All Forum Posts by: Chris Koch

SFH rental purchased in June 2018 with new tenants on a 2yr lease at $1300 with 3% annual rent increase. (Lease specifies 3% annual increase with two year lease or 2% annual increase with three year lease.)

Increased rent in June 2019 with no issue to $1339.  Tenants have never missed a payment.  The house is very nice, but the rent is still probably on the high end of the normal range for the area.  Initial two year lease is up for renewal in June.  PM company prefers lease renewals in April-July, when rents are highest and inventory is lowest.  Took several months to place tenants in a similar house in the neighborhood last September.  Had to reduce the rate for that other rental to $1200 before it rented.

Just got an email from the PM suggesting that, because of COVID, they want to change the proposed renewal offer.  Their new suggestion specifies a 1 year term with a 0.82%  increase to $1350 or a two year term (with no annual increase) at $1360, which is ~1.5% over current.  Neither of these are close to the standard 3%/yr COL increase expected, but maybe not reasonable to expect 100% success at a 3% rate adjustment every year forever.

What do you guys think?  Are you raising rents at this time?  I don't really want to raise anyone's rent currently, but maybe I'm too soft... maybe we craft a new lease that holds this year's increase off for 3-6 months?  And maybe it's smaller?   I don't know... just sort of looking for ideas and thoughts.

Would you mind expanding on what they have offered to do in response to your complaints?

I have found a RE investor (a good friend actually) who will give me a 10% return on a small hard money loan like this until I build up enough to do something else with it.  Easy enough!

Thanks everyone -- great advice in this thread!

@Mike Reynolds It's W2 money. I'm above the income limits. No way into a Roth directly, so did the "Backdoor Roth". (nondeductible contributions to a traditional IRA, then conversion into a Roth)

@Brian Eastman  that's a fair point.  The money was otherwise just sitting in a savings account with a minuscule return, so it doesn't hurt too bad, but in retrospect it might have been a better choice to make it a brokerage account first.  Now that it's converted, can the SD-Roth be moved into a brokerage style account and just pick up a Vanguard fund for a while?  (I'm with ETC if that matters.)

Just opened my first SD-IRA for REI, deposited 2017's $5500, and converted to Roth. Plan to do this again in 2018. It'll be maybe a few more years until I have enough in there to buy a turnkey rental (our primary REI strategy). Meantime I'll continue to invest with my personal or LLC's account.

I'm wondering what people do with their SD-IRA in the first couple years rather than just let the money sit there uninvested. Should I buy stocks and get some sort of return, maybe act as a small-time hard money lender? ($5500-11000 isn't exactly a ton of money for that right?) I'm basically just looking for ideas.

Thanks!

J Scott linked it 12 posts higher than yours on this same page... 

But here it is again.