All Forum Posts by: Ujwal Velagapudi

I have always been one to take the tenants on, but this is a different situation. Regardless, I would request all the documentation of the tenants during due diligence, ensure payment history, vet them as you would and then you can consider removing any prior to closing that you would not qualify based on their application. In this time you may also be able to get confirmation of employment again, as many have lost jobs, but not sure how that'd work exactly since they're already current tenants. If they are tenants you would've generally qualified, then might as well keep them and save the $$ and hassle of re-leasing. Also get an estoppel certificate from the tenants. 

That's terrible, but glad you're happy with this new job you're starting. There is just so much hate in some people, I don't get it. 

You can definitely succeed by investing in listed properties, but I don't think in today's market. Last few years have been pretty rough on the MLS for investors with deals getting swooped up well in advance, or just heavy competition with cash buyers. There will be a time again where this will be just fine, with enough passable deals to satisfy everyone looking on the MLS, but we'll have to see when that is.

Finance your free and clear assets, pull out only 40-60% equity (or whatever you are comfortable with). I like your reserves for each property, definitely don't touch those. When you refinance to get equity and re-invest, also make sure you put down a bit more than necessary and finance your next deal. Again, whatever makes you feel like you aren't over leveraged. For me 50% equity would feel safe.

Hey @Ricardo T. congrats on closing your first soon! I would say 25% down would be common, depending on the lender you could get 20% as well. If you get a residential loan on a 2-4 unit, you could get away with 5% (or 3.5 w/FHA) if you occupy it as your personal residence.

I purchased my second about just over 4 months after my first. I was actually just looking over my old emails and realized I had another apartment building under contract within days of getting my first property under contract, but unfortunately it didn't close due to a fire. I was looking at a few different deals and had them all in the pipeline. If I had more money, I would've definitely grabbed a few more, but I also had zero idea about managing properties at the time. 

I was just very aggressive early on, and wanted to buy everything I could that made sense on paper and checked out physically, but those were different times. Today, I think it would help to feel out your property, get an understanding of managing your tenants, maintenance, etc. especially as situations are definitely different around us today. But at the same time definitely keep your eye out, never stop getting a sense for the market, and if you do see something you like you can make the move. 

So in those cases I should've specified it was for smaller operating transactions, not an actual asset purchase/sale. For example the dozens of folks that have guaranteed they will lease my unit with cash in hand "tomorrow", the numerous contractors that have said they will arrive at X time for the emergency plumbing/heating/electrical work, or the tenants who say they'll have the money in by X. I've learned to just always keep a back up for contractors, have tenant pipelines, etc. I made the mistake of holding a unit before and not showing it thinking that I had a done deal with a tenant who was going to move in, only to find out they backed out for whatever reason. Seems like common sense now in hindsight as I'm typing this out, but I had to get burned a few times to realize it. 

I'm actually curious as well on this, I've inherited tenants with an mmj card as well. The fact that it is "medical" makes me think it would be wrong, so as long as they are not smoking on your premises. But if you say you've seen or smelled them smoking, that is definitely grounds to not re-sign them. On the basis of simply having the card, I am not sure, since having one does not necessarily correlate to them actually smoking it. 

I've had a few of these mixed-use units, I loved them! Have you spoken to your shop tenant, where does he stand on it? Were there prior issues with the previous seller that's caused him to stop paying, is he willing to take an increase in rent to market rates, is he showing signs of restraint and not moving out. As for eviction, does he have any legitimate grounds to not vacate?

Once you get a better understand for where he stands I think you can make a better decision. If he is willing to work with you, it's best to have a clear set of dates and allow him to move out (commercial tends to take longer sometimes depending on the business). Otherwise if it's just a financial issue, yes, you could offer a small amount for him to leave after weighing out the cost of eviction, loss in rent for X months in court, etc.

Try CIT, VIO, or Marcus, all are about 1%+ if you want a general savings account. Sofi was great, till they went down to .2%. These will continue to trickle down though as rates remain at record lows. 

I've inherited or have done this on a few properties. One, it was a true on-site maintenance/manager who was getting nearly his full rent subsidized. However, this was an apartment building so we still had a full time, off-site PM. We eventually let the on-site manager go, it just was getting to be too big of a headache, asking for additional payment for work that was unnecessary. We just let the actual PM deal with the property and hire out any work needed. 

On the other hand, I did inherit a tenant who would mow my grass, clean up the sidewalk, etc. and be my eyes and ears around the building for my commercial retail strip. This worked out well since it was just a $100/mo discount, and he truly was a great lookout helping me to get a better feel for the area. I never asked him to step outside this agreement though, and never compensated him with anything further. 

Now this next scenario is what I would advise anybody if you didn't inherit any of these on-site managers and this is a setup you want to have. I had a mixed use building where my tenants were absolutely phenomenal. They never bothered me, and would always be very helpful with accommodating maintenance worker schedules so I didn't need to be always be there (they leased the basement unit with the boilers as well). They helped with many other aspects throughout, were clean, would help out our neighbors on the block, etc. After a 3+ year relationship, I asked them to be my on-site PM if I absolutely could not do something in person as I was always travelling. I paid them an excellent hourly rate to perform tasks I personally couldn't if I wasn't able to (going to the city office, showing a unit, overseeing a maintenance request, etc.). They were sweet enough to do it without asking for anything in return, but I think as a landlord you will figure out if a tenant of yours is trustworthy enough to be in this position for you.

Like the others have said, I still think there is some conflict of interest, and I wouldn't recommend keeping any management agreement for a tenant you inherit, but it doesn't mean you can't have a successful on-site PM after cultivating a good relationship over the years.