All Forum Posts by: Erin N.

@Steve Babiak of course they can.  It would be just like disputing a CC charge.  Paypal would issue a charge back and then I would have an opportunity to dispute it.  However, Paypal would probably side with the tenant.

I did finally talk with him yesterday.  He said he's in the middle of a family emergency and is no longer coming to town.  Now I want to put together a lease termination document that HOPEFULLY he'll sign (he said he will).  I haven't found much online in the way of templates for early lease termination.  If anyone has any suggestions I'd be very grateful once again!

@Mark Freeman that's not a bad idea. I do have an application complete with references and emergency contact info.  I ran a criminal background and credit check.  I have a lease signed by both parties.  I think that in the future, I'll instead do an agreement and a holding fee that is non-refundable but can be applied to the security deposit or rent once the lease has been executed and all monies are paid to move in.  

@Account Closed I can make a claim against for unpaid rent as long as I follow the proper procedure for making a claim against the security deposit.  If anyone sees a flaw in my reasoning here or thinks I'm walking into a land mine please let me know!  Thank you everyone for your input.  It has been very valuable :)

I have a strange situation, and I'm not sure how I should proceed.  I have an executed lease with a tenant to start July 6 (yesterday) for 6 months.  He is coming from out of state and is here only temporarily.  He paid a security deposit equal to a full month of rent via Paypal, and our agreement is to pay the full first month's rent on arrival.  

I sent him an email on Sunday asking about his exact time of arrival.  I got no response.  I texted him yesterday and also left a VM.  I know that someone read my text because I used iMessage and it shows that it's been read.  I just sent another text, and it has also been read.  

What should I do?  My gut says that his plans changed, and he is ignoring me.  I would think that with an executed lease and money having changed hands, that I can't just ignore our rental contract and put the apartment back on the market.  He has not taken possession of the property, so I don't really know what process to follow to reclaim the apartment and re-rent it.  

Any thoughts are much appreciated!

Thanks!

@Roy N. I guess there may be different people out there using something they call "The 50% Rule". If you're using the rule as explained by Brandon Turner in the article on this website

http://www.biggerpockets.com/renewsblog/2013/06/14/50-percent-rule/

then vacancy rate is included in the expense portion of the 50%. He expressly states it in the video.

The 50% rule includes vacancy rate. You subtracted 10% vacancy from your gross income and then took 50% of that. It puts you at a 55/45 instead of 50/50 and skews your other numbers.

Hi Brian,

"Pull the tax record" sounds sorta fancy, but it's usually really easy to do online and can give you a TON of information. I do it for every property I analyze. I'm not sure about your area, but where I live, the tax record gives me information about property tax from the last several years, how much the county appraised the property for (which for me is a good rough estimate of appraisal value...our county appraises (for tax purposes) at roughly 75% of actual value). You can also find out how the property is zoned, which lets you know HABU potential when thinking about future use. You can verify number of bedrooms and bathrooms and also square footage. The tax record also lets you know who owns the property. You can find out if it's owned by a trust or a LLC or if it's a bank owned property. I always check to see if the property address is the same as the owner's mailing address. It's nice to know if I'm making an offer on someone's primary residence or on an investment property owned by a LLC. I even go a step further and search the property records for my county by owner name to see if the same person owns lots of properties. If so, they are probably looking at just the numbers and aren't emotionally invested in the place...meaning they might be more open to a fair and well thought out offer based on comps and numbers and such.

I also think it's critical to know exactly how much property tax you will be paying since that dramatically impacts cash flow. In my county, each municipality charges vastly different tax rates. There are also school district millages which can even change the property tax within a municipality.

I hope this helps.

Erin

Hi Sharon,

Good questions! When I bought my property, one of the duplexes was uninhabitable and had been empty for 2 years. I completely renovated all 4 units...and they badly needed it! Fortunately, my gf and I are able to do all renovation ourselves, so the $20k was strictly our material cost. For $5k/unit, we were able to put all new tile flooring in each unit, do complete kitchen and bath remodels including adding dishwasher, garbage disposal, new sinks and toilets, back splashes, tiled showers, and more.

I bought my place for $1.21/sqft. Since Jan 2013, a dozen or so other multifamily properties sold in my area for $1.50-$2.10/sqft. The ones on the higher end of the price scale (over $2/sqft) are comparable to mine in terms of renovation. At $480k, I self-appraised mine at a conservative $1.57/sqft.

On my HVAC post, I had said I pay electric on 3 of the units. The 3 units are:

1. my own unit
2. the one I rent as vacation (which i did include $450/mo in "additional VR expense")
3. The one I rent to a family member. Although, they do pay me back for it every month. I wasn't very clear in my other post.

The 4th unit is a regular rental, and they do pay their own electric. Once I move and rent the whole complex out, everyone will pay their own electric.

Hope that helps clarify!

Thanks,

Erin

Hello all,

I'm a newbie (2nd post), and I just really appreciate having this forum and all the wise folks who take the time to participate!

First of all, I would like to show off my fancy new unicorn that I bought last November. This was my first multi-family investment property, and it's been awesome so far!

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Property type - 2 duplexes
Fannie Mae REO
Purchase price $369,000 (includes $40k renovation)
Financing - FHA 203(k)
Down payment - $8559
Out of pocket renovation - $20,000
Rebate - $1500

Final out of pocket - $27059

Here's the monthly cash flow -

Duplex 1

PITI - $1467.50
Unit A rent - $1100 (below market - this is a family member)
Unit B rent - $1250
15% vacancy/maintenance reserve - $352.50
Net income - $530

Duplex 2

PITI - $1467.50
Unit C - owner occupied
Unit D - 20% personal use, 80% vacation rental - $1500 (average)
15% vacancy/maintenance reserve - $225
Additional VR expense - $450
Monthly loss - $642 <--- Not quite living for free, but not bad...and my in-laws have their own apartment when they visit!

Once I fulfill my 12 mo owner-occupied requirement, that's where things get really interesting:

Unit A rent - $1400
Unit B rent - $1250
Unit C rent - $1300
Unit D rent - $1200

15% vacancy and maintenance reserve - $772.50
PITI - $2935
Net income - $1442 <----- SWEET!!

I know I'm not factoring in some other benefits like depreciation and tax write-off, etc. But I'm just trying to keep this basic for the thread.
-----------------------------------------------------------------------

As you can probably tell, I like a highly leveraged, cash-flow positive type of investment. I HATE using my own money to buy anything!

This is where I need some advice. I want to buy another multifamily property, and I want to get the most out of every dollar I have. I am fairly certain that my property now will appraise for $480-$510k

My questions:

1. Can I refinance to conventional from FHA (considering seasoning requirements)? Is this a good idea? I wanted to open up the possibility of buying my next property with FHA 203(k).

a. If the answer is yes, does that change if I want to do a cash-out refi?
b. I need to replace all 4 HVAC systems. Can I work this into a refi ? Is there a renovation refi that would use ARV appraisal value? I just have no idea.
c. What else am I missing regarding refi? I just am really uninformed about financing, and I really need to learn!

2. What else am I not thinking about? Combined LTV of all properties I own...not sure of the rules. What else? I don't want to shoot myself in the foot and end up in a situation where I can't finance a new purchase.

3. Other than FHA owner-occupied, what are other ways I can buy a new property with as little money down as possible? I haven't really clicked with any traditional or residential investment mortgage lenders/brokers. Honestly, they all act like I'm bugging them with my questions.

Thank you very much for all your help!

Thank you both for you replies.

Steve - as for the need to replace, two of them are completely non-functional, and I've had to put in window units to get by for the last couple of months. The third one, when winter comes around, I will have to use the emergency heat setting to get the heater to work AT ALL which costs an arm and a leg (I pay utilities on those three units). The 4th unit is a vacation rental, and my renters blast the heck out of the AC with the windows open in 100 degree heat. It's as old as the two that broke down, so I figure I'm living on borrowed time. Again, I pay utilities on that unit and my electric bill last month was $350 for 750sqft! Good thing I made about $3k renting it out. It was worth the electric bill :) The 5th one is the best one, and it doesn't have any problems. Also, my tenant pays that electric bill. I could get away with maybe not replacing it right now, but it is as old as the other units (1999), so I figure I'll be replacing in the next year or two anyway.

Rob - I can't believe I didn't think about approaching it that way. Big DUH on my part! I had tunnel vision about needing to replace multiple units. I will try this. Great idea!

I need to replace 5 HVAC systems. I don't have a good relationship with a local HVAC company, so I started calling around to see if I could get estimates. Because I have multiple units, they all want to charge me $100/unit just to come out and give me an estimate. I think that's downright insane. Because of this, I'm considering putting out an RFP and seeing if anyone will bite. Has anyone used an RFP process for something of this nature? If so, any tips?

Thank you!