All Forum Posts by: Alecia Loveless

@Jay Chung If the mechanicals for the duplex are in the basement it may be better not to give the tenants access. For insurance you often have to have a certain amount of access to get to furnaces, hot water heaters, and electrical panels.

In my basements tenants have access to they totally disregard the access required and block the pathways needed for access.

In one building the tenants accumulated so much junk over the course of their tenancy that I was forced to get a 40’ roll off dumpster to get it emptied for a sale. And the tenants still lived there, they had just been putting old mattresses, broken furniture, and crud there for years. They then refused to accept responsibility for it.

I just think basement access is generally a bad idea.

But my solution in your case would be to frame out a dividing wall of 2x4s and either drywall or if the basement is prone to taking on water then I’d look for something waterproof as opposed to the drywall. There’s a rigid plastic type material that’s used in dairies and on farms that I’ve seen used.

@Kyle Carter You have to have insurance if you have a loan.

If you do not have a loan you would be very foolish to not have substantial liability insurance at a minimum.

I keep a very healthy amount of reserves to avoid using my insurance unless I have a catastrophic issue. This is so my premiums don’t go up or I don’t get cancelled.

Insurance is just an expense to factor into your underwriting just like property taxes.

@John Friendas Without knowing the expenses and costs associated with it I can’t make an educated judgement.

I wouldn’t think if this is your first property that a rent by the room strategy would be the best starting point. There will be more wear and tear and multiple headaches with several different renters.

I would recommend at least $300-$400/month in cash flow after expenses to make this potentially worthwhile on a SFH. Use the BP Calculator to get a better idea on your costs.

@Patricia Steiner As it is a condo I would think you could try to get the Association to do external pest control.

At about half of my properties I provide quarterly exterior pest control services. This takes care of most of the issues. I wouldn’t think this would necessarily be the correct solution in a condo unit.

Where I live mice are common as the cold weather drives them inside. Tenants know to expect them.

I have offered to provide snappy traps for tenants in the past. This might be an option for you.

@Jorge Caceres When we have to include heat in our rent we just raise the price accordingly to the max comparable amount that other similar units are getting.

I’m not sure you can reasonably expect that you are going to recoup 70%-100% of the heat/AC costs. It’s just the nature of the beast.

With MTR you are probably just going to be stuck.

With my LTRs I have been switching to all tenant paid utilities after my first winter where I discovered the majority of my tenants were setting the heat at 78 (which is unreasonable in Northern New Hampshire) and leaving their windows open in -20 degree weather.

Best case scenario for you maybe do a “utility allowance “.

@Jordan Laney I wouldn’t worry about $250. It’s the cost of doing business. It costs me $20 to transfer electric service into my name in most towns.

Am not sure if the $250 is the cost of the electricity from August until now or just one month. If it’s the cost of 3-4 months of electricity it’s probably pretty reasonable as my 1 bedroom units tend to run $35-$45 per month.

@Reyna Ayala No need for that many accounts. Most will say 1 savings for deposits and 1 checking for operations.

Personally I like 1 savings and 1 individual checking for each property. I feel like this gives me an instant screenshot of every expense for each building so I know Building A paid $1800 for insurance, Building B paid $2100 for insurance and Building C paid $2400 for insurance as opposed to having one account and seeing Insurance was $6300.

It just gives me a better screenshot in my opinion.

@Samuel Gebretnsae I’ve inspected properties that were having repairs done to them for water damage during the inspection.

Personally as long as the building didn’t flood I wouldn’t care. And if it had flooded it would be more than $5,000 for the repairs.

The only deal I’ve ever walked away from we determined that the entirety of two of the exterior, structural walls were significantly bowing and in the basement below them the foundation had been permanently covered so there was no way to see what it was doing.

Beyond something of extreme nature I find most things are repairable, especially if it’s a rental.

If it was for a personal residence I might be a little more concerned but I feel like $5000 worth of work isn’t very significant. I can easily get to that amount on a 3 day project.

@Raif Jochim I personally like having my primary paid off.

I’ve consulted several different people and they have told me in my situation as an investor expanding their portfolio it makes more sense to keep the extra cash as opposed to paying down rentals.

If you have the extra cash you can buy more units or be able to handle expenses that crop up more easily.

But be sure to consult with your own experts and accountant.

@Brady Ascheman Once the tenant is in I no longer worry about the 3X rule for rent. They will need to figure out for themselves if they can afford the increase.

It will likely cost you several thousand or more to rehab the home upon turnover. That could potentially take away all the extra from increasing $150 for several years.

As others said I’d increase $50 and keep the tenant. Then next year you can raise it again if the market still allows.

The $1000/month rate is likely for a fully rehabbed unit which is currently costing me about $5000-$7500 to accomplish.