All Forum Posts by: Wade Garrett

I own a fourplex in a working class town in New Jersey, which has been a home run investment. I love owning it, it cash flows, and has appreicated A LOT since I bought it four years ago. And I have been looking to expand.

A new deal just came on the market on the SAME block as my current rental. The entire deal is a 2BR, 1 Bath house.... plus a 3-story apartment building: First floor is 2 four bedroom apartments. Second floor, 12 bedrooms. Third floor, 13 bedrooms. I know the area, have good contractors closeby. And I know the rental pool. I would be happy to expand in the same town.

The kicker(s) are.... only two bathrooms on the second and third floors each, which means it is currently used as a boarding house. To boot, I checked the sex offender registry, and one of the two sex offenders in town currently lives in the building. So the initial situation has A LOT of hair on it.

My idea is to buy it, convert 4-6 of the bedooms into bathrooms, and turn floors two and three into 8-10 2 and 3 BR apartments, and boot all the transients. I talked to my plumber, and we think we can pull off the renovations for ~ $200k. If fully stabilized after that, the NOI is quite strong, BEFORE I begin to reduce utility expenses. And there are a lot of places to improve inefficient utility expenses.

My issue is carrying the place as a boarding house while I go on with my renovations. I have a two year horizon I envision on my renovations.

Current Details: 
Price $1.2mm (add another $200k for renovations, so $1.4mm)
Fully Rented Monthly Roll: $21,100, or $253k annualized
MY Estimation for annual Capex + Maintenance: ($52k)
Utilities currently paid by owner (annual): ($41k)
MY Estimation for vacant at 15%: ($38k)
PITI annualized: ($83k)
Net: +$39k

My Stabilized Estimate: 
Annual rent roll: $208k
Capex: ($52k)
Utilities ($20k)
Vacancy at 5% ($10k)
PITI: ($83k)
Net: +43k
On a down payment of $345k --> 12.4% ROI, with a much more stable tenant base and upside in rents and downside on utilities.

Would love to hear thoughts from anyone with similar experience. 

Thank you,
MWG.

Send him notice of non-renewal now. If you work something out in the meantime, great. If he's still there Dec 1 morning, go to the courthouse and file for eviction THAT DAY. He won't be there more than 5 weeks start to finish. And in that case, you'll keep his deposit.

Update: the sheriff has the paperwork and is posting on Monday. They have 3 days to vacate after that (March 30). If they do not, I schedule the lockout (which I will do the following day). 

Thank you for the comments. I appreciate the shared knowledge. 

While I am unhappy about this situation, I am intent on becoming a professional in this business, so I view it as an expensive lesson learned. 

Their total owed to me is $2,354..... rent, court fees, back water bills. I have $2,700 in security. 

I have a family in my building that has been bad with paying rent and past due bills. I have filed for eviction on them in the past, and most recently for February. I also non-renewed their lease, which ends March 31. 

Today is March 23. I just got a call from them saying that they are using the security deposit as March rent, and will not be out until April 15. It is my largest and most expensive unit.

Obviously this puts me in a bad situation for a few reasons.... potential damages not covered by the deposit (plus rent), two weeks of a non-paying squatter, and a mid-month vacancy which will make it impossible to fill for April. 

The February eviction actually defaulted in my favor, and I held back on filing with the sheriff because I didn't want to have them removed. I thought they would be out on time. So I filed with the sheriff in early March. I am awaiting the paperwork to go through which gives the sheriff my information and the right to remove them. After that, they have 3 days. 

I explained this to the tenant and he said if I want to go to court then we can go to court. 

Let this be a lesson to everyone else, don't cut corners or try to be nice outside of the written rules. I made a huge mistake. Put everything in your favor just in case a tenant tries to pull an unforeseen stunt. 

I am hoping the paperwork comes through anytime before the 15th, because now nothing will stop me from removing them physically if it is within my right. 

I just called her current landlord. She is current on her bills with them and has been. They mentioned an issue about a year and a half ago but there have been no recent issues. This is roughly the same time as her cc bills. She offered the information that she was not working to take care of her mother a couple of years ago. All of it seems to tie together around the same time. 

I will put both on the lease on account of his financials. As I said, I got a good feel for them and believe they would be good tenants.... and he would make a good billpayer. 

I have had a couple apply to live in my 1BR. They are an engaged couple in their 50's. After I met them I wanted to rent to them. 

The apartment rents for $1,150/month. 

He makes $86k a year, has a credit score of 720+. Is current on all bills. 

She has a credit score of 520, $9k in credit card debt. $50k of unpaid cc's from a couple years ago reported as loss. No income. No outstanding collections. Judgement of $3k against her 3 years ago for credit card payment. 

Obviously I am going off of his financials. He alone more than qualifies. And since her outstanding $9k in current debt is $182 a month, household debt is also not an issue. 

I would like to rent to them. But her numbers are scary. 

I went through the place today. The apartment is clean. She stole the refrigerator and microwave. The stove also doesnt ignite. Im wondering if there is something worth stealing in the stove that she took. She also left a ton of her stuff in her basement storage compartment and in the garage. A real gem, this one.

My first tenant is moving out today (hopefully). I am going tomorrow morning to assess the apartment. What are some things I should be looking for?

Will make sure all appliances still work. 

Test toilet, sinks, shower.

Make sure no major damage. 

Anything else I am missing?

Thanks

Good morning, would appreciate some landlord input. 

I have a tenant, a young family, that I have sent a letter of non-renewal to effective April 1. 

I don't particularly dislike them, but I have received complaints about them from each of my other tenants (noise, parking, etc.). 

More importantly, they are not good at paying on time. They currently have an outstanding $565 utility bill from Q3 2016 with me that they still haven't paid. They have paid rent late 4 out of the 6 months I have owned the place. 

They called me last night asking for "one more chance" to make good on the outstanding bill, and that this will be the last time they pay late. They've asked that I offer them a renewal lease. 

I am torn between booting them and starting fresh, or offering them a very strict m2m and kick them out if they are late just one more time. 

Thanks for the responses. I have a locksmith going to fix it now. 

As an aside, just got another text from the tenant, "The bathroom door gets jammed too."