All Forum Posts by: Brian Adzadi

@Joe Schaak

An older duplex in a class C neighborhood? If you are planning to rent it for now, put in an electric baseboard heater and keep it moving my friend.

Unless its an upcoming neighborhood that is seeing gentrification, its not necessary to put in expensive equipment which the tenants at the end of the day will not care about.

@William Levi Corcio

Hopefully someone who is a mortgage specialist can chime in on this but from what I understand, if you buy a home as your primary residence, you shouldn't be collecting rent on it.  Mortgage companies will look hard at that because you are not using the home for its initial purpose. How much trouble you can get into for doing that, I don't know; I never been in that predicament. (Remember, if you were to have told the mortgage company that you were going to use the house as an investment property, they would have charged a higher interest rate.)

If I were you, I will first check out my credit history and FICO to see what factors are affecting my score. Are there other debts showing up in my history besides the house that are deterring them from giving me a second mortgage. If there are, try to clean those debts up before going for the mortgage.

If that is not the case, then see if how much you are earning is too low to be considered for a second mortgage. If that is the case then may be try to find a higher paying job or you can have your brothers/partner be co-signers on the 2nd the mortgage.

@Nicholas J Robichaud

I am sure some of the veteran investors could give a little better advice but here is my take.

1. Move all your stuff into storage (furniture, clothes, knick-knacks etc.)

2. Stay over parents, friends, uncles, aunts, brother whoever that can accommodate you for free for about a month.  Be looking for the next potential house while you are staying there. Also start getting your necessary documents for applying for a mortgage in the mean time.

3. Clean the house until its near immaculate. Start posting the house as a rental on Facebook Marketplace, Craigslist, Put up as sign, what have you. If the house is in a desirable neighborhood and the rent you are charging is reasonable then you should be able to rent that house out within a month of moving out.

4. Get in contact with a realtor to start looking for houses once you get the lease is signed and the security deposit is in your account.

@Lilly Olson

This is a question that @Brandon Hall may be able to answer much better. What I would like to know is, are you going to deduct these expenses through your business or are you going to deduct them through your individual returns.

If its through your business then I believe you can claim all those expenses without a problem. However, if its through your individual tax returns then it may trigger an audit.

@Thomas Lee Malpass

It does not matter how the tenant feels about another tenant living in the backyard. It is YOUR property. As long they are aware that another tenant will be living behind them, it is up to them if they are willing to sign the lease or not. If they do sign the lease, then obviously they are ok with someone living behind them.

Besides, unlike a duplex where the tenants are living right next to or above each other, the ADU is a completely separate from the house, so any noise complaints or the likelihood of the tenants getting into arguments decreases tremendously.

But if you feel like renting out the unit out to one tenant, its all up to you. I ,however, will rent those units out separately for max profit and ease of rent payments.

@Thomas Lee Malpass

The first thing I thought when I saw the title of your post was, "Great, he has a 2 for one property that he could rent out separately".

Why would you rent them out to one tenant? Maximize profit bro. Besides a tenant can afford a $2,400-$2,600 rent than a $3,400-$3600 rent.

You have to think about the tenants being able to afford your property, no matter the circumstance they are in.

@Seth S.

I think you should base your decision on what your priorities are. Are you looking for good cash flow or are you ok with just coasting by? Do you want tenants who will give you less headaches and treat your property like its theirs or are you ok with tenants treating it like trash? That is the notion I am getting from your question.

Just because your tenants in Deal 1 will be paying lower rent, does not mean they are guaranteed to pay you on time or all the time. The day those tenants decide that they don't want to pay you rent at all, you will be in the same predicament as Deal 2 if they lose their jobs.

Besides I know people who were paying $1,300 to $1,500 in rent during the recession and they made it through. So for a tenant not to be able to pay $1,100 in rent during a rough time is a little weird to me. You can make $1,100 a month delivering pizzas alone.

So at the end of the day, pick the place which you feel will give you the most peace of mind, because at the end of the day, that's all that really matters.

@Jeff Louis

At this point, those people are right. FHA is the best format to acquire with your current situation. Credit score requirements are only 620 or above and down payment for an investment property is only 3.5-5%. The only caveat is that you are required to stay in that property for about 1-2 years (most often 1 year, but I don't know if the rules have changed so that's why I say 1-2 years). Once that 1-2 years is over, you can then do another owner occupied rental FHA for another property.

If I were you, however, I will tackle that 40K student loan a little faster so as to start putting money aside to cover Cap Ex or major capital improvements on the property. Trust me, Murphy's Law is insanely real when dealing with real estate.  

@Account Closed

I am not a well seasoned landlord and hopefully ones who are can chime in. I feel the biggest factor in determining frequency of tenant turnover is location, location, location. You can have amazing finishes in the house but if the property is located next to a prison or a cemetery, you can best believe your tenants will not be planning on staying for too long.

So if I were you, I would base the types of finishes to install in the house on the type of neighborhood its in. If its a C-D class neighborhood, I would put in the most basic, tenant proof cabinets, vanities and countertops there is. If its a A-B class neighborhood, I would place the most aesthetically pleasing of finishes there is because your clientele will expect that.

I personally, I think, the biggest factors to focus on when it comes to reducing turnovers besides location is providing amenities like in house wash/dry and private parking.

@Nikki Kofkin

The lease agreement with the landlord should have everything spelled out. At the end of the day, it does not matter what the landlord said, its what is written on the contract. If the landlord put in the lease that any person who stays at the rental for more than 1 or 2 months will be added onto the lease and the rent charge will be adjusted accordingly then the judge will rule on the landlord's side. If, however, none of that is said on the lease and its just what the landlord said to the tenants then the judge will rule on the tenant's side. I am not an attorney and you should ideally refer them to an attorney for clarification. This is just general knowledge I am using. Things may be different on a state by state, city by city basis.