All Forum Posts by: Tina Tsysh

Those numbers seem great. What is making you question this deal? Are you going to rehab some of the units and raise rents?

I 100% agree with @Mason Hickman about getting J Scott’s book about estimating rehab costs. Also, don’t be afraid to reach out to other investors in your market and ask them if you can come with them on some of the properties walk throughs.

Yes! Listen to the most recent Bigger Pockets Rookie podcast show # 49. It will make you not want to buy anything else BUT new construction!

My best advice is to go and talk to a lawyer. If you take the tenant’s deposit, he might sue you or leave your property completely trashed and damaged. Did you have any language in your contract about what happens if the tenant doesn’t perform his tasks? Contract law varies state by state, so even if it’ll cost you a couple hundred dollars, go for a consultation with a lawyer. You don’t want to be stuck with someone extending their move out date even further or having to repair your property if they ruin it.

That is a red flag in itself if someone asks you to exchange SSNs. You do NOT need SSN to run a background check. You can do it using the person’s name, date of birth and address. That would make me very suspicious as a potential partner. Definitely do your due diligence!

14% seems absurdly high. The max closing costs that I have seen were about 5% of the purchase price (for a very large house in CA). Typically, you want to allocate between 2-5% to be on safe side. However, every deal is different and a lot depends whether you are in a buyer's or seller's market. If the seller is desperate to sell the home and has no offers, he might offer to pay for the closing costs. On the other hand, if you are competing with multiple offers, you might have to cover all of the costs. Talk with your local realtors and ask them what closing costs they have seen in your market! 

You have to ask yourself whether or not you want to be involved in the management of the airbnb or if you are willing to hire someone to clean it for you. Since your town is not a touristy town either, I would find someone who is doing airbnb in your market with a similar type property and ask them about their occupancy rate (you might be able to find someone on BP). If the numbers work with a given occupancy rate and all of the cleaning expenses, then airbnb could work better because of the flexibility that it provides. 

However, if you do not want to manage the place or pay someone to do it for you, you might want to look for tenants who want to sign a month-to-month lease. This way, when you are ready to begin construction, you can give them a 30-day notice to vacate the premises due to construction. Good luck! 

I agree with what @Greg Scott said. Even though you might not want to ask your tenants to leave because they are paying rent and you don't want to go a month (or however long it's going take to find new tenants) without receiving rent, you are exposing yourself to more risk in the future. If the doberman does something to the neighbors, they WILL sue you and your insurance won't cover any of the future cost. I think you are better off having some vacancy for a month rather than risk paying thousands of dollars in the future. Even if you replace the fence, what guarantee do you have that your tenant's dog won't do anything to the neighbors cat? None. 

Don't sacrifice short-term cash flow for a potential lawsuit in the future! 

I agree with what @Bridget Brazelton and @Ben Rhodin that as long as the numbers make sense, why not buy a new build? Especially if the new master-planned community is in a good school district, the tenants that you get there will most likely stay there for a while if they have kids. This should be your target demographic for tenants if there are good schools nearby. In addition, with Denver being such a hot market, many people that are moving there want to be in a new home. Denver has also seen a very healthy increase in wages, meaning that people can afford paying higher rents for new construction. 

At the end of the day, you are trading low maintenance for the premium you are paying for the property. As long as the numbers work, do it! 

I am curious as well of why house-hacking isn't for you. You can buy a duplex, live in one unit and rent out the other one. You can rent it out to a friend / colleague and make some money while still having your privacy in your separate unit. The longer you are saving up, the higher the prices get while you wait. Plus we should see higher interest rates in the future. However, getting into real estate and having zero savings is not ideal either. You can buy something with as low as 3.5% down payment, and benefit from the tenant living in the other unit help you pay down your principal and cover part of (if not full) your mortgage payment. You might not be buying class A new construction home, but you are investing money towards an asset rather than helping someone else to get wealthy.