All Forum Posts by: Andrew Johnson

Dan C. What about taking Mike Sedlacek 's idea and just change it to charge $125/month to park and additional car overnight per month? It would treat a second tenant the same as someone who wants to keep a second car on the lot. I've never done it but parking seems like it could be an objective concern (congestion) that doesn't take into account the people side when it comes to an application. Now monitoring it is a different story...

Rob Drum Jr. It really REALLY depends on the area. You could end up with a low maintenance unverisity student (hard to throw loud parties in a 1bd/1ba) or someone who can only afford that. There's no way I would look to rent out a 1bd/1ba in a warzone (or adjacent) but in a nice area I would. All of that said, a 2bd/1ba will probably get you a better ROI. One thing you will want to look at are the HOA dues, how they would do special assessments, etc. That could drive a 1bd/1ba to have disproportionality high expenses.

Jack B. I'd eat the cost of the plumbing expenditure and just keep renting it out. It isn't like paint or flooring where you could have DIYs that buy the house because of some visual wear-and-tear. They're going to have to use a plumber and factor that into their offer. Or you'll end up with a non-retail buyer offering you 75% of ARV while also factoring in the plumbing cost. Even if the get the latter at a discount (and adjust accordingly) you'll probably be less than thrilled with the offers. Anyway, one persons opinion that is never eager to pay 6% to realtors (or large tax bills) of a property is making money. I'll wait to be shouted down by others with differing opinions... 😬

Bob Gillar Whether you like them or not, investigate homes that are managed by a couple of different PM companies in the area. If you Google the addresses or home "name" (a lot of beach homes have these) you'll be able to see if they are professionally managed and by whom. I'd be looking at 2 key things to start: 1.) PM fees (could range from 20% - 40% depending on the market), 2.) Occupancy rate. The T12s should outline all of this (and the expenses) as well as often denoting who has already made reservations for 2017. The trailing T12 could be 80% and as easily be 50%. What I found was larger homes will commando a disproportionately higher rent during the peak season for family destinations and drastically underperform during the off season (snowbirds don't want a 4-5 bedroom house so sometimes it's not even a price issue). Assume that your occupancy rate will be worse as you haven't built up a list of pre-bookings or people that come annually. If the T12s don't have it, also get insurance quotes well in advance (hint: they can be a eye opener).

Nich J. If they want to sell the property off market and can get a good price, why wouldn't they? It's less work, save money on commissions, don't pay for marketing, etc. But, presumably, since they're an agent and tour, sell, and negotiate real estate for a living they know what their property is worth, know other investors, just to name a few things. Consequently, they both know the property and the local market better than you, I don't know how good of a "deal" you would get. Of course this all assumes you're working with a professional agent, not someone who just went and got their license to list 1 home a year on weekends. Advice: negotiate and see where you end up. As others have said, always make sure you have an inspection period, etc.

Sean Kirkham If the fed raises rates 3 times in 2017 it's going to mess with more than a few pro-formas of non-all-cash buyers.

Joshua Solomon I'm in the same boat as Michael Boyer in that you should plan for 1 months rent. Sometimes it's nothing more than paying a cleaner for a few hours work and carpet cleaning. Other times you find mysterious holes in the drywall, weird unexplainable carpet wear patterns, or that they were using a teapot to cover a burn area on the laminate countertop. My advice would be to pay what it takes to get the unit rentable (attractive) as soon as possible. It's much easier to eat the costs of expenses when you have rent, a new security deposit, etc.

Tony Stancato If it's professionally managed you can probably get a monthly breakdown easily. If the PM uses something like Appfolio you can just request a PDF of the annual data on the property. That will show (should) everything from what units are paying rent on time through the cost to repair a garbage disposal. It might be a little less invasive than "you me your tax returns".

Micheas Marroquin I would estimate 10% of gross rents. Some might charge 8% and the a certain fee when a unit turns over. Some will charge an additional percentage on top of repairs. There are 100 variations and some great threads here on the topic. My advice: budget 10% but read the PM contract, all of it, don't skim it, and compile a list of questions prior to vetting PMs.

Tyson Allen I'm not in your state but I have written into offers that the buyer has the right to market vacant units during the escrow period. That's a little different that touring or accepting a deposit but (as others have eluded to) you can at least create a list.