All Forum Posts by: Chris Calabrese

Ned is right, you can rarely hold deposits for carpet cleaning or paint, unless it's extraordinary circumstances. Without a lease, you really have nothing to go on, but if you have it writing, you could add a clause that the tenant will paint the room and clean the carpets when they move out.

Sizing varies based on your location. I use the following chart:

http://www.acdirect.com/systemsize.php

It also varies based on the style of builing, type of insulation and other factors, but this is a good estimate for most residential homes.

You can get good deals on systems online from Ingram's or the Furnace Outlet. Your local companies will be marking up the equipment. Goodman is probably the least expensive of the well-known brands. If this is a 1-story home and the attic is accessible, you should be able to get the system, ductwork and install for $4000-$4500.

I wouldn't do it either, except in extreme circumstances. More than damage or non-payment, I'd be worried that they would decide they didn't like the house and that would give them a chance to back out. Then I've had it off the market for 60 days. I think that's riskier than what you'll save in taxes, if anything.

If they're already in a lease and can get it extended, maybe you could offer to reimburse them (at closing only) for the extra 2 months rent in their current place.

...when you tell your wife you can't paint your bathroom because the ROI is too low.

But if you don't pay a salary, then you end up paying this in self-employment tax anyway. They'll always get your money!

I haven't rented to military, but a lot of people in my area do. I've heard that they can get in trouble with the military if they don't pay rent, but this may just be a rumor. I do know that most states have laws (maybe it's even federal) that landlords must forgive the remainder of a lease if the tenant gets deployed or moved involuntarily. I'm fine with this as an American, but as a real estate investor, not so much.

With that many problems, I doubt anyone else will buy it for the list price. I'll bet you can scoop it up cheap in about 3 months once the bank realizes they're asking too much.

Then he's probably still paying taxes based on the 4% owner-occupied rate. Eventually, the city will realize he doesn't live there anymore and assess at a higher rate, and in most jurisdictions, his taxes would double. To counteract that, he could appeal the taxes to get the condo reassessed lower.

To elaborate on Chris G's post, I assume the $250 loss is cash flow only. How does it work out after taxes and principal payoff?

I'm in a similar situation with a condo that I paid $205000 for as a personal residence that's now worth about $80000. (When I moved, I decided to rent for a year or two while the market bounced back...that sounded good in 2007! If I only knew what I knew now.)

Anyway, I lose $500 a month in cash flow, but I'm paying off about $2800/year in principal and after depreciation and expenses, I save about $2400/year in taxes. I suspect he may be in the same boat if everything scales down about 50% and his true loss may only be about $500 a year. This may make it worth preserving his credit and taking the chance that he could get out of it in decent shape someday.

It will probably never turn into a "good investment", but it may be worth keeping for other reasons.

You could buy it for $3000, evict the tenants, and hire a cleanup crew to clean it out. Then wholesale it to a rehabber who might have been scared away by the original condition.