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The other thing is you really don't want to give your tenants the ability to chargeback their rent if they're unhappy about something or want to skip out on their lease
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Apr 5, 2015 16:30
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BEHOLD: MY CAPE posted:The other thing is you really don't want to give your tenants the ability to chargeback their rent if they're unhappy about something or want to skip out on their lease Isn't there the possibility of them cancelling a check as well? I would think skipping out on payment would be the likeliest indicator that there's a problem as opposed to making the payment then trying to reverse it after the fact.
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Apr 6, 2015 00:51
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TouchyMcFeely posted:Isn't there the possibility of them cancelling a check as well? Not after it's deposited and cleared. With credit cards you can generally dispute a charge for a substantial period of time (60 or more days) and the process is very purchaser friendly. I don't accept credit cards so I don't know all the details from the merchant side of things but at the very least your money is held in limbo and you're subjected to an administrative hassle. Why even bother? Back to the convenience argument I'm not sure there's a big tenant base that demands the convenience of online payment but can't or won't use ACH check payments. They're just as easy as punching in a CC number for the customer.
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Apr 6, 2015 16:19
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Bloody Queef posted:Lord1234 BQ, did you ever make an Excel sheet like this? Would you be willing to share this spreadsheet?
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Apr 6, 2015 16:44
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BEHOLD: MY CAPE posted:Did you investigate financing an investment property before paying for an appraisal? It's the landlord that's paying for the appraiser, not me. I will be getting an independent appraisal if I keep moving forward with the purchase. Thankfully I haven't been badly burned, and I'mI'm not super keen on keeping up utilities but I've already talked with the roommate about the electric bill and all that so we have both reached a thermostat setting we can live with. I have a gas furnace and natural gas is dirt cheap compared to the electricity it takes to run the A/C. What I'm charging now is about 75% of what I pay in rent. If I look at it as they're paying half my rent with the extra being utilities then they're covering about 2/3rd of the annual utility bill. When I started doing this it was just easier to do a flat rate for people that are here only two months at a time, especially since the water bill only comes quarterly. I've been doing this for over two years now and the rent I'm charging has consistently kept the room filled. I used to charge about 80 dollars a month more and ended up with an empty room for part of the year.
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Apr 6, 2015 17:38
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Mandalay posted:BQ, did you ever make an Excel sheet like this? Would you be willing to share this spreadsheet? I have a bunch of different spreadsheets for rental property projected cash flow, etc. I didn't make one for that scenario. Feel free to PM me your details and I can throw a sheet together for you.
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Apr 6, 2015 21:21
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I have a 'is this a good idea' situation that I would love some input on. A property down the street from my house has come up for auction. It's been vacant for 5 years (!) but I have toured it and it's in pretty good shape. It's been bank owned during this time and there are records of people stopping by to inspecting it 2x a month for the last 5 years. There are some cosmetic issues throughout (hardwoods need to be refinished, paint, holes patched, etc), and the kitchen and bath both need to be redone, but all the (old) appliances are still there, and nothing appears to be irreparably broken. These are all things that we've remodeled ourselves in our own home so I'm not too worried about that - I know we can do the work, if a bit slower than a pro would. There was a leak in the third floor at one point in time, but the bank put half a new roof on, and beyond some falling plaster there doesn't seem to be anything currently wrong. They also replaced many of the windows with energy efficient windows and had the whole place winterized. The big questions for me are the heating and electric systems, as all utilities have been shut off. The house has radiant heat, so any leaks or bursts would be expensive to repair. The boiler is newish though, so that's a plus at least. My question is: how much would be reasonable to place as a bid for this place? Rents in the area are around 1200-1500 for similar homes, and houses in good shape go for 140,000+. We would be primarily interested in renting it out, but wouldn't be opposed to selling it if numbers didn't add up for renting. I'm not afraid of the work, but I'm pretty conservative financially and do not want to stretch myself too much. We could pay cash up to 20k. Some homes in the area have gone for around that or less at foreclosure auctions, but that's not necessarily the norm. I figure it needs at least 10k cash in improvements/fixes (which is probably optimistic) plus a lot of time and work on our parts so I don't want to pay too much for it initially. Help! tl;dr Help me not screw myself at a foreclosed home auction.
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Apr 10, 2015 02:35
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It sounds impossible that this house will sell for $20k at auction given the bank spent about that much on repairs to it; that's your ceiling price because auctions are cash transactions
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Apr 10, 2015 02:47
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BEHOLD: MY CAPE posted:It sounds impossible that this house will sell for $20k at auction given the bank spent about that much on repairs to it; that's your ceiling price because auctions are cash transactions In speaking with the guy who is going to be running the auction, he made it sound like the bank just wants to be done with it. It's being run by a private company who asks for a percentage of the price up front at the auction, but then the rest of the transaction is handled similarly to a normal house closing. So, there is opportunity to bring money to the table at that point beyond the initial payment. I can get my hands on more than the 20k I mentioned anyway, it would just take some time. And blowing up my precious emergency war chest. However, apparently there was a cash offer before the auction date, so now I have just a few days to decide. He didn't tell me to get lost when I told him I was in the market at the 10k-15k range, and encouraged me to look at the place and then let him know if I wanted to make an offer. But who knows if that means I might have a shot at that price, or if he's hoping I am actually willing to go much higher. I realize these numbers must sound insane to some people, but it's a city neighborhood undergoing 'gentrification'. I live here and love it, so it's not a slum. Just a bit gritty. All this said, I'm also entirely willing to admit the possibility that I've talked myself into a pie in the sky pipe dream. That's why I'm here! I lost out on a house that went for 36k with fewer unknowns and in much better shape last year due to my dithering too long, so I might be a trigger happy after that.
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Apr 10, 2015 03:11
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Are auction prices for homes normally that far below the regular market?
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Apr 10, 2015 03:13
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Cicero posted:Are auction prices for homes normally that far below the regular market? Right, if houses are really renting for $1500 and there's not some absurd property tax situation like $12000/year or something stupid I just can't imagine that there aren't landlords or flippers willing to pay more than $20,000
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Apr 10, 2015 03:21
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Prepaid leases: has anyone done one? I have a potential tenant who is a college student (but an older woman, so there won't be keggers in the place.) She will likely be paying her rent with student loan and grant money supplemented by a minimumish wage job. To the best of my knowledge loans and grants generally comes as a big chunk in the beginning of the semester. My concern is halfway through the semester, that student loan money is all spent and she can't afford to pay rent. I haven't expressed this concern to her yet. Has anyone handled this scenario before? I think prepaid rent would be a good idea, I can give her a discount if she does that. How does it work if midway through the lease she says "gently caress it" and moves away. Would it be treated like it was normal rent and I would refund whatever amount back once I rerented? For jurisdiction questions, the property is in Delaware which is very landlord friendly and basically has no tenant laws other than timing of security deposit refund, notice to enter, and all the generic safety related things. I think the max security deposit is 2x Monthly rent, but haven't seen any discussions about prepaid rent.
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Apr 10, 2015 19:49
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I think prepaid rent is yours to keep if the tenant breaks his or her lease, but if you insist on a prepaid lease for a college student on loans when you would accept monthly rent from someone with an equivalent income who works and is paid on a regular basis, you're exposing yourself to a fair housing claim.
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Apr 10, 2015 19:57
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I think mostly you're exposing yourself to watching someone laugh at you as they go find another place to rent.
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Apr 10, 2015 20:00
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BEHOLD: MY CAPE posted:I think prepaid rent is yours to keep if the tenant breaks his or her lease, but if you insist on a prepaid lease for a college student on loans when you would accept monthly rent from someone with an equivalent income who works and is paid on a regular basis, you're exposing yourself to a fair housing claim. I agree with you on the fair housing front. Except she basically has no monthly income. Her job pays 8 or 9 bucks an hour and I would never qualify her if that was her only source of income. But I may need to reconsider. DNova, I wouldn't really care if she told me to go gently caress myself. Place was listed on Weds and she looked at it yesterday. Already have a ton of showings for over the weekend. Bloody Queef fucked around with this message at 21:15 on Apr 10, 2015 |
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Apr 10, 2015 21:12
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Bloody Queef posted:I agree with you on the fair housing front. Then why even consider the can of worms when you have other presumably more financially stable potentials?
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Apr 10, 2015 23:13
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DNova posted:Then why even consider the can of worms when you have other presumably more financially stable potentials? That's a better point. Honestly my wife makes all non financial decisions regarding our rentals and she's a terrific interviewer and her gut has never been wrong (knock on wood). And she thinks this woman would be a perfect tenant if we can figure out the financial stuff. That's a little more important on this property because it's on our personal property. Hopefully a better financial tenant that has the right intangibles.
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Apr 11, 2015 16:43
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Tell me what's wrong with this plan: 1. Get mortgage on a rental property with 10% down. 2. Hire a property management service to manage it, even this means you only break even on the mortgage + tax + fees + repairs + insurance. 3. Own the entire property after 30 years (assuming 30-year, fixed rate mortgage) Repeat steps 1 and 2 every year forever. I read about this in a book and the author said it worked great until he found out he was only allowed to have four mortgages or something. I'm assuming there must be a ton of gotchas and little ways this can go wrong. Seems like it would even let you get around the "don't own rentals far, far away from where you live" rule, since you wouldn't be managing it yourself. EB Nulshit fucked around with this message at 04:14 on Apr 16, 2015 |
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Apr 16, 2015 04:05
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EB Nulshit posted:Tell me what's wrong with this plan:
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Apr 16, 2015 06:16
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SiGmA_X posted:You found the problem! "you only break even on the mortgage + tax + fees + repairs + insurance." You're going to have vacancies, and the fees will eat up your profit. Not to mention, you aren't going to qualify for a mortgage once your debt to income ratio reaches a certain number.
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Apr 16, 2015 07:33
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Also 10% down on an investment property isn't easily obtainable. It was 10 years ago, and will probably get there soon, but it's not as easy as 10% down on a personal residence.
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Apr 16, 2015 11:15
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I'm in NC. Say a tenant's lease is up by November, but they've been chronically late. In lieu of eviction, they offer to pay all the back rent + all the rent until July, and move out in July. Is there a way to change the lease so that the promise to move out in July is legally binding? Or is a signed document to that effect enough? Googling didn't help.
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Apr 16, 2015 12:10
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SiGmA_X posted:You found the problem! "you only break even on the mortgage + tax + fees + repairs + insurance." You're going to have vacancies, and the fees will eat up your profit. Why? Isn't that what you pay the property management company to prevent? Why not just be extra careful to only purchase properties where you would break even on mortgage + tax + fees + repairs +insurance and vacancies? If you're only purchasing one property per year, then you should have the time to find such a unicorn, even if they're really rare, no? But, given that the author started in the late 90s and did say it got much harder in the late 00s, these two make sense: Scrapez posted:Not to mention, you aren't going to qualify for a mortgage once your debt to income ratio reaches a certain number. Bloody Queef posted:Also 10% down on an investment property isn't easily obtainable. It was 10 years ago, and will probably get there soon, but it's not as easy as 10% down on a personal residence. However, is there some way around this? Maybe an individual person can only have a maximum debt-to-income ratio, but why can't you just start a company that has no debts and have the company get additional mortgages?
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Apr 16, 2015 12:37
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Rurutia posted:I'm in NC. Say a tenant's lease is up by November, but they've been chronically late. In lieu of eviction, they offer to pay all the back rent + all the rent until July, and move out in July. Is there a way to change the lease so that the promise to move out in July is legally binding? Or is a signed document to that effect enough? Googling didn't help. You can sign a rider to the lease to the effect of your new agreement. But I wouldn't hold your breath on this tenant actually paying a bunch of back rent. Not knowing anything else about the situation honestly this sounds like a stall to stop you from evicting.
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Apr 16, 2015 12:37
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BEHOLD: MY CAPE posted:You can sign a rider to the lease to the effect of your new agreement. But I wouldn't hold your breath on this tenant actually paying a bunch of back rent. Not knowing anything else about the situation honestly this sounds like a stall to stop you from evicting. Yeah, I'm probably going to say if they can pay everything by tonight, then I'll stop the eviction, but I'm not going to do it until the cash or certified check is in my hand.
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Apr 16, 2015 12:39
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EB Nulshit posted:Why? Isn't that what you pay the property management company to prevent? Why not just be extra careful to only purchase properties where you would break even on mortgage + tax + fees + repairs +insurance and vacancies? If you're only purchasing one property per year, then you should have the time to find such a unicorn, even if they're really rare, no? A company with no money and no assets can't get a mortgage either.... There's nothing wrong with your plan, it's not magic. The nominal return on such a property is 7.7% over 30 years plus whatever the long term appreciation of the house is, realistically another 1-2%. Overall very similar to investing in the stock market. The real gravy in the equation is to do all of the property management yourself and keep that 15-20%
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Apr 16, 2015 12:42
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BEHOLD: MY CAPE posted:A company with no money and no assets can't get a mortgage either.... But.... If I own it, and I have money and assets...  Oh, oh, oh! If my debt-to-income ratio has to be under a certain number, won't the rental income offset that by some extent, allowing me to purchase more properties? BEHOLD: MY CAPE posted:There's nothing wrong with your plan, it's not magic. The nominal return on such a property is 7.7% over 30 years 7.7% of the 10%-20% I put down or 7.7% of the full price of the property? BEHOLD: MY CAPE posted:Overall very similar to investing in the stock market. The real gravy in the equation is to do all of the property management yourself and keep that 15-20% If you have a property that rents for $600/mo, then if you do the property management yourself to keep the 15% property management fee, that's only 600 * 15% * 12 = $90 * 12 = $1080/yr. $1080/yr isn't worth it at all. After income taxes, that's even less. EB Nulshit fucked around with this message at 13:02 on Apr 16, 2015 |
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Apr 16, 2015 12:58
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1. Yes, once you become a legitimate business with multiple years of documented cash flow then yes you can get more loans. The way you put it at first read to me as, "can I just start an LLC to get around lender debt requirements?" 2. 7.7% of your 10% in nominal dollars assuming you break even the entirety of the 30 year term. Lots of other assumptions and variables can be built into that including rent inflation, property appreciation, tax treatment (generally less favorable than equity investment) etc. 3. If you think on a bigger scale with more properties this turns into a big deal, and also consider that "only" $1080 compounded over many years is a lot of money. Importantly that margin would also be positive cash flow in your hypothetical business model. BEHOLD: MY CAPE fucked around with this message at 13:25 on Apr 16, 2015 |
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Apr 16, 2015 13:21
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Rurutia posted:Yeah, I'm probably going to say if they can pay everything by tonight, then I'll stop the eviction, but I'm not going to do it until the cash or certified check is in my hand. That's what I would do, although it would be pretty clever to get you to agree in writing not to evict them until July
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Apr 16, 2015 13:28
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Anybody have any experience going in with partners, setting up legal framework, etc? I'd like a book to read to give me some background, as an accountant friend, lawyer friend, and I are flirting with starting something. I don't want to lean on their expertise without knowing the generalities of the processes myself. They'd do the legal write ups and funneling of cash, I would be the property manager and just want to figure out what a fair way to set up compensation, capital investments, etc is without committing to too much by myself.
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Apr 22, 2015 00:15
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We are probably about to have our tenants depart our rental at the end of the lease. I think we have a good relationship with them and I was wondering if anyone solicits reviews/feedback in how they perform as a landlord? I know they only see one side of things, but I would like their input if it is appropriate to ask. Any thoughts?
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Apr 25, 2015 15:49
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I just had a tenant casually mention to me that he's getting a cat. I instantly objected, I loving hate cats, but he said he already signed the paperwork. He feels bad for not checking with me first. My one big concern is cat urine. I asked my insurance today and they say they won't cover any pet damage. This is a young female cat so it'll probably won't make any mistakes for a few years, but I also know firsthand that a sick or old/senile cat will pee wherever it wants, and left unattended will eat through my hardwood floors. I'm not sure what to do here, the only thing I can think of that seems reasonable is a sort of running security deposit. Like, I'll charge him an extra $100 a month (my rent is already charitably low) and if the place is fine in a few years then he gets a fat stack back. I figure that'd scale with the damage-over-time that a pisscat can rack up.
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May 11, 2015 23:14
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Zero VGS posted:I just had a tenant casually mention to me that he's getting a cat. I instantly objected, I loving hate cats, but he said he already signed the paperwork. He feels bad for not checking with me first. A large deposit seems like the right answer, I'd let them build up a ~$1000 deposit over a long period of time and then make it clear to him that any cat-caused repairs you have to make after that will come from the deposit. Your plan seems way more fair than large companies that do ~$50/mo pet rent on top of a huge pet deposit.
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May 11, 2015 23:23
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I'm assuming there wasn't anything concerning pets in your original agreement?
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May 11, 2015 23:25
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Zero VGS posted:I just had a tenant casually mention to me that he's getting a cat. I instantly objected, I loving hate cats, but he said he already signed the paperwork. He feels bad for not checking with me first. I do a $2-300 pet deposit (depending on what my flooring surfaces are) and do $50/month additional pet rent. I think this is pretty reasonable and not punitive. If your tenant objects to this, show him in your lease where it shows pets are not allowed and that if the tenant obtains a pet without express permission, eviction proceedings will start (I hope you had this in there). Remember, you're not their friend, you're their landlord.
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May 11, 2015 23:37
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SpelledBackwards posted:I'm assuming there wasn't anything concerning pets in your original agreement? Not in writing but then he didn't have any pets in the first place and I did my usual verbal spiel about no smoking/pets because I always do. He admits he should have asked ahead of time. He says he can't afford an extra $100 a month for security deposit. I said "You do a cat with food and vet bills can be a whole lot more than that, so you should reconsider ownership if you're cutting it that close" and he says he's going to try to give the cat back now. I feel like a bit of a jerk but I mean come on.
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May 11, 2015 23:38
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Zero VGS posted:Not in writing but then he didn't have any pets in the first place and I did my usual verbal spiel about no smoking/pets because I always do. He admits he should have asked ahead of time. If you have a usual verbal spiel you do, why not turn those into a Pet Addendum and Smoking Addendum to the lease so that you can actually have recourse? You're lucky he mentioned it to you instead of just bringing the cat, because he's allowed to under the lease.
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May 11, 2015 23:52
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Bloody Queef posted:I do a $2-300 pet deposit (depending on what my flooring surfaces are) and do $50/month additional pet rent. I think this is pretty reasonable and not punitive. One month's rent pet deposit, no additional pet rent has been my policy so far. Officially, no pets are allowed. Zero VGS posted:Not in writing but then he didn't have any pets in the first place and I did my usual verbal spiel about no smoking/pets because I always do. This is worthless. Everything in writing. Come on.
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May 11, 2015 23:52
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Well, he said he just talked to the guy he was taking the cat from and it wasn't a hassle for the process to be canceled. So I dodged that bullet, assuming he's not sneaking it in or something.
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May 12, 2015 00:05
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Now take some time to modify your lease and/or get some addendums legal in your area so that you don't have to give a verbal spiel that will never hold up in court.
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May 12, 2015 00:08
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