All Forum Posts by: Andrew Weiner

I would expect your property manager to handle all of this.  The short answer is that the lease should cover what happens in this case.  If the lease doesn't specify a buy out or break penalty then they are on the hook for the entire lease or until someone else moves in.  As for going after the rent you would assign the debt to a collections agency or have an attorney file for a judgement and then they will try to garnish wages to collect the money.  Either way expect to pay at least 33% of the money that is recovered if they get anything at all.  Again this should all fall to the property manager, they should have a collections agency and an evictions attorney who can file for the judgement.  Also its a bit suspect that two tenants would do the same thing simultaneously unless they are related somehow.  

There are a few however most reputable and quality contractors aren't going to look at several properties a week and give detailed bids on that many properties just so that you can decide if you want to put in a bid to purchase.  The best guys are very busy and I would warn you that if someone has the time and willingness to do what your asking that you should be very wary.  If you already have properties you should see if you can go through that network or give someone some small jobs on your existing portfolio to build a relationship, if you don't have any properties yet then you might want to take a less aggressive approach when moving into a new market.

I’m not a guru at reading the bigger pockets calculators but I think you need more upside on this deal.  Your looking at 3 months of holding costs and potential for the rehab to go over budget or over on time.  If you go over your estimates then your into this property for nearly market price.  It might be easier to just buy something at or near market that is ready to go for your first out of state deal while you gain local contacts and comfort with the distance.  Also you need to find out about the point of sale, in Garfield Heights you will probably have to escrow some money and meet the city requirements which can be another area that can drive up costs.  If your numbers are really conservative then it could be a good deal in a suburb with a strong rental market.

Good luck!

I’m sorry if I missed it but is this an estimate or a bill?  Most property management agreements require approval before spending over a certain threshold, usually in the $500 range so I hope you had/have the chance to get other bids.  Overall the price might be ok, possibly a little bit high.  There are important factors like how big the drywall patch behind the shower is, I assume that includes painting that patch which is another expense that wasn’t detailed but still needs to be done.  How big the bathroom vanity is, there is a big different between 18 inch and 42 inch vanities.  Was there any additional electrical work to install the lights?  If anything as I run the numbers in my head the material price seems low and the labor too high even if the final price is in range.  $192 for a kitchen faucet, a bathroom vanity, bathroom faucet, drywall, joint compound, paint, two bathroom lights, and the misc items that go with some of those repairs actually seems low.

This is a municipal issue here, not county.  The county website is just the record keeper but the decisions and rezoning are done by each city individually.  What city is the property in?  We deal with some municipalities that don’t care and some where it’s big issue.

@Ryan Cleary. I think that your numbers make sense but you also need to look critically at your home inspection and use that as a jumping off point for the capex and the expected time line. Capex usually comes in chunks, for example a new driveway for $10,000 and then no capex for a little while which over time may average 7%. I mention this because if you use your home inspection and annual inspections well you can do some preventative maintenance to push off some of the larger expenses. For example sealing a drive way every couple years will extend the life significantly and save you from that large expense. Its a tough pill to swallow to spend money on things that don't "need" to be done immediately but it can help retain the long term value of your investment.

I have a lender that should be able to help with Cleveland portfolio cash outs, and you can PM me for the contact info.  I’m not sure if they will lend against portfolios between states.  Depending on your circumstances you may also look at long term private lenders, the rates are higher but they don’t have the same limitations that banks do.  

I think that you should be focused less on market and more on identification of the best possible deal and where you feel most comfortable. Although it is a tough time to travel I think that physically visiting each market would make sense to get a better feel and allow you to meet some local resources. I have friends that have made big money and lost big money in what the forums consider to be the best markets. The most important thing to do is make sure to buy at the right price and maintain sufficient reserves to do preventative maintenance. If you are financing the deal then a few extra dollars might still look good on a COC basis but you have to make sure that you aren't putting your exit and liquidity at risk by overpaying in the market. I wish you the best of luck on the search and whatever market you end up in make sure that you have an experienced local working with you before you buy.

Do you intend to use a property manager?  It could be worthwhile to possibly engage the current manager in which case they have a strong incentive to give you the deposits and prorated rent.  You might be able to get a month to month agreement with them and then after you have the rent and deposits you’ll have the freedom to quickly change managers if they don’t work out.  If you don’t want to use them then you are completely entitled to request those funds. As for deposits I would ask a local landlord/tenant lawyer that question, I’ve never had it come up from a tax sale where there was someone around to get the deposit from.  If you don’t have one I can recommend a few.

I would not get involved in or worry too much about what happened with rents owed and who has them from prior to you getting title.  The management company should have those funds in a trust account and maybe you can give them the benefit of the doubt they may hold them for a period and then send the money to unclaimed funds.