All Forum Posts by: Becca F.

@David S.

Thanks for all the information. That's what I was told about trying to rent out room by room or the downstairs unit (if I were to put in a kitchenette it would function as a studio apartment) with the house being considered a multi-unit. I'm not sure how other landlords rent out their homes as a SFH vs. a multi-unit since so many people have in-law units.

I'll talk to a few property managers and find an experienced PM. 

@Nathan Gesner

My realtor advised me not to rent out to family and pay a company to move all the previous owners belongings out instead of me sorting it out which takes months and is costing me thousands in rent. I wanted to help out a family member and they would help me out, which I thought would benefit the both of us. This arrangement is now biting me because family and friends will take advantage of landlords. After seeing other people's posts about severely undercharging rent and feeling bad about increasing rent, owning a rental property is a business not a charity. I appreciate your advice. Thank you. 

Quote from @Carlos Ptriawan:

Quote from @Becca F.:

@Bruce Woodruff

@Jay Hinrichs

I owned an Oakland property (a condo) and sold it. My Bay Area investor friends tried to convince me to keep it, you know for that California appreciation. It was in a great location near restaurants, shops, public transportation with great walk score. My method of trying to acquire more rental property in the Bay Area was to buy it as a primary residence live in it for a few years then rent it out. After talking to Oakland landlords who had non-paying renters squat in their properties for months on top of the can't discriminate against people with criminal backgrounds law, I decided to cut my losses. 

You should sell it, bay area cap rate is already hitting a ceiling wall anyway. Slow appreciation is only possible in East Bay after 680 and South Bay, where the madness is not that bad. These are the last area where normalcy still exists.

SF is going into Detroit Tech style.

Sorry for your squatter issue, I had a problem also in some of my rehabs, had to call 911 a few times and kick the squatter really LOL

CA have a law that it's fine now for petty crime and shoplifting is the new normal.

A week ago I saw an almost a dead man falling on the floor of panda express and people just ignore LOL it's total insanity.

I sold the condo. It says that in the first sentence in my post. I didn't have a squatter issue - that was with the other landlords I talked to. 

This is my first time self-managing a property.Market rate rent is about $5400 to $6000 a month on 3 bedroom 2 bath SFH in San Francisco. There's another bathroom downstairs (renovated) and large room downstairs (needs new floor but is painted and has new lights) which has a lot of old things from the previous owner. This downstairs unit could possibly get another $1900 to $2000. There's also a good size backyard for S.F. I'm renting out to a family member and charging $1900 a month rent for 1 bedroom. I had planned to rent out the master bedroom with private bathroom for $2000 a month and the other bedroom for $1900. She just happens to be the only tenant along with her boyfriend for now. My intention was to get roommates for the other 2 bedrooms, preferably her friends or someone who's not a random stranger. So they get the whole house for now for $1900 with brand new everything in kitchen, bathrooms, lights, appliances, etc. She is helping me clean out the stuff downstairs. A regular tenant wouldn't be okay with all the excess stuff so this is why I did this arrangement instead of letting the house sit empty earning $0 rent. This whole process has been stressful while working a full time job.

I know I set a bad precedent by allowing late rent and not enforcing late fees trying to be nice to family. I added an addendum with $100 garage use fee once the garage doors and openers were replaced, which she said she couldn't pay. I'm also currently paying for utilities (electric/gas), water, and trash/recycling. The lease also states that the tenant is supposed to reimburse me for the electric/gas and water bills. I haven't received any reimbursement. The lease started on Sept. 1st. I wrote the lease up using a template a landlord friend sent me. 

She has also vaped in the house in front of me when the lease clearly states no smoking or vaping of any product. I asked her to stop vaping in the house and to go outside. Instead of apologizing and stopping the vaping, her defense was "how do you know if tenant is vaping?" We get into an argument and she said she would move out but it's $2800 to $3200 for a 1 bedroom apartment in San Francisco or they go share a 2 bedroom with friends. If she really pushed the issue she could make me pay a relocation fee (this is a thing in the Bay Area if you're making a tenant move out) but she violated the lease terms and trying to take me to court seems unlikely (not impossible). She also claims that I allowed her to use the other bedroom as an office, which I didn't.

My friend advised me to get a property manager immediately and have a new lease stating that they're renting out 1 bedroom, move their belongings out of the other 2 bedrooms and immediately have the utilities switched in the tenant's name, which she would need to call to start but with this rift, I'm not sure this would happen. Hire someone to haul all the stuff away in the downstairs area instead of sorting through the stuff like I have been. Another landlord friend said that SFH in S.F. aren't under rent control and if there are roommates, the current tenant is the Master Tenant and a lease is drawn up with the roommates not with me the landlord. Other tenants pay the Master Tenant rent then I get the entire rent. If it's consider a multi-unit, I could be subject to rent control, if I rent out the downstairs as a separate unit or the other bedrooms (separate leases with each roommate). Is this correct?

I'm going to look like the bad person if I evict a family member. I'm renting at a loss with just $1900 rent since I took out an equity line to pay for the renovations instead of being cash flow positive. Also does anyone have a property manager they use in S.F.? 

Quote from @Wesley W.:

 You are rationalizing.  Here is a lease provision I use that you might consider adding to your lease to demonstrate to prospective applicants that you mean business.  The "lease violation fee" idea I got from @Nathan Gesner, and the smoke remediation fee from Andrew Schultz, of the RentPrep for Landlords podcast.  As always, check with your local attorney to verify validity.

SMOKING: Smoking is prohibited inside your unit or in any interior common areas. This includes marijuana as well as electronic cigarettes (i.e. “vaping”). Smoking leaves soot and deposits, so an additional cleaning/remediation fee of at least $250.00 per room/area will be charged if we determine that smoking/vaping has occurred. You also agree to pay an additional $200.00 lease violation fee each time we determine, at our sole discretion, that smoking has occurred in your rental unit, due as Additional Rent. Payment of this fee by you does not represent a waiver by us for this breach of the Lease. Any cigarette butts from smoking outside by you or your guests must be picked up and properly disposed of.

This is very helpful. I'm having somewhat similar issues as the OP. I'm renting out a SFH to a family member who has vaped in front of me in the property along with late rent so there are 2 lease violations. Instead of apologizing and saying she won't vape in the house, her defense was "how do you know a tenant is vaping anyway?" I'm self managing this property but should have hired a property manager at the beginning and not rented out to a family member. 

@Bruce Woodruff

@Jay Hinrichs

I owned an Oakland property (a condo) and sold it. My Bay Area investor friends tried to convince me to keep it, you know for that California appreciation. It was in a great location near restaurants, shops, public transportation with great walk score. My method of trying to acquire more rental property in the Bay Area was to buy it as a primary residence live in it for a few years then rent it out. After talking to Oakland landlords who had non-paying renters squat in their properties for months on top of the can't discriminate against people with criminal backgrounds law, I decided to cut my losses. 

I'm taking the proceeds from the sale and I'm looking at the Midwest and possibly Tennessee where it's landlord friendly. I have two other rentals in the Bay Area but I'm not buying anymore in California at these price points. Lesson learned: don't buy in Oakland or Berkeley. 

There were 25 special assessments on my Oakland property tax bill, the "crime prevention tax" being the most ridiculous one - the renters love to vote on property tax increases since they think all homeowners and landlords are billionaires. These laws and special assessments are going to really hurt small time LLs especially many elderly people who are renting out their properties to supplement their retirement income.

@Clinton Cox

I agree with the above comments. Keep the Miami house and rent it out. 

I kept my Indiana house and rented it out just in case it didn't work out in the San Francisco Bay Area, I could have home to move back into. I did a cash out refi $50,000 last year since home values increased significantly over the past 3 years. I pulled the equity out to help renovate a California property. My property taxes increased to 2.771% when the county figured out that I was renting it out and not living in it so my cash flow has decreased. It was in the 1% range as a primary home owner. Your estimated cash flow numbers are better than mine but I bought the house for a low price (no renovation needed) it was worth keeping it. It's in an appreciating nice suburban area with a good school district so there are other factors besides the immediate cash flow. Good luck with the move and new job!

Quote from @Nathan Gesner:

Quote from @Dan Panea:

I am starting in real estate, as an rehab/flip/investor. When you said $300K insurance policy, did you mean personal insurance policy covering business mal practice? I just want to know what the jargon to use when I reach an insurance company. 

Thank you!

A homeowner insurance policy usually has $300,000 in liability coverage (property damage or personal injury). On a rehab/flip you may want more because it's a construction site. Once the property is occupied, the minimum should be all you need because it's enough to cover accidental injuries. The only time I've seen an owner successfully sued for more than insurance would cover? When the Landlord is a slumlord that clearly ignores dangerous situations over a long period of time.

I purchased a $1 million umbrella insurance policy beyond the rental dwelling/homeowner's insurance policy to cover 2 SFH rentals. I could increase it to $2 million but I don't think that's necessary at this point.

@Mary Eubanks

Congratulations on closing on your first rental! I would say that getting good tenants in is one of the most important things and know your state and local laws. Have a handyman, plumber and electrician. 

At first I stated no pets for my SFH in Indiana. My first tenant pulled a last minute "my daughter really wants a dog". She passed the background check, great credit score, everything so I didn't want to try to get a new tenant in place. After talking with my property manager. I decided to charge a monthly pet fee, $35 for a small dog/cat or $45 for a large dog (Labrador, Golden Retriever, Saint Bernard, etc). If I wanted to get specific, I could have stated the weight of the animal for the small and large sizes. My PM said some people do a pet deposit of about $200 and a monthly fee or just one. Sometimes it's not clear who does damage to the property, the people or the pet so he suggested doing the monthly pet fee. The pet fee also nets more money over a year than if I did the $200 deposit (if the tenant didn't get any of it back). I also stated tenant is responsible for mowing the lawn, no overnight guests for more than a certain number of days, no smoking, no other pets including visitors, etc

For my SFH in San Francisco Bay Area that I self-manage, I have the same rules as Indiana but a few more specifics. I stated in the lease: no candles, no smoking/vaping of any product inside the property, immediately mop up any spills or standing water, no non-operating vehicles, items they can store in the garage (bicycle is okay), no illegal drug use (I have to state the obvious) and "if any part of this lease is deemed invalid, it does not invalidate the other parts of the lease." I also can't charge pet deposit or fees for someone who has a registered emotional support animal. SFHs aren't subject to rent control (so far) but multi-units are. I have a Master Tenant to avoid the multi-unit issue and any roommates pay rent directly to the Master Tenant and have a written agreement/lease with the Master Tenant. I charge a garage use $100 monthly fee so whoever wants to park their cars in the 2 car garage pays for it. You probably won't have this issue in Texas with rent control.

@Evan Reinhardt

I didn't purchase the Invest with Ace course.

Here's a free rental calculator but I don't think you can save it as pdf or spreadsheet (at least I can't figure out how to save it). It also shows what the financial analysis is if you hold the property for a certain number of years, for a example 20 years: https://www.calculator.net/ren...

I bought two rental worksheets (a BRRRR one and Rental Property Calculator) for $24 during a Black Friday sale from another investor, Soli Cayetano, known as Lattes and Leases on Instagram and on her website. It has the many of the same features as Ace's calculator but I don't see the numbers of years hold feature, like the free calculator above.