher quality material. However since its a duplex I feel that most people interested in buying it would actually rather it be vinyl since vinyl works better as a low maintenance rental. The road it is on is mostly cedar sided duplexes but they're all back in the woods so it won't look out of place if its the only one that's vinyl. Also this road is surrounded by subdivisions that are primarily vinyl if that matters.

I'm curious what some more experienced landlords think about these options and if there is anything else i should be factoring into my analysis.

Thank you all for the welcome and the great info. Brandon Turner I really enjoyed the article about investing at a young age, very insightful and it all applies directly to me. From everything I've read of yours it sounds like you are pretty much where I want to be 5 years from now. I guess i'm on the right track because i'm in a live-in flip right now and have a duplex under contract. Great advice for young investors.

Karen Rittenhouse Great podcast, its awesome to hear such an impressive success story from my area. Would love to talk sometime

Hi,
My name is Tom Crowley. I'm a 23 year old professional poker player that is trying to learn the real estate game. Poker has been great to me thus far but its a volatile game and not really something I want to be doing full time as I grow older and potentially have a family. So i'm looking to supplement this income with some more stable (relatively) passive income. My goal is to have enough passive income from real estate to fully support myself by my 29th birthday. This may seem like a lofty goal but I feel that poker has given me lots of advantages over the average 23 year old newbie trying to get into real estate. From some start-up capital, to a strong risk tolerance, as well as an ability to effectively analyze number.

I've been reading these forums for a while, along with anything else I can get my hands on to learn as much as possible about investing in real estate. BP has been a great resource for me. I really appreciate how many highly successful people are willing to share their knowledge with us rookies. I currently have my second cash flow property under contract and am set to close in the next couple weeks. I look forward to learning from the best and hope to someday pass on the knowledge that I pick up over the years.