All Forum Posts by: Al D.

- Mirror, mirror on the wall, who is the best of them all? - Why, for me it’s been Derrick Craig

I am surprised to be reading that $200/door is difficult to get in the Cleveland area. I don’t know how you guys calculate your monthly returns per door (Like, do you just account for PITI, or also add expected depreciation, etc? Do you subtract expected capex? Is there a standard that each of you knows for a fact that all others are adhering to when discussing the dollar figure with the others here?) To me, in any case, the dollar figure is ambiguous because it will vary by the purchase price, downpayment, interest rate, local tax variances between towns/counties, etc. In my own experience of buying in a Cleveland suburb with 8+ school ratings (not a D class neighborhood) back in 2016, I got more than $200 per door - after accounting for PITI, before any capex, and self-managing. But I don’t calculate my potential profit that way to begin with. Instead, I aim for a 1%+ monthly return. So, for an easy example: a $100,000 purchase should gross me $1,000 or more in monthly rent. A couple of people above referred to “The 1% Rule” already. I haven’t looked at buying anything in the Cleveland area since last summer - and actually ended up getting better deals elsewhere then. But I do believe that good deals can still be had today. In fact, looking at an email I received from a turnkey provider (who does not appear to have any presence on this site) there back in March of this year, she was selling SFRs in Parma, Parma Heights, Cleveland (44102), South Euclid, and University Heights at the time. The prices for these ranged from $85,000 to just under $127,000 (and these are just asking prices.) Her pro-forma showed “estimated gross monthly cash flow conventional financing” ranging from $271/mo to $344/mo on these properties - after accounting for 3% for vacancy, 3% for maintenance, and 8% for management. While I am too tired to figure out what interest rate she was assuming and what downpayment (she did not list these metrics,) all these properties are right around the 1% rule. Having dealt with “turnkey” providers in other markets (I have no experience with any of those in the Cleveland area,) I’ve learned to find my own agents, who do nothing but represent buyers and sellers. You tell them what kind of schools you want, price/rent ratio, etc. They work for you. Just don’t forget to buy something from them at some point - only way they make money, not on managing your rentals. I found my own agent in the area, while doing my own research on Zillow. She has a narrow specialty in a narrow geographic area of the Cleveland suburbs. And I am ok with her “limitations.” I quickly learned to trust her. Back in 2016, my first property there, a duplex, was yielding 1.2% right off the bat. To put it into dollars: when accounting for my PITI (and nothing else,) I was pocketing just over $300/mo per door of that duplex. But I also knew (when I bought) that the rent had not been increased in a long time. By now, I get $487.50/door - a 1.575% monthly return. Again, I self-manage. This was not a turnkey, but an estate sale, the sellers of which quietly let a few people know they were willing to let it go for quite less than the asking price on the MLS at that time, after not an offer in months. My agent happened to be in the know. Not long after this purchase, I bought another, much newer, duplex in the same suburb, after it had been sitting on the market for close to a year. I was getting about $650/door, after accounting only for PITI. I am making $687.50/door two years later. Though, if either of the current tenants moves out, I may go back down to the original return (this property is at the upper level of the market, and new builds are still coming on.) Both of these properties were bought with 25% down, 30yr conforming. Figure out what you want (city, type of property, approximate purchase price, price/rent ratio, age, level of acceptable deferred maintenance, etc.) and tell the agent(s). There is a chance that you may get an agent who will throw everything under the sun at you as a “great deal.” Assuming that your research on the area is right, keep to your “musts,” which will also let the agent know that you are a serious investor whose time they should no longer be wasting until they really have a great deal. Keep in mind that Ohio property taxes vary widely from town to town, and some are just nuts, so choosing the city(ies) in the area should be your first step.

Joshua Lyon : Not clear from your statement whether you knew ahead of time that this was an international wire transfer. This FDIC page may be a good start on what your protections are and what to do now in that case: https://www.fdic.gov/consumers/consumer/news/cnsum13/sending-money-abroad.html In any case, you should file a “complaint” with the FTC and request a cancellation of the transfer from the banking institution on your end (this will not get your money back, but it’s a step you need to take.) There was a lawsuit brought up by First American Title against a real estate agent who allegedly failed to secure his email account. I don’t know where that lawsuit stands - could have been dismissed.

@Sagar S.: I don’t think that you should think the worst of AWB at this point - if the place is rented and they are pocketing your money, it would be beyond what I think of them.  It would be criminal.

But you should wonder. When I used their PM arm "REI," after buying turnkey from AWB, I got the place already tenanted. That tenant got evicted less than six months later for non-payment of rent. In this case, I tend to believe that REI did nothing wrong (except that it took me to tell them that the tenant missed a payment before they contacted the tenant to ask why they did not pay as of over 20 days before.)

After that eviction, the property sat empty for four months (late October - late January, slow months.) REI was on the hook to pay me the rent-equivalent; I was on the hook to cover utilities. Then they got me another tenant. A month later, I decided to self-manage; I fired REI over some suspicions I had, and got the then-current tenant's application. The tenant should have never qualified to rent the property, as her listed income was not even 2x the rent - despite REI's claim that 3x is their minimum to qualify. No one else was on the application, and no other adult signed the lease. I suspect that REI was willing to put any warm body in the property to stop paying me out of their own pocket for what could have been another three months.

The following month, the tenant stopped paying and did not answer my attempts to communicate. Once I served her with the eviction notice, she contacted me, claiming she lost her job. Under the circumstances - and after a long fight, which made me think that the company's management team is absolutely unprofessional - REI made me mostly whole. To be clear: REI still violated terms of our new agreement with each other to make me whole. I had to start picking my fights.

After the “jobless” tenant moved out, the property again sat empty from early January until late April - under a different PM this time.  I also lowered the rent from $1,250/mo to $1,195/mo.  There were applicants, but their credit was bad - I preferred to wait.

So, it is not unusual, in my experience, to have properties there stay empty for two+ months. Although, given the time of the year, I would think it should not be the case. I just can't imagine that REI would go as low as has been suggested here.

As for the original question of this post: AWB/REI came across as nice people when I met with them and during the purchase and our early relationship. But I would absolutely not do business with them again.

Charlene McNamara , congratulations on making the out of state leap. Depending on where you bought in the NE Ohio area, you may find the following link useful: https://www.biggerpockets.com/forums/731/topics/485533-cleveland-sfr-water-and-sewer-bills (It is not just about water and sewer bills.)

That depends on your original contract. Did the tenant fulfill the original term? (Sounds like he did.) Did the original (written?) contract state what was to happen at the expiration of the original term? (Like, was it automatically to become a month-to-month?) Did the original contract provide for the tenant (and you) to give a (x-number of days) written notice before move out? (Sounds like he did not adhere to that - this may be his only fault in this case.) Did the original contract state that any changes/extensions/etc would need to be in writing? (I would not take a verbal “extension” to court to begin with, but especially with that clause in the written contract.) IMO (if your written contract supports the above,) you may reasonably be able to claim up to a month (unless you get a replacement tenant sooner than that - than the actual prorated loss) in court. Personally, in this type of situation, I would not bother. I’d try to re-rent it as soon as possible. Next question for you is: if your original contract supports your claim (but be sure that it does), and you still have the security deposit, “charge” against that. In any case, be sure to let the former tenant know the itemized disposition of his security deposit within whatever amount of time your local laws say - in some jurisdictions, failing to do so may result in having to pay the tenant back more than just the original security deposit. The tenant left no forwarding address to return the security deposit? Be sure to document every phone call (other methods) you use to track him down, especially if your efforts should fail in the end. You are not expected to take “heroic” steps - just a reasonable attempt to return the deposit/provide an itemized statement on its disposition.

If she is current on rent - and especially if not - start the eviction process under “quiet enjoyment” if your locality allows it, or under anything else you can factually claim, ASAP. The fact that she has not been arrested yet is likely only because a case like this goes from the victim (1) learning about the crime, (2) contacting credit card to confirm, (3) making a police report. Given that you were able to track down these two victims, it is clear who the suspect is - (4) (because this is not a case where the suspect was still there when the cops arrived, or “hot pursuit”) the police report goes to the DA’s office, and an arrest warrant gets issued. What that means is that she is likely about to spend some time in jail, pre-trial (does not sound like she can afford bail,) and perhaps be sentenced to a term. In any case, no work, no money. The only potential benefit in that case to you is in serving her - you know where to find her, and can have the sheriff do it. But you don’t know how the eviction judge may look at the whole situation. And who will be taking care of the animal if she gets arrested away from the residence - the cops don’t know there is an unattended animal at her (your) place... Time is of the essence. Don’t be hard on yourself - you did a background check, which fell short. (Though, I’d be curious to know how you later learned about the fraud cases - perhaps you should not explain publicly.) From your story it is clear that she is a scammer. I’ve had those, and may again. I am yet to meet anyone who is 100% immune 100% of the time. Still waiting for that vaccine to hit the market.

First, check your rental/lease agreement to see if it addresses such an issue that you are facing now. However, even if it addresses it and says something along the lines of, “tenant is responsible for repair to HVAC under any circumstance,” does not mean that the language in the agreement is legal under PA law (just because something is in a contract - and agreed to in writing - does not always mean that it is legal if local laws may exist that specifically say that it is not legal.) But you should always start by looking at your contract. I never owned anything in PA, so had to look this up. Nolo seemed like a good start: https://www.nolo.com/legal-encyclopedia/pennsylvania-tenant-rights-withhold-rent-repair-deduct.html There are useful links from that page, specifically: http://tenant.net/Other_Areas/Penn/harris/pa-part2.html It appears that you have some options, but you must take steps - described in the link - to make sure that you are also within the law when taking them.

Reach out to David Greene . He holds events somewhere around Brentwood about once a month. He can add you to his email list.

Fresh off the press: http://abc7.com/technology/california-energy-commission-approves-requirement-for-solar-panels-on-new-homes/3450672/