All Forum Posts by: Andy Sabisch

So here's a question.  Rent on our units is due on the 1st, late on the 3rd and at either day 10 or 15, eviction proceedings are started.  Also after the 2nd late in a lease period, rent goes up $25 a month for the rest of the lease.

Have one tenant that is always late and usually later than the 15th in her case.  By law we have to give her 10 days once she receives notice to cure it before we can go to the magistrate. 

So we get the rent and late fee on the 23rd to the 25th.  And getting it that late you know the next month repeats the story. 

Any thoughts on how to handle the last 6 months of her lease as renewal is out of the question.  Thanks

That's a loaded question.  Are you doing the work yourself or contracting it all out? Will you be the GC or need to hire one?  Have you done similar projects or is this your first? Do you have contractors ready or will you need to find them from ground zero?  All of these have costs associated with them and affect holding costs which play into cost per ft2.  Also different areas can vary widely in costs.

If you can narrow things down a bit it would help with a more detailed response.

As others have said, make sure you do a full background check and even that will not ensure you are 100% protected (we can tell you first hand about that).  One thing we have started doing is to call the current / previous landlord and see how things were left.  That can often be more telling than a background check which many not have input from the previous places they lived.  

The one challenge for us has been tenants who have never rented before (starting out) . . . be interested if others have found a solution to this as we have had 3 evictions in the past 3 years with first time renters who seem to think rent is the last thing you pay each month (and actually told the magistrate that).  One actually told the judge that we had more money than they did so it wasn't fair to evict them . . . gotta love them at time.

This is a post that applies to any tenant . . . just because they meet eligibility, make sure the fit works both ways.  We have tenants that looked good on the application and background check that when they showed up with pet in tow (no pets allowed), 10 relatives and vehicle filled with trash and cigarettes in everyone's pockets that we knew this would be a problem lease.  No discrimination but when we talked, both sides realized that the rental was not for them.

What condition is the tub?  We recently had to deal with a damaged tub and opted to tile the walls once we pulled everything out.  It was time consuming and while it came out great, not sure the time and cost justified the effort.  We have installed wall units in the past and they have held up to rental demands as well as tile.  You don't want to get the $100 sets but for $300 to $400 you can get a solid, durable wall unit.  Just remember to routinely check the caulking when you do your routine walk throughs.

There is more to returns than this question would allude to.  If I can do a cosmetic flip and have the crews that can knock it out in a few weeks so we can relist it and do three in the  time it takes to do a full rehab which will have my money and attention tied up for months, the simple flip would be my choice.  In a full rehab you will invariably find the unexpected which throws the timeline off and costs money (hard money, holding costs, utilities, etc.)  If your goal is to get your money turned, a 10% return in a month versus 40% in 6 months seems to be a no-brainer.  But if you have the financial resources and the trades ready to rock, run the numbers and see what option works best for your specific project.  We have switched strategies on some projects when we ran numbers and getting in & out is also the goal on a flip.

Foundation issues as others have said would be red flag for us . . . often the estimates are low and unexpected overages can sink a flip (holding costs will eat you alive).  Unless you are getting a heck of a deal I would recommend avoiding a foundation issue property until you have a team of contractors that you can count on and can find out what the repairs would run.  The rest of the repairs you can budget with a decent confidence but foundation issues can be a killer . . .we have passed on a few that in following up with the eventual buyer turned out to spot on as the cost was more than double the estimate in 3 cases.

We have shifted from flip to hold due to the market interest rates which tend to result in longer holding times and carrying costs.  Buyers are less likely to get into budding wars in many areas and putting together a solid rental which cash flows from day one at at least 10% has been our approach for the last few years.  We are working numbers to see if flips are where we need to refocus.

Good approach....knowledge is power and taking the time to gain that is commendable.  A lot of people watch the TV shows and think it is easy money ... most of us learned the hard and expensive way.

Good luck in your journey ... wish you were closer to help!

Hard Money loans have been the downfall of many new investors.  The fees and overall costs of these loans needs to be a key factor including what if the project goes over time . . . . you can be underwater in no time.

Underestimating repair costs and overestimating ARVs based on Zestimates are the next stumbling block.

There's money to be made but make sure numbers all work WITH contingencies defined and overages expected . . . remember, a project will always cost more and take longer than initially thought!