All Forum Posts by: Alan K Auman

@Jennifer T.

This is a solid approach and is basically what I was leaning towards doing except I hadn't thought of giving them the option to break the current lease and leave early. That's a really good idea that gives them even more options and flexibility. Thanks for the suggestion!

@Matthew Kreitzer

I'll definitely be giving them AT LEAST 60 days minimum notice so legally I'm good. That was the first thing I looked into. Having said that I'm really leaning towards telling them right from the start so I don't think the timeline is even going to come into play.

@David Stone

Thanks for the suggestion. I wish I could do what you did but these tenants are so far under FMV that a slight increase like what you did would still leave them ridiculously far under FMV. I don't mind leaving SOME money on the table every month to secure a good tenant with a reliable background like how you did in your situation. If I could raise it slightly and only have them under FMV by 30 or 40 bucks I would no doubt do that. However in this scenario even to get them within $50/month of FMV would take a substantial increase. I very much appreciate your input, though.

Hello all, 

I'm currently in the process of buying a duplex that has long term tenants on both sides. By all accounts the tenants are great tenants. Apparently they pay their rent on time every month, both times I've been to the property the units were clean and tidy, and they seem to be just good working class folks who take pride in their homes. On one side is a divorced blue collar kind of guy. He's got a bit of a bachelor thing going on in his unit aside from the pictures of his kids he has hanging on the wall. On the other side is an older couple who may or may not be retired. They look like they're still working age but they have both been home both times in the middle of the day so who knows. Their unit is impeccable although I did smell cigarette smoke and they have a small dog. So now that you all have some background here is my question:

Their leases aren't up until Oct so I can't do anything until then anyway but when it is time to sign MY lease they will be paying quite a bit more if they choose to stay. One unit right now rents for $450 and the other for $500. Both these units should be at $650 AT LEAST and could probably realistically fetch $750 a piece. They're mirror images of each other. Each is a 2level 3bd/2ba with about 1400sf. The property is a block away from the park and is within a .5 mile of a major hospital and within 3 mi of a major public university. I want to give these people as much notice as possible that there will be changes if they choose to renew (besides the increase they will also no longer be able to smoke in the unit, they will have to file deposits with me which for some reason they currently don't have, and any future pets will be subject to a pet deposit and monthly fee (I'm going to grandfather the current little dog in so he won't cost them anything)). I'm afraid that if I tell them right from the get go that there's always a possibility that they become difficult tenants in retaliation to the changes they know are coming. On the other hand I don't want to wait too long and blind side them. I honestly don't know if they have any idea how under market value they are as none of them strike me as the internet savvy type so I can't picture them cruising CL to check current market rates. 

So what say you all. Give them a lengthy heads up and risk turning good paying tenants into difficult tenants or wait until about 60 days out and leave them in a situation where they may be scrambling a bit to figure out their next step? I'm really quite torn.

@Shawn Holsapple is extremely active on this site. He seems to know Indy inside and out. He'd definitely be worth reaching out to.

@Tom S.

I started a thread that is asking about the very scenario that you are talking about here. If it's not too much trouble can you take a look at my situation and give me your thoughts? You seem to have experience with exactly the predicament I find myself in. Here's the thread. Thanks in advance for any advice. 

https://www.biggerpockets.com/forums/83/topics/281955-urgent--how-to-structure-this-deal-need-help-asap?page=1#p1836233

 @Jesse Vipond

Keep us updated! Very interested to see how this works out.

What a great way to look at it. Awesome comment.  

Just as the title says I'm considering getting my license. I mainly want it to make investing easier (having access to MLS, not having to wait on agents to view properties, etc..) but I am also interested in actually representing sellers and buyers as well. I know many people say the MLS access isn't that beneficial for investors because all the good deals are "off market" but in my area the MLS actually turns up pretty good deals so I do believe having access would give me a slight edge for myself and other investors. Can any Indiana RA's point me towards the best way to get started in this endeavor? I know I could just Google it but I wanted to get some feedback from some actual people who have went through it. Thanks a ton.

I'll cut to the chase:

3b/2ba each unit (built as a duplex so mirror images of each other)

Listed for 80k

Purchase price- 70k (seller paid closing costs) with 20%down ($14k)

Rent- 650/unit

PITI- approx $500/month

Neighborhood- C+ to B (about a block and half from a very nice park but with some rundown houses on the block. Property is also less than a half mile away from the biggest hospital in the area and about 3 miles from ISU campus.

Other positives- both units are metered separately on all utilities so tenants can pay their own utilities and save me that headache of trying to figure out who pays what. Property has been updated with vinyl siding, gutters, and all windows are updated as well. Also both units are in fairly good shape with long term tenants in each unit who seem to care for the units. They are paying well under market rate of 650/month so that's a discussion that will need to be had.

Hangups about the deal:

*knob and tube wiring throughout (though seller has agreed to update at a cost of $6500 as a condition of sale so I guess that's actually a positive. Seller has also agreed to a 1yr home warranty and termite treatment as evidence of termites were found during inspection)

*roof is old, will need complete tear off when it's time to replace. I think it still has some years left in it but I would expect to be replacing it within 10yrs. Will be very costly when it's time to replace.

*Plumbing is old. Not much newer plumbing to speak of although my better halfs family is a family of plumbers so that helps out with that concern.

*both front porches are sagging towards each other so some mudjacking could be a future concern though I think I can stabilize the sinking by fitting the porches with gutters that they currently (and have always) lacked.

Overall I'm pretty confident that the deal is good but I could use some outside opinions just as food for thought. Also something I didn't mention is there is a generous sized fenced in back yard with a garage. The garage is in terrible shape though and should probably be torn down at some point though as of now it works for storage purposes.

Thoughts are very welcome!

 Commenting to save this comment. Thanks @Shawn Holsapple