All Forum Posts by: Rick Bassett

We have (2) that rent for $1895 each - 1500 sq/ft SFH w/4Bed, 1.5 bath - income level is $50k - $70K

We are rehabbing a house and have the option of adding a walk-in closet to two of the bedrooms or adding a decent sized Bonus Room (office) to the floor plan.

I say Bonus room as the home it is size of a bedroom but due to septic sizing it can't technically be a bedroom.

So if you had to choose for resale value, which would you pick?

5 pages of conflicting posts in that thread isn't really a 'nutshelll'.

This is my simplistic understanding of DF so far (jump in if I am wrong):

- If I offer an option to buy I am OK if I collect the full option fee upfront or at the closing BUT I can't allow a buyer to pay the option fee over time.

- Options should be separate from the lease and and shouldn't be assignable.

- I can't allow any portion of monthly rental payments to be applied towards the purchase of the property or the downpayment.

- I can't offer direct seller financing without going through a mortgage servicing company, which I assume does an in-depth screening (underwriting) to ensure that the buyer is 'qualified' for this financing arrangement -and- collects the monthly payments from the buyer and then distributes the 'mortgage payments' to me.

In our State, the law is clear that Security Deposits can't be used for the last months rent but that doesn't stop tenants from trying. It is super easy to get a small claims judgement against tenants that do this; getting paid on that judgement is another matter.

Also in our State we can't start the formal notice process until the 11th and that must be done by a Marshall ($75 - $100) BUT when properties are held in LLC's, like ours are, then an Attorney must have the Marshall serve the notice (several hundred dollar$s) more. So getting the notice on the door might take until the 15th and cost us $300 - $500. It's not really worth the expense or effort for someone that is going at the end of the month BUT definitely worth it for someone that is 'staying and not paying'.

Consider:

It is the winter, if you pull the plug on her now, which you are entitled to do, then you will lose a months rent plus utilities plus your efforts of lining up another tenant.

She will certainly do this to you as well on the back end of her lease, you can pretty much count on that. You will lose the last months rent which you may or may not be able to get a small claims judgement against her for.

So it becomes a question of whether you want to take the 1 month rent hit now or later.

This is what I'd do (and have done in similar situations):

I'd take her now but only make the lease 6 months so that you can get it in-sync with the prime renting season going forward and get a better read on this tenant. Tell her that you want to get your lease in-sync with the summer rental season (that is your privilege) and you will renew it with her in late June for 8/1/14 - 7/31/15 assuming there are no problems (late payments, problems discovered in June walk thru, excessive drama etc).

I would also go back and take a hard look at the data that she provided on the application so that you have a better chance of finding her after she leaves in case you have to take her to small claims or housing court. Get good information on the Emergency Contacts (relatives especially). It is far easier to get this info now then after they have moved in.

This does a few things for you:

1) It lets the tenant know that you know how to run your business right from the beginning.

2) It gives you a 18 month tenant instead of a 12 month tenant as renewal will most likely happen unless she is terrible.

3) It gives you the information that you need upfront for when you have to chase her for the last months rent.

4) You get your rental unit in-sync with the prime rental season going forward.

I suspect, with no data to back it up, that most of the Guru Graduates who attend these seminars don't have great success afterwards. It's a shame as they put in a lot of time, hope and sometimes way too much money for the 'secrets' that the Gurus teach them.

I used to think of the army of Guru Graduates as a real pain in the tuchus as they often mess up good potential investment opportunities when they couldn't close on deals that they had first mover advantage on (for a long variety of reasons, most of them involving unrealistic leverage). Now I look their involvement as an opportunity for my contingency offer(s) in that I tell the seller(s) to call me when the Guru Graduate's offer comes off the rails and we will do a straight deal with no BS. It works a good percentage of the time.

Hi Jason,

Working just north of you in the New Haven area.

I'm very involved with Rotary and both Trumbull and Westport have excellent Clubs (Westport actually has 2 of them). You should check them out.

Rick

While it is harder to get the numbers to work in our area (buy/rehab/rent/hold/rinse/repeat) than it was a few years ago, some deals are still popping up where they do work.

Our area is a strange one in that we really don't have any new building to speak of due to the lack of buildable land. We also have pockets of great affluence and great poverty that often butt up against each (ie...Woodbridge/New Haven) through our little State.

Great poverty usually translates to lessor quality school systems which in turn drives people with the means move to the more affluent areas in the burbs to put their kids in the better school systems thus keeping up or driving up the prices in burbs while flat lining the prices in the less affluent areas, the cities.

Going through this now and the zoning rules matter a lot (no pun intended).

We purchased a house with a lot that is .96 acres and has 100' of frontage on the road and want to split it. Town requires .5 acres and 100' of frontage for each lot, otherwise you have to seek a variance.

Variance requires A2 Survey, letters to neighbors informing them of a public hearing in case they wish to object, sign off by wetlands commission (no issue here), zoning board and zoning board of appeals. Estimated cost of this crap-shoot is $5,000 - $10,000 plus whatever we have to concede to neighbors such as special landscaping, fences...etc.

Zach,

Lots of good advice here.

I will add that it is important not to show any emotion to these people, they are trying to upset you and get you to do something stupid that they can use against you.

Give them no smile, no frown, stick to the book and toss them out.