Lets chat about the wonderful world of owning rental property

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Lets chat about the wonderful world of owning rental property

EAT FASTER!!!!!!: Sep 21, 2002; Legendary.

I've found that if you're a solid tenant otherwise in anything but the hottest rental markets - pay your rent on time in full every month, no drama, don't generate noise complaints, don't smoke in the apartment, good credit, limited, reasonable complaints to management exclusively about things that are clearly their responsibility - they're willing to forgive a lot of the "reasonable" wear and tear that happens in an apartment every month. I had my cats DESTROY the carpet (and a doorframe) in one place and the landlord told me it was due for replacement anyway and didn't even charge my security deposit for the damage.

# ¿ Mar 7, 2017 16:37

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# ¿ May 10, 2024 16:43

EAT FASTER!!!!!!: Sep 21, 2002; Legendary.

lord1234 posted:

So I have a tenant in my guest house(fully detached 1 bedroom, with laundry etc). Currently rent is 850 with all utilities included. The tenant was on a 4 month contract because she was unsure if her contract was going to be renewed.

On 12/1, we dropped it to a month to month contract as she was unsure if she was staying or going. She asked for me to drop it to 700$ a month and go month to month. I told her that I might drop it if she signs a lease for a year, but at that point we left it month to month.

Today 12/6 she comes saying she'll sign a 1 year lease for 650$ a month. Frankly asking for a ~25% discount is insane in my book for a longer-term lease. She isn't home a lot, and I'll admit doesn't cause a much higher electric bill, but her stuff is always there, so I don't think that should matter. I'm happy to give her a small break, but not such a hefty one. How should I approach this?

Is she a good tenant? Does she always pay her rent on time? What does $650 a month do to your numbers? 100% occupancy in the unit for a year is nice, but how is the market? Do you think you'd be able to get another tenant approved and moved in within 2 months? If so, you've already saved yourself the difference. Your mistake was letting her signal 700 as a reasonable number in her month to month renegotiation. Your opportunity was to say you'd be willing to take another year of lease at $800 or $750.

# ¿ Dec 7, 2017 00:19

EAT FASTER!!!!!!: Sep 21, 2002; Legendary.

Help me understand why this isn't a no brainer?

https://www.zillow.com/homedetails/2437-Petsel-Pl-Iowa-City-IA-52246/2107599497_zpid/?fullpage=true

# ¿ Jan 10, 2019 21:12

EAT FASTER!!!!!!: Sep 21, 2002; Legendary.

Jealous Cow posted:

Why was it listed and pending in 2017 for half the current asking? What did they plaster over that doubled the value?

My friend is a RE agent and says it was completely renovated.

# ¿ Jan 10, 2019 21:26

EAT FASTER!!!!!!: Sep 21, 2002; Legendary.

BEHOLD: MY CAPE posted:

You have to run the full numbers on it including the mortgage payment, property taxes, landlord licensing, vacancy and capital reserves for building like that but it could be a reasonable deal. $1100 per unit fully rented on long-term leases sounds like high rent for old 3/1 apartment units in Middle America but I don't know the area. I would ask for the rent rolls and a P&L and figure out what fully renovated really means like for example what's the condition of the roof and major systems. Oftentimes "fully renovated"means they went in and put down laminate and new countertops and painted the cabinet doors. If everything checks out and you come up with a cap rate of like 6 or 7% and you are willing to manage an 8 unit property it could be a fine deal.

It happens to be < 10 minutes from the academic medical center, dental school and law school.

I�ll request the rolls and also an account of what was spent renovating.

# ¿ Jan 11, 2019 22:29

EAT FASTER!!!!!!: Sep 21, 2002; Legendary.

crazypeltast52 posted:

How long have they been running it? Do they have P&Ls that they can give you as well? You may have to price in a reassessment in your cap rate if the assessment is lagging the renovations.

I'll have to look into all of this. I was just using numbers I know for the property taxes based on the sale price, estimating some of the other numbers and tying it all together with this spreadsheet.

https://www.calculator.net/rental-property-calculator.html

I have the assets on hand to put 20% down on a 30 year note (although would probably attempt to do this in a partnership with a couple I know - I went to business school with the husband and the wife is a RE agent). I figured property taxes as 15k (estimated based on sale price), insurance as 8k, maintenance as 10k, other costs as 2k and treated the net revenue from laundry services as 0. I also gave a vacancy rate of 12.5%

This prompted a cap rate of 5.22%

# ¿ Jan 11, 2019 23:06

EAT FASTER!!!!!!: Sep 21, 2002; Legendary.

BEHOLD: MY CAPE posted:

12.5% vacancy is super high, but you also don't have anything figured for cap ex so it's probably a wash. I guess overall I would say it's a little bit weird for a rehabber to like do a total renovation and then go through all the work of stabilizing the property to 100% occupied market rents just to immediately sell, but it is possible they want to just want to take the cash and don't want to deal with refinancing their hard money.

Talk to a commercial lender about what you are going to need to get the best loan terms, probably is going to make them a little skittish if you tell them you are a first-time investor but if this is a truly turn-key deal and you have plenty of cash I'm sure you can make it happen. Think really hard about getting into a partnership on a huge deal like this where you are going to tie up $200k cash and make sure you have a very thorough written operating agreement that addresses what you're going to do with reserves and cash flow, disputes in management decisions and very clearly gives exit routes when one of you wants out. It could be interesting but honestly I'd start with something a little smaller before doing a JV.

Edit: also I see you're in the "one of the partners is a real estate agent" situation, make sure you talk about that $30,000 commission check before she pockets it at closing

She knows that's (discounted) a portion of her initial capital in the JV so I don't think that situation is unclear. Just considering it. I know it's a big play.

# ¿ Jan 12, 2019 07:36

EAT FASTER!!!!!!: Sep 21, 2002; Legendary.

Jealous Cow posted:

Got a call from my property manager. The two car garage door needs to be replaced. �Something� happened that caused it to get tweaked and out of square so it won�t open anymore.

I talked to the contractor who said the door has a slide lock on it, which they always remove when installing an opener, and it�s likely that the tenant tried to open the door with the opener while the slide lock was engaged, but can�t prove it.

This is my first big tenant-caused repair since being a landlord for about 3 years. $1700. The new door won�t have a slide lock, so there isn�t really even anything to say to the tenant.

The garage door guy said he�s seen this litigated before and courts have found for the tenant, saying the landlord should have removed the lock if they didn�t want this to happen. Unfortunately I didn�t even realize the lock was there.

Sorry, I guess that's why you have a maintenance accrual account. Any problems with the tenant otherwise?

# ¿ Feb 8, 2019 16:18

EAT FASTER!!!!!!: Sep 21, 2002; Legendary.

Jealous Cow posted:

They were a day late paying once, but so far no. They renewed and I guess I�ll see how they�ve kept the interior during the renewal walkthrough.

They did put a huge trampoline in the backyard which I�m not thrilled about.

Doesn't that absolutely, catastrophically gently caress up your insurance rates? People break their necks on those all the time.

# ¿ Feb 8, 2019 16:20

EAT FASTER!!!!!!: Sep 21, 2002; Legendary.

Jealous Cow posted:

Just spoke with my agent:

There is no blanket exclusion on trampolines. They don�t care about them as a unique object. They would only not cover me if I had installed it myself and was negligent in its maintenance.

My primary home policy and my umbrella would be in force as long as there was no negligence on my part. Granted, I only have about $1.3MM in coverage, but I�m not worried about it because that�d be more than enough to defend me against the claim.

You guys got me all worked up over this

That's because it's a big deal and potentially an exceedingly expensive problem. Say you have some rocky soil back there, and one of their idiot kids does a flip off the tramp onto rocky soil and breaks their neck? Do you think these tenants will stop at anything to claw every red cent out of you that they can?

Do you know what it costs to care for an injured, quadriplegic child from life?

Can you guarantee that the entirety of the property wouldn't be found by a jury of sympathetic peers not to be negligent of maintenance?

Even if jumping OFF the tramp is what causes the problem, they'll sue wherever they land (your property, rentier).

Sorry, but it's a big deal, and it's why poo poo like this should be verboten and actionable in your lease.

# ¿ Feb 8, 2019 17:06

EAT FASTER!!!!!!: Sep 21, 2002; Legendary.

Short of full autonomous gay luxury space communism, are there solutions palatable to the American electorate?

# ¿ Mar 29, 2019 21:34

EAT FASTER!!!!!!: Sep 21, 2002; Legendary.

Hoodwinker posted:

Are you speaking from experience? Is there data on this? I'm legitimately asking. I'm not a landlord and I don't have an interest in owning rental property. Why would the psychological profile differ from any other kind of provider/purchaser transaction? Wouldn't farmers then also feel animosity for the people who purchase their goods since sustenance is a living need (if that's the reason landlords feel animosity)? What about the relationship generates animosity? Why is the power dynamic inherently unhealthy? I'm sorry, I'm not trying to bombard you with questions, this is just raising a lot of them in my mind and I'm sorting them out in written form.

For some real, meaningful insight into the problem you should read "Evicted: Poverty and Profit in the American City." This book was pretty eye opening about the asymmetries of power that exist between renter and rentier.

Basically even well intentioned people end up jaded, bitter and exploitative in the landlord business.

it's because tenets can do substantial, irreversible damage to your property above and beyond your ability to protect your investment and keep it working.

# ¿ Mar 29, 2019 22:05

EAT FASTER!!!!!!: Sep 21, 2002; Legendary.

I don't know, maybe take it up with a society that hasn't determined property rights to be as inalienable as life and liberty.

# ¿ Jun 24, 2019 16:58

EAT FASTER!!!!!!: Sep 21, 2002; Legendary.

DaveSauce posted:

I'm talking full blown vacation rental, so most guests would be 1-week rentals, and the off-season would be mostly weekends. We don't have enough time off from work to really be able to take more than a week there per year, so the idea would be that rentals would subsidize our ownership.

Prices in the area are so high we wouldn't be able to afford it otherwise, but at the same time it's a popular enough area where the summer season gets booked up pretty solid for most properties in the area. I haven't dug in enough to REALLY know the occupancy rates, though, which is why I'm asking for advice on how to get a good estimate for that and other costs. My bet is that we'd take a loss on it on average, but if that loss was less than $500/mo over any given year I would seriously consider it. Less than $200/mo and it'd basically pay for itself in that we could rent it for "free."

So most likely scenario is we'd use a management company that covers most of the basics in exchange for a big chunk of the rental fee. In our experience as guests, the agency covers booking, payment, emergency maintenance, cleaning, linens, etc. I want to say they take like 30-50%, but this is a guess based on random things I've read online.

Also it's not a different country. It's still in the US and it's less than a 3 hour drive for us. We'd most likely go through a management agency, which would handle maintenance and whatnot.

My understanding of owning vacation property is that it almost never works out to your favor to attempt this. When it works out it's because you've successfully speculated on an appreciating asset. When it fails to work out, (even if the asset appreciates) it's because your cash flow could be working so many other places (including but not limited to real estate investing, if you insist) and is losing out servicing an asset with tremendously variable occupancy, high associated costs, high volatility, high exposure to climate change, etc.

And good luck selling that albatross if you decide you don't want to vacation there anymore.

EAT FASTER!!!!!! fucked around with this message at 18:57 on Jun 24, 2019

# ¿ Jun 24, 2019 18:54

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# ¿ May 10, 2024 16:43

EAT FASTER!!!!!!: Sep 21, 2002; Legendary.

Don't get me wrong I know this might be one of those, "in a gentle way you can shake the world" kinds of things but if you've really got beef with the institution of renting property for money why don't you take it to the doorstep of Sean Dobson or something instead of stampeding in on a bunch of generally reasonable people who try to conduct business in a what seems to be a largely decent and evenhanded way?

That is to say, if you want to be persuasive about the inevitable injustice of renting property (and the landlord tenant relationship) - and I think you can be! - why don't you try to be a bit more nuanced and sophisticated in attempting to persuade other thinking, breathing, valid, supposedly-decent human beings of the virtue of your perspective and the folly of theirs?

Except of course if the only actual avenues remaining to be a capital "L" leftist in the United States in 2019 are 1) to radicalize, leave the country for the third world where you'll pursue your ideology sincerely but with all the creature comforts and benefits of being born privileged in history's greatest hegemony discarded like so many of your outgrown teenage identities or 2) as an insufferable ongoing performance piece in which you posture about having read, thought, considered or talked about an endlessly tedious regression of ideas about ideas about ideas and where you botch every. genuine. opportunity. to persuade those who think or feel differently than you by clumsily deploying unconvincing memes or awkward catchphrases instead of meeting them halfway from the comfortable identity you've knitted together for yourself.

Because if instead of playing a role for fun on the internet you're trying to communicate real ideas with real meaning and real importance, you should know that the rest of the baggage is insufferable.

Unless you really truly believe that the citizenry of what qualifies as "the proletariat" in 2019's United States of America is ready for armed, bloody revolution against a capital class armed with a symphony of opioids (including some actual opioids) the likes of which Marx could have never imagined.

# ¿ Jun 25, 2019 00:06

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Lets chat about the wonderful world of owning rental property