All Forum Posts by: Andrew Weiner

The $500 would likely cover just the filing fee and legal fee.  They likely will charge more for going to court.  The big expense is that you need to have a rep from the owner/management company on site during the physical eviction and the biggest expense is the required registered and bonded movers on eviction day.  In Cleveland you also have to dispose of the trash that is removed the same day or you will get a fine from the city.  Last item is you do need to change the locks.  The movers more or less start at $500 for showing up and doing any amount of moving.  Once you add it all up I think $2,000 is a reasonable low end.  If the tenant moves out early and you don't have to get movers that will save you a lot of money.  

Rent seems ok, lower rent does drive more traffic but its not always better traffic.  I would note that there doesn't seem to be an online booking option which drives a lot of our traffic.  The house could use some updating but it should still rent within 2 months I would think.  Maybe a move in special like 12th month free or half security deposit?

 The challenge with starting with a 6 month or month to month lease is that your turn cost to rent collected could be upside down.  You have to do cleaning, minimum touch up painting, something will come up on maintenance regardless of how good the tenants were to you and then vacancy/leasing.  I would opt for 18 months if you want to change the season of the move out.  

Do you want traditional financing or do you need a hard money lender?

I think that @Shane Kelly is right to stay away from the bottom of the barrel even if you are accepting section 8.  There is HUGE demand for section 8 in the suburbs but as you go to less desirable areas the demand does fall off and tenants want a nicer home if they are settling on the neighborhood.  Also single families that accept vouchers move faster than multifamily.  More for you calculation is that you do have to pass the section 8 inspections which usually aren't over the top but if there is a lot of deferred maintenance then you should budget for some extra repairs after inspection.  Last point (I think) is that the time to move in a tenant with a voucher is longer due to the submission of their packet to the housing authority, approval and rent determination, and then inspections.  This can be a 10+ week process.  

All that being said I do own and have bought properties with the intention of renting to section 8 tenants, the consistency of payment is usually higher and in many cases the rent itself is higher.  As long as you know what the process is at the front then you can do very well with this strategy.  

Like others have said, the market can do anything.  There is A LOT of cash on the sidelines and even a 5% pull back could bring in a whole slew of buyers.  There are probably at least a dozen other realistic possibilities too.  
Between MF and SF I am leaning toward SF these days, it’s easier to manage (as a PM it makes a difference to me).  Also I think that the tenants are usually more stable which correlates to better long term cash flow.  That being said I also own MF and will continue to buy both depending on the deals that are available.  
Even if you end up buying before a pull back, as long as you cashflow you’ll be fine over time.  

We try to avoid providing appliances if we can, so much so that we will give the tenants a small credit at move in if they bring their own.  Refrigerators seem to be less and less reliable every year and repair costs are HIGH, I wouldn't mind providing a stove but like it was mentioned above the tenants can leave them damaged or dirty which is another turn over expense.

We toyed with the idea of renting appliances but didn't get a very positive market response, maybe the market will start to change.  

The hard money lenders I know have bridge loans which is for exactly what you are talking about.  They have higher interest rates and are usually capped at 12 months but no prepayment penalty (usually a 5-4-3-2-1 or 3-2-1 step down).  Like @Chris Mason said, if the issue is speed then this works, however if you want to do a cash out refi your most likely looking at a minimum 6 month seasoning period from the purchase date.  I would add for your calculations that you might get a lower interest rate on conventional loans but you are paying for two closings which isn't cheap either.  

You should check the lease to make sure the penalty isn't explicitly called out.  If you do have something in your lease then you should follow that. My lease allows us to charge the full months rent which we do, we also try to explain at move in that we only prorate the rent on the way in, not the way out.