All Forum Posts by: Christopher Reeder

@Champ Leong

If this is not a pad for a pump, I suspect this is a grease trap for the kitchen drain. I have several 1940’s properties that have grease traps that are made from brick and inground. Septic companies can empty them when they are filled.

@Ryan O'Hara

As part of researching properties to buy, you must have been doing financial analysis on each one to consider if it would pencil out or not. During this analysis, I presume you knew the current rents of the tenant and what your business plan required to support your purchase decision.

You are now at the point of closing on the property and are rethinking your financial business plan. If you selected this property with an intent to increase rents, execute your business plan. It is hard and it is not a fun first step to property management, but it is one you will need to learn, get comfortable with and have a clear strategy as part of your acquisition criteria or your next property (or this one) could turn into a cash drain which is not the reason to be a landlord.

@Nicolette Alger

I recommend contacting your municipal building department and explain your build idea. Ask if this would be an option for the land. If they give positive feedback, you can work with a GC and designer to draw up plans. The building department would review and accept your design which will allow you to move forward with construction.

@Reya Ripet

I self manage my properties and executed several extensions this month for early 2022 lease expirations. First thing to check is the language in your current lease on notices to your tenant. This might be a mute point as they have communicated their intent to renew. Next is analyze your market to determine where rates are for similar properties. This will help establish a range for you to plan the rate increase.

I use a simple 1-page addendum which details any part of the original lease that will change (term length, start/end dates, rate, deposit, etc). You and your tenant will sign to execute the extension and then you are off and running again.

Chris

@Yeshua Williams

You mention you acquired this property and rehabbed it. I’d ask you review your depreciation elections of your rehab in the year you reported the rehab. Many costs incurred qualify as 5, 7 and 15 year property for tax purposes which also qualify as 100% bonus depreciation.

Not knowing your property’s annual income, I’d presume your bonus depreciation should offset your taxable income before depreciation expense. If your rehab was quite significant compared to taxable income, you likely have a carry-forward taxable loss that will reduce your income.

As others have stated, your tax advisor’s recommendation to 1099 yourself is not a logical activity. Take a draw of your cash, report it as a reduction of equity, then buy your next rental property. Rinse and repeat.

@Kyle Mullins  when I started my investing journey in 2010, I took the same approach you concluded; $25 annual increases and a feel good moment being my tenant’s best landlord ever. 

Fast forward to today and I’ve learned this is only a business. I’m not here to make friends with tenants. I’ve been burned by a tenant for $4k during my friendly years. Go through that event and it hardens you like a slap in the face. 

My approach today is straight forward and has been successful in each of my acquisitions. I provide a 2 page welcome letter to all inherited tenants explaining who I am, how to contact me and what will start happening. I give them 2 months notice + remaining days in month I close of the rent increase. This has meant an increase of 7-50% depending on the current rent vs market. I immediately execute my business plan (interior rehab, exterior rehab, common area work).

Bite the bullet, raise the rents to your financial analysis target, execute your rehab plan and communicate to your tenants. You will have 1 month of heartache and if they like the place enough, they will find a way to stay. If they can’t afford your new rate, they need to find a more affordable place.

Chris

@John Matarazzo

I had a tenant in my earlier investing journey that was similar to your current tenant that pays late. At first I enjoyed the additional income but over the years grew to see how it was inefficient for my portfolio management. Their habits continued to worsen over time to the point they were paying on the 30th of the month with the late fee.

When their lease came up for renewal, I offered them a renewal option and changed their late term clause to be $10/day. Since signing their new lease 3 years ago, I’ve collected $10 in late fees from them.

The late charge term changed the tenants opinion of the late charge and made them prioritize rent over their other monthly payments. They continue to renew each year at the new rates and have been a very successful turn-around tenant for me.

I’m in Florida which is landlord friendly so your success could be different based on your market and local laws.

@Kathryn Schauer

There are many products that can be used as moisture barriers; non-permeable coating like SealKrete, rubber barrier product like a house wrap, etc.

The picture you showed in response to Jay is similar to the French drain I described.

@Kathryn Schauer

In Florida we deal with a lot of rain from our thunderstorms. As far as I know, there are not requirements for gutter systems on any residential construction.

Options I’ve used to prevent water intrusion as you have described is to seal the outside wall with a product from SealKrete. This is similar to paint you apply to the outside of the building which creates a moisture barrier. Adding gutters then can collect the rain water. Feed your downspouts into a French drain (channel dug into soil leading away from structure filled with gravel, a perforated pipe and covered). The water will travel in the pipe and percolate into your soil away from the building.

Hope this is helpful.

Chris

Robert Binns Roofing has done 4 roofs for my properties and have always been very competitive and provided a good quality shingle roof.