All Forum Posts by: Toben B.

I need help negotiating a package of 15 duplexes. I already own several duplexes that I bought one at a time.  

The deal is for 30 duplexes with an average rent of $1062.50 a month. 

These appear to be in good shape and are rented at an appropriate price point.  I know the market well and understand duplexes very well, but I have never purchased more than 1 property at a time. 

The seller is asking about $2.2 million. Which is a fair price if we were to break them up and sell them individually. 

If you compare this to the 2% rule - he is asking 1.4% in rent per month.  I would be much happier to get closer to 2%. 1.67% would be my highest offer or about $1.85 million. 

Help me structure a logical argument as to why he should accept $1.85 million or a lower price point instead of $2.2 million. 

I don't have the P&L statement at this point.  96% are currently occupied. 

Thank you,

Toben

How do I determine a fair price on the entire package. 

George - My CPA told me that a lease option doesn't count as a sale unless they execute the option in that 3 year window. However you can sell and carry the note which does count. 

I had a house I had to sell due to my 3 year window ending and my realtor found someone with bad credit and $25,000 to put down. 

You need a giant payment if you do this as the realtor will take their 6% fee out of the down payment. 

If I ever do take the house back they lose the down payment although it may take 4-6 months to evict as they are an owner and not a tenant. 

I wouldn't worry about the upstairs if you don't have plumbing up there. 

I think the financing is starting to affect the 2% rule for long term landlords as well. 

Once I started getting mortgages in the 4% range - it started to make sense to deviate from the rule.  I got a house with $1100 in rent and a $340 monthly payment even though it is only at %1.57.

However the 2% rule was a great yardstick to measure how good the deal might be when I was a newbie. 

I was in a similar condition. 

Sold my house in a nice neighborhood and used the proceeds as a downpayment on another duplex and bought a house in a less desirable neighborhood outright. The rents total $2250 for all 3 units vs $900 for the one house. 

A nice house you live in may not be the best rental. My best rentals have been one story fairly small 3 bedroom houses that can be picked up cheaply. 

Due to past experiences I recommend to not use a 2 or 1.5 story as a rental. Tenants can't seem to understand the damage a upstairs water leak will do to a 2 story house. 

The exception here is that you can sell a house tax free for up to three years after you move out. (If you lived there atleast 2 years) So if you want to rent for 2 years and then put it on the market that might work. 

OK What colors do I paint it? I don't want to replace the yellow siding so what do I paint the brick to match?

What color do I paint the columns? I am more of a handy man than a decorator.

I fixed the pics. 

Hello,

I bought a house that I will sell on a lease option and I could use some help on improving the curb appeal. The whole block looks great, while my house looks a bit dumpy.  What are some not terribly expensive ways to fix this up? I am thinking paint the columns black or white, add shutters, and what else? I'm not really a home decorator so good ideas are welcome. 

Hello,

I crawled through the crawlspace in a house I am preparing to rent yesterday and found the earth was damp where water has come in from the vents during a recent heavy rain.

There are no rain gutters on the house, so I am wondering if this would be enough to fix the issue and how much of an issue this really is.

There is no mold, no evidence of standing water or signs of real damage.

50% is a safe starting place and the first year I own a property it has even been higher. However the longer I own a property my costs slowly decrease over time. Some of the properties I have owned the longest are down to 30%.

1. Put all utilities in tenants names.

2. Replace all carpet with Tile.

3. Paint all walls, ceiling, and baseboards the exact same color of pre-mixed semi gloss paint.

4. Write the lease so tenant is responsible for sink and toilet clogs, and all repairs.

5. Require tenants to mow lawn.

On the first year I buy my expenses are always higher but each year I seem to have less and less work as I don't have to repaint all the surfaces and just do a quick touch up with the exact same color of paint. Ceramic tile is terribly expensive to install but becomes nearly maintenance fee once it is in.

Keep in mind you want to save up lots of cash to handle the big hits such as a new roof, hvac, etc.

Hello,

I have heard that most insurance companies do not want large dogs. (over 20 pounds)

We are researching a mobile home park that has 4 - 5 large dogs.

Will some insurance companies accept large dogs or do I need to plan to evict 5 tenants as soon as I close on the property?

Thank you,

Toben