All Forum Posts by: Erin N.

@Bill HamiltonI agree that a timeline will help put this all into perspective.  I am a tad fuzzy on the details myself, and I don't have all the numbers and dates consolidated into a single summary.  I have asked the tenants for that.  

@Jeff B.Pending the summary from my tenant of all charges, refunds, and the timeline, I'm most likely going to pay them the full amount that the city didn't cover.  After weighing everything, I think it's the right thing to do.  They didn't outright ask me for compensation but asked me to advocate for them with the city so they city will pay them the full amount.  The city's policy, especially related to refunds for sewer charges, is really inadequate IMO.  I just don't think I'm going to get anywhere with them.  At the end of the day, I bought a distressed property and took a risk that there were hidden problems I was unaware of.  That is not the tenants' problem.

For those of you asking if they are "good" tenants and if this will help with retention - these are acquaintance-friends who have rented from me over a 5 year period in 3 different units I've purchased and renovated.  Their lease is up in a few months, and they are going to purchase a house.  They have always paid on time and have been good tenants.

@Stephen WilfongIm having the same problem

@Jacob Sampson I don't have final numbers, but probably less than $300.  Rent is $1100/mo.

Thanks @Jassem A..  Good idea.

@Jeremy Pace I guess that's the question I can't answer.  I knowingly bought a foreclosure with unknown plumbing status (utilities were off).  I did pay a plumber to check everything out, and the city inspected the plumbing.  My thought is that the plumber is actually negligent.  I specifically paid him to inspect the plumbing and advise me of any issues.  Knowing (now) how very simple it is to determine if there is a leak that needs further investigation, he should have done that.  On the other had, the tenant should have brought this to my attention earlier.  They waited about 4-5 months before saying anything.  

Looking for thoughts on the right thing to do in my situation.  I purchased a foreclosed duplex almost a year ago that needed major renovation.  I did everything by the book and had all the  correct property inspections, etc.  

Several months into my tenant's lease, they complained about high water bills.  Turns out their bill was double what the other side of the duplex was.  And the units are identical.  The tenant had the city come out, and they determined that the leak was not a city issue, and it was somewhere between the meter and the house.  I learned that this is really easy to determine. You just have to shut off the valve going into the house and see if the meter still ticks.  Now I know how to avoid this issue moving forward!  Anyway, there is a one time leak adjustment policy with our water department.  The problem is that it doesn't cover the entire amount that they were charged.   

My question is, what is my obligation to my tenant regarding compensation for the water leak?  I tend to err on the side of feeling overly responsible and doing more than I really should have to do to make things right, so I wanted to have others weigh in.  Should I make up the entire amount of the shortfall that the city didn't pay?  Or should I offer to split it with them 50/50?  All thoughts and perspectives are appreciated!

Thank you

@Dave Jimenez I have bought 2 financed properties via online auction.  One was Hubzu.  I ended up needing more than the 35 days to close, and they allowed me a one time extension.  I had to pay a per diem up front for the extension, but they refunded that to me at closing.  It was not that difficult to do, but I think the seller has discretion about granting the extension or not.  I was able to chose the duration of the extension, and I chose 14 days.  I did have to end up using a private lender on that property because my conventional loan fell through on a technicality.  It ended up taking 55 days from the day I won the bid to the day I took possession.

I purchased the other property from homesearch.com, and I financed that with an owner occupied conventional renovation loan.  That one was 44 days from the day I won the bid until the day I took possession.

With both properties, I had all my inspections and construction bids done prior to bidding on the property.  I know that is a risk, because the home inspection costs money and there is no guarantee you will win the bid.  It's a necessary risk in my opinion.  You also have to be willing to lose your earnest money deposit if the financing falls through.  For your $11k earnest money deposit and cost of home inspection, it's a risk I would take in your situation if you can afford to lose that money.

If the property is on Hubzu and is not occupied, you should be able to gain access to the entire property. Why did you only drive by it?  Is it occupied or have you just not dug that deeply into it?  It's a big enough deal that you should do everything you can do gain full access to the property.  You won't be able to turn on utilities, but there is a lot you can learn about the property by going through it with a home inspector.

@Account Closed I love doing short term rentals and am in the process of converting 2 of my LTR units into short term (I just mentioned this on another thread).  I have a great area for short term because we have vacationers, snow birds, business travelers, etc and stay busy year round.  It gives me the added benefit of being able to employ (and help out) some family members as my maintenance/turn around crew.  It's been a good fit all the way around!

@Account Closed yes, I'm renting it as a vacation rental.  Here are monthly numbers:

If I rented it long term, these are the numbers:

I have a mix of LTR and STR units. I'm actually getting ready to convert 2 of my LTR units into STR. I have 4 units that are traditional vacation rentals that I rent nightly, weekly, or monthly. My other STR units are more for people renting less than 6 months that need furnished units with utilities paid. Mostly people relocating or on temporary work assignments. I have found the short term furnished rental market to be more lucrative in my area than long term rentals. I also manage my own properties and handle all my own bookings and advertising. It's more time intensive than LTR, but I don't mind that part of it and it makes sense for me.

Hi Mike!  

It's interesting to read the responses on here.  It actually makes me feel like an odd duck.  That's ok, though.  My real estate investments have allowed me to become financially independent in just 3 years, so I think I'm probably doing something right.  Or I'm doing it all wrong, and I'll find out in a few years. :)

I personally think that cash flow is king. My biggest money making property sat on the MLS for 6 months because investors thought it was overpriced. The property nets me about $50k/year (after even the P&I on the mortgage), and I only put $32k of my own cash into the deal. It's a 4-plex, and I bought it in 2012 for $369k. It appraises now around $450k. I don't want to sell it. It makes too much money.

I'm also not in a high risk category for having to rely on appraised value for anything.  That's a piece of this that I haven't seen discussed.  I have a 30 year fixed loan on my property, and I still owe about $345k on it.  If that was a hard money interest only loan with 12 month terms, I'd be in a whole different risk category.  If you are financing this through a hard money lender or are getting a 5 or 7 year balloon mortgage, I think you should figure out how to mitigate your risk of not being able to refinance when the mortgage comes due.  I personally wouldn't rely on appreciation as my risk mitigation strategy regardless of historical market data and projections.  I think it's too risky.  

I have another property that I bought 10 months ago and financed with a 12 month interest only loan from a private lender. I'm in the process of refinancing that loan into a conventional 30 year fixed mortgage. I only financed half of the purchase price, and I have both cash reserves and a HELOC on another property that I could tap into if I'm unable to refinance right now for some reason and have to pay that loan off in cash. That's the sort of preparation and risk mitigation I think you should be thinking about.

As for using the cash flow to pay down the mortgage, I wouldn't do that.  The interest rate on the loan I have on my 4-plex is under 3.5%.  I can find a lot of ways to invest my cash that net a much bigger return that that and are not very risky.  I would build up 6-12 months of cash reserves to cover expenses - including mortgage payments - and then invest cash on hand after those reserves are built up.  

Good luck with everything!