All Forum Posts by: Ceril S.

@Tony H. Does the inherited tenant have a current lease in place and do you have a copy of it?  Check with the local laws, but I believe that you would have to honor that existing lease first before putting yours in place. Even if it is an expired lease, you should have gotten a copy before going under contract.

I check the county website and even the town tax database is often easily accessible (go to town website and click on pay taxes and put in tenant's address)  I google the person and facebook check them, especially if something doesn't feel right.  We call employers and google for employers public published phone numbers and call that one instead of the one that the tenant provides and see if we can still get connected to their "supervisor".  There are many ways to double check if what they are telling you is true.  We also request bank statements, if they say that they get paid in cash, sometimes we will accept the last 3 months of bank statements that show a recurring deposit of the same amounts.  We absolutely call the last landlord - simply look up in white pages their name and address off of the county or town tax history.

@John Moon  We had our plumber do the heater (I think it was about $3K but he was doing other work for us as well at the same time)

RUBS is legal in NJ and we have a calculation in our lease that uses a combination of square footage and # of occupants.  The tenant also initials that section of the lease that they understand and agree.

In your case you may have to convert 2 units to electric baseboard.  We didn't go this route because, while the cost was cheaper, we have another unit that has electric baseboard heat complains that their electric bill is too high in the winter.  The tenant would have utilities in their own name for electric and gas so we don't bill or pay for that.

Is gas separately metered? for stoves? or is that electric?

We have had this a couple times now.  

1) We don't let just one tenant off the lease, especially if they needed both incomes in order to qualify. (You did do background checks and income verification, right?)

2) We tell them that they are 100% responsible for the rent for the full duration of their lease whether they live there or not.

3) We offer to list the apartment for rent and if it is rented prior to the end of their lease, then we will release them, however, they are responsible for the rent up until that point and they are required to cooperate with showings, etc.

4) Their security deposit is dealt with normally, any repairs that we need to make (including getting rid of their trash left in a hasty departure) all gets billed to the security deposit.

5) If they don't let us list the apartment and can't pay the rent, they will be evicted and that will show up on both of their permanent records for a long time (usually this is motivating for them not to do this)

Luckily, the times we've had to do this, we've ended up with better tenants on the re-rent and have had ZERO downtime for the turnover, so it actually cost us aggravation and time on our part, but did not lead to an actual vacancy.

@David Kors as @Julie Marquez said - there are tons of threads here about BRRRR. Yes you will need to have some money in the game. We either use hard money or cash for the purchase which is usually something like 70% ARV MINUS acquisition, rehab and holding costs. So far it seems to us that the least money immediately out of pocket is if you do a hard money loan with 10% down (of total project cost) + ~3-4% fee. I haven't seen less. (Although HML will require you to show that you have the reserves in place to hold the project) When you refinance at the end, many banks won't do more than 70% LTV so that is the "all-in" number that you try to stay under.

We ran into this on a duplex and decided to add another heater for the 2nd unit because otherwise we would have to carry the heating costs (which leads to waste on the side of the tenants - because one unit may be too warm and keep their windows open letting all your dollars out!)  The other options we looked at were 

- locking the 1 thermostat and having it controlled by us (and paid by us)

- Converting 1 unit to electric baseboard

- Dividing the utilities so that it can be billed separately (which is what we eventually went with - keeping the existing radiators in place and adding a separate heater)

Are all of the other utilities separate?  We have a couple properties that we bill back for water using (RUBS) but have so far kept electric and gas on the tenants bill.

@Emilie Ponsin We currently use State Farm for our investment properties.

@Emilie Ponsin Our first multi-fam 2 years ago, we got with 20% down. After that we were told that 25% down was the new minimum for a multifam investment property and we were able to get lower conventional loans with 25% down for properties 2-4. Financing properties 5 & 6 required more work to find and acquire (and those banks wanted 65-70%LTV)

Good luck with everything and congrats!

We have tenants currently that have signed a lease that says "no smoking" is allowed or there is a $500 fine.  It was advertised as being a non-smoking apartment.  However, their toilet was running and when my property manager (wife) went to fix the flap, there was a cigarette butt in the toilet!  She took a picture and gave them a warning.  When we went back to do an appraisal for our refi - there it was again - the cigarette butt in the toilet!  Of course, a picture was taken and now they will be fined $500.  We will have them now sign a new addendum to the lease saying that if it happens again, they will be fined another $500 as well as be served a notice to quit.  The property manager will also do a quick inspection monthly when rent is collected.  I feel stupid for allowing them to have gotten off with just a warning the first time!

@Stephanie P. Good catch there - totally did not mean to downplay the cost of fees (points) when using HM!  It is certainly a significant number both on the front end of borrowing and on the refi end as well (especially if you end up doing a long term refi with a company like LimaOne's rental30 program and there are many others out there as well) - definitely make sure to take all of those into account when running your numbers!  Like many things, HM is another tool in your investing toolbox, and bigger pockets is an awesome place to get educated about how and when it would make sense to use it.