All Forum Posts by: Charles Carillo

@Julie Bretton

11 months behind? I would talk to the tenant now and tell them you are going to start the eviction process in 7 days if they do not get caught up. You might get a month or so out of them but you are not going to get your 11 months of rent. The tenant does not need to know you are selling; but they will find out during inspections and appraisals. The eviction should have started when they didn't pay in month 1. The buyer is not going to reimburse you for not evicting them prior to the sale. The buyer still has to deal with this "problematic tenant" after they purchase the property and most likely will lose thousands between attorneys and lost rent.

In regards to the informing the buyer that the tenant is behind. Yes, you should let them know but they can see it when they review the rent rolls. 

@Andrew Fudge

My first house hack was with students from a college I just graduated from. You can definitely make money but it is a little different from normal rentals. You have the parents apply with the student and co-sign with them. You can also request a larger deposit. In my experience, these students leave every 12 months and move elsewhere. I would charge a higher premium because of this. Maybe add 8%-10% to the monthly rent to cover you when they move out and you lose a month of rent as your prepare for the next tenant. 

Lastly, and also a touchy subject, but it is difficult to have happy non-student tenants in a small rental property with student renters. The problem is renting a unit in a 3-family when there are students in the other 2. You cannot say in your ad that you are only accepting certain people but of course, the non-students are going to waste their time (and yours) when they talk to you and come see the property only to find out there are college students in the rest of the units. I would put some language in the ad explaining the property and say "X miles from (college name here)" and "a 3 family property with college students occupying the other 2 units" or something to this extent. The point is to let potential tenants know that there are college students there. This avoids people (and you) wasting your time. You can also advertise the property at the college.

@Henry Centola

Hopefully someone comments with a specific lender but, in my experiences; when I was looking for portfolio financing or small commercial financing; I would reach out to all local banks and credit unions within a 45-60 minute drive of the property and ask if they lent on what I was doing. You will be surprised how many lenders actual lend on multifamily but do not advertise it on their website. It will take you an afternoon but, you will find someone who will. Then you can compare terms, rates/spreads etc.

@Austin Smith

It is difficult to be successful in multifamily when your local/state government are both working against you. After 16 years of owning rentals in a tenant-friendly state (Connecticut); we sold them all. We had tenants we couldn't evict during COVID and we finally got them out; re-rented, waited several months and listed them. I suggest you do the same. 

Amazingly, I have never heard about the issue of non-paying tenants from gurus on social media selling multifamily coaching.

@Joyce D Raphael

I purchased it cash and paid cash for the rehab. Yes, I went over my rehab budget but, I purchased it in late 2009. My rehab budget could have tripled and I would have still made money. 2009 is very different from 2022. Increase your rehab budget and do out the numbers as a buyer at $607k. Interest rates will most likely increase 1-2 more times before you complete the rehab. I believe it will be difficult to get $607k for a property netting $31k a year with interest rates where they are.

@Joyce D Raphael

First, the ARV seems pretty high for a property that is supposed to bring in $5,200 per month gross. That is like a 5.14% Cap Rate (assuming 50% expenses). The 1 month LIBOR is currently 3.57%. In other words, if someone bought this from you for $607k; they will most likely be paying the bank to own the property.

Next, this is a HEAVY value-add project. I purchased a vacant 5-unit in 2009 that was completely vacant and I went over my budget. I would make sure to triple check your numbers and make sure you have a sizeable buffer.

Lastly, you mentioned passive investors. To legally have passive investors in a deal, you need to create a syndication which would be too expensive for this deal to make sense. I would suggest setting up a JV; BUT, make sure that everyone is active (has an active role) or you are breaking SEC rules. 4 JV partners is a lot; maybe try to find just 1 or 2 (max) others to partner with.

*Not trying to be negative. Just explaining what my experiences have been with projects like this.

@Jessica Price

Try reaching out to owners directly. In most cases, the seller is not going to advertise or say up front that they will owner finance. You need to find target properties that have been owned for 10-15+ years and when you are building rapport with sellers; talk to them about seller financing and all of the benefits. Most agents don't understand it or want to deal with seller financing.

@Matt Sora

Usually with us, if someone stops paying rent, we evict them and our property manager will submit what they owe to a collection agency. The collection agency will contact them and try to collect but in most cases; once you evict someone, you will never get any money from them. If you try and garnish wages and they stop working or change jobs; you usually have to go back to court (if you can find out where they are now working).

Honestly, it is probably not worth your time. I would focus on preparing the unit for new renters, finding new renters, performing a (more) in-depth background check, rent it and move on. Deadbeat tenants are part of being a landlord.

@Tyrel Ferris

Do you have natural gas at the property? When I have had oil in rentals; we would install gas furnaces/boilers for each unit with separate meters. This is the best however; it is expensive but, you will be saving money every month. In this scenario, you would have all of the gas bills in your name until the leases come up for renewal. At that time, you can require tenants in the new lease to pay their gas (heating) themselves. If they don't like it, they can move out.

@Edward Kanive

I would setup a phone meeting with her and work through the issues. It is a hassle to switch managers so I would have a call with them first to address your points prior to just firing them. It seems like they are not that assertive with your property and these issues (in most instances) can easily be corrected.

Maybe find your own people to make repairs or do unit turns if you want this sped up. You can also call the utility companies and have them automatically put them back in your name when someone turns them off. We do that; not sure the process with the companies in your area though.