All Forum Posts by: Karen Johnson

Originally posted by @Account Closed:

I think the answer is something you'll have to decide yourself based on your available time and your individual way of handling stress.

I'm curious though - if your long term plan is to buy and hold then why fix and flip and why not fix and rent the property you bought?

Thank you for your feedback. We are partnering with someone on the flip (because we have no experience in this area and our partner does). We discussed doing a BRRR type of strategy with our partner, but straight fix and flips seemed less complex in terms of unwinding the partnership at the end. It works for us either way because we get the additional cash infusion that we can apply to our longer term goal.

Hi everyone. I apologize in advance for the brevity of this post. If you can stick it out, and give me advice (philosophical or financial), I would appreciate it.

We (my husband and I) are ready to get things going with our investing. The original plan was to partner with someone to do a few flips so we could raise more capital to purchase buy and hold properties, which is our longer term goal. So far so good and we will be closing on our first flip purchase in a few days.

I instigated a deviation from the plan and started to look at cash-flowing multi-families for buy and hold, since I know we have enough to purchase a property already. However, I also have to admit that it would be great to have more capital available. We found a deal in Norristown, PA (anyone who knows the area well, please provide some your insight into which way it’s trending). It is a 6-unit property, which means we would need to get commercial financing. There are 4 units in 1 building and 2 units in another building in the back. The asking on the property is $335,000. It has a monthly income of $4583 and at least one of the units is under-priced (long term tenant, paying less than $600/month for a 2 bedroom unit that should rent for $900+). There is one section 8 tenant that is looking to move out soon. We have only seen 3 of the 6 units, since two tenants changed their locks (with one of said locks having had the lockbox attached which also contained the key to the 3rd unseen unit). We would of course see the rest and do financial due diligence and inspections if we decided to purchase. This is a C class property, but could be improved with some simple updates like flooring, paint and newer appliances. However, they are all long term tenants and satisfied with status quo, so we wouldn’t be looking to update much of anything unless/until they move out. We’ve run the numbers a few different ways, trying to account for worst case scenario and it still seems to be a good investment.

So, what’s my question? First, does it make sense for us to simultaneously attempt to do a flip and to purchase a multi-family, since we are just starting out? Financially speaking, we would have to get creative to do both of those things at the same time. I think I’m OK with that aspect, but I’m wondering if we should just focus on one thing at a time (I know a lot of people recommend this). Second – is a 6 unit property more than we should take on as novice investors? We’ve been accidental landlords before. We knew we wanted to get into the business on our own terms eventually, and initially planned start with SFRs and duplexes, and eventually  move into larger properties. We see the value in multi-family, but we’re not sure we should jump right into larger ones. Should we focus on looking at smaller properties that we can get without commercial funding, and so we can learn more about landlording as a business on a smaller scale? I freely admit that I’m leaning more toward this purchase than my husband is. I think there is a part of me that is worried we won’t find another deal like this for a while if we don't move on it. So maybe I’m partially motivated by fear (which, as I type, is irrational and not really a good reason to buy $300K+ of property). The flip side of that is that I’m worried about doing a half-baked job at two things where we could do one thing really well to start out. Maybe that worry answers points to the right answer to my questions?

I have a million other questions, but honestly if you’ve made it this far I don’t want to abuse the privilege. Thank you in advance for your feedback.

Another option is to ask them of they have another unit you could switch to instead. I had a similar issue once (except I refused to move my things into the unit until it was resolved). The property manager initially told me that they would send someone out to "see if it smelled" and I told them it was a bit ridiculous to say that considering I was standing in the rain with my moving van because it smelled so bad in there. I don't remember what my talking points were, but I did convince them it was better for them to give me another unit to move into (I wanted to live there, after all) than to get into a long, drawn out battle over future non-payment of rent and possible litigation to get my deposit back.

Hi Branden, I'm from Ambler, PA and wanted to say hello since you're so close by. I'm relatively new as well, looking to do mostly buy and hold, but not averse to flipping. Like you, I'm reading and learning. Thinking about joining a local REIA as well. I don't have a lot of advice to offer since I'm learning myself, but wanted to say welcome and wish you all the best!

Hello everyone,

I've been on BP for a few years now (since I became an accidental landlord). Now, I'm at the point where I want to get into real estate with purpose and intentionality. I am interested in buy and hold SFR and multi-family in my area, as well as flipping. I'm still in the process of learning everything I can, and trying to make connections and associations that will help me grow. I'm trying to push past analysis paralysis, but also don't want to jump into things hastily. That's me in a nutshell. I'd love to network with other local investors, and get as much knowledge and information as I can from the community in general.

It's really not about punishing them (although my first post may have made it seem that way). I think that in all likelihood they will not move on the 15th regardless of what courtesy I do or do not extend them, and I prefer not to muddy the waters further with discussions about rebates. They have been "moving next month" since last July, and suddenly are planning to be out in 3 days. I do feel I've been very flexible in not giving them any angst for telling me (only when I inquired about their late rent) that they were planning to move out at the end of the month, given that I require at least 30 days notice. I don't really feel like I need to do much more than this. I see arguments in both directions, but I think I'm more comfortable with holding them to the terms they agreed to (even if they haven't held up their end all the time).

I thought this through some more and decided to tell the tenant it's not an option. The sudden decision to move earlier is honestly not my issue and I'm not obligated to make things easier for them. I think they may be asking because we've had a pretty good rapport, but at the end of the day it's business and I have to treat it as such.

Hello,

After several months of telling me they were likely to move in a month (they went from a 1 year lease to month-to-month as they were trying to purchase a home), my tenants are moving. I found out because I contacted them regarding the rent being late, and was told, oh, by the way, we are moving at the end of this month. They paid the rent, so no issues there. Now, tenant is asking if I will prorate the rent and issue a refund if they move out by the 15th (note, it is the 12th, and they literally asked me this question via text 10 minutes ago). I feel like I want to make them pay the whole month just for my troubles (they paid late constantly and I always had to remind them). What would you advise doing in this case? I wouldn't mind them moving earlier because I can get ready for a new tenant quicker, but it's also not like they are doing me a favor, per se. Any advice welcome.

Thanks,

Karen.

Hello all,

I own a nice townhouse in Philadelphia region which is part of a community with an HOA. The problem is that the HOA is broke, has lost FHA status and is under threat of bankruptcy. For full context, more than 55% of owners do not pay their dues. HOA is almost $36,000 behind on its monthly bills and is owed almost $415,000 in dues and dues-related penalties and fees. The HOA board is essentially defunct (no annual meeting in over 4 years, and we have less than the required number of board members). I pay my dues and I am also trying to get on the board so I can (hopefully) have more information and help bring about some change. However, the reality is that the HOA is very close to going under and we're not guaranteed to be able to turn it around. My unit is great, but with the financial issues, the complex is not well kept. Landscaping had to be cancelled in order to maintain trash removal. There are several plumbing issues. There are potholes in the parking lot that will cause flooding if it rains and will only get worse after it snows. There are some abandoned units now, as well as some up for Sheriff's sale. The last couple of people who have tried to refinance have been unable to, and I have heard one or two stories of people being denied financing to purchase and being required to purchase for cash. So it's a pretty big mess. I guess my question is - what are my options here? The property is rented out but I'm concerned that as the neighborhood declines it will be harder to rent at market rate and/or the quality of renter will decline. I'm concerned that if the HOA goes bankrupt it will end up costing us several additional thousand dollars. I would love to sell the property, but I'm not sure how I can under the current conditions. I've owned the condo for about 6 years and it's been slowly going from bad to worse. I'd be open to putting out some cash to get rid of it, but I'm not even sure it's possible to find a buyer given the circumstances. Is there an option I should be considering outside a conventional sale that could be successful despite the ongoing issues?

Thanks for all the great information. The tenant paid the rent following my last contact, provided an explanation and says that it will never happen again. I have learned a lot about how to handle it if it does happen again, and also about how to structure future leases to be better protected in the future.