All Forum Posts by: Adam Tafel

@Nathan McDonald - I dealt with this as a tenant years ago. My building has switched hands, and I was scheduled to move out in a few months. I hadn't done any damage to my unit, but my new landlord stated upon moving that he couldn't legally take my deposit even if I had. I'm not an attorney, but big management companies typically know their rights and use every advantage possible.

You could probably keep some of their deposit without consequences, I'm curious how many landlords have actually had deposits challenged in court? It's rare, as most tenants won't find it worthwhile to jump through the necessary hoops. That still doesn't make it the "right" thing to do, you'll have to make that decision for yourself.

I'm assuming you saw the inside of their unit before buying the place? And that the condition of their unit factored into the price you paid? 

@Justin Ignacio - thanks for sharing. Cashflow will go negative the second you have any repair/capex/vacancy. You seem to have good financial sense, keep analyzing deals and options and sharing them on BP. 

I've been doing video tours for clients all week, many are making offers sight-unseen. We write offers with a shorter inspection period, during which the buyer can back out of the deal. A smart seller will have at least one unit vacant before listing right now, fully occupied properties can be tricky. 

@Oscar Brooks - great tip on the FreshAir Sensor! Ordering a few of these now. The most frustrating part of a guest smoking in your Airbnb is having to prove it! This will simplify the process.

@Brittney Lundeen - I've been in your situation before, and completely understand the frustration. You can require an occupant to be added to a lease, add additional language to the lease, document communication, be direct, all good practices advised in this forum. 

I would add "let it be, for now" to the list of advice. The kind of tenant who 1. allows another to occupy without permission, 2. is dishonest (or at least withholding) about his occupancy, and 3. allows him to smoke inside - probably not the best in the long-term. What can you do at this point? Not much. Creating a you vs. them situation is the last thing in the world that you want, although you want to take action after feeling violated. 

Inheriting tenants can be tough, but it's always temporary. Smoke smells aren't permanent, neither are these people. You can do 100 things on paper to "protect yourself", but this situation is temporarily beyond your control, practically speaking. I don't say this to be dismissive or negative, I'm suggesting you pick another battle for now. 

Best of luck! 

@Justin Young - I would use property price + any repair/closing costs. In this case you would need $700/mo in rent to meet the 1% rule. If you were to calculate a cap rate you would use the actual value to the property. 

@Kyle N. terms and buying power differ dramatically when it comes to owner-occupant vs. residential/commercial investment loans. It's very important to come up with a long-term strategy/goal, and bring that strategy to your lender. I wish I would have gotten advice from other investors when I started 5 years ago, I did things inefficiently because I didn't know any better.  

Let's say you'd like to acquire 12 units in the next 5 years. If you make under ~79k, you can use a conventional loan and occupy a 3-4 unit property for 5% down. I was making about 45k/year in 2015, so I *should* have done this. Instead I used an FHA unnecessarily. I wasn't thinking about the long-term game.

Once you are making above ~79k, you'll need to put 25% down if you use any other loan but an FHA owner-occupant (I'm assuming this applies to you). You can still occupy a 2-4 unit property for 3.5% down with a competitive interest rate. Because you likely won't be able to secure another FHA loan after your first purchase, starting with a bigger, more expensive property might be smarter, assuming that you don't have unlimited cash reserves. You can then go on to occupy another multifamily property, acquiring a conventional loan with a larger down payment.

These rules/lending limits might be a bit different in your market, but my point is this : the rules are tricky, you need a long-term plan and a great lender/agent who specialize in investments. Do you ever play pool? Always be thinking 2-3 shots ahead. I think very few folks on BP would recommend starting with an out-of-state investment, but I'm sure it can be done. I've found that starting with a MF house-hack is the easiest/smartest way to get started. 

@Connor Mullen - ask your agent/lender to recommend an insurance broker. It's hard to know you're getting the best price possible when contacting individual companies, a good independent broker can shop your policy around to multiple companies. 

@Nick Stageberg - have you been seeing an influx of nurses trying to book? I would think that having STR in Rochester right now wouldn't be too bad. I'm in St. Paul, just accepted another longer-term booking (3 months). I gave them a major discount, but it's still above market rent. I have 3 more vacant units but I'm hoping to fill them with medical staff in the next few days. Fingers crossed !

Man, with unemployment skyrocketing you'd think people would be eager for an easy cash gig? I typically post gigs on facebook and get a ton of responses. Do you live in the area? Reach out to your sphere, college kids home from school early should be all over this. 

FHA isn't a big fan of peeling paint, and the rotting subfloor could be an issue. Ideally FHA wants to know that everything in the home is functional and safe, with major structural components (foundation/roof) in good repair. Luckily you're dealing with a family friend, I'm assuming it's off-market? FHA inspection will probably come back with some work orders, at which time you can negotiate with the seller on costs. Do whatever you can pre-inspection, talk with a local agent/lender who is experienced in FHA deals and you'll know what to expect. They've been pretty easy on us lately, we get our clients properties in need of repair with FHA loans all the time.