All Forum Posts by: Casandra M.

@Craig Bellot - We have properties in Wisconsin near Delavan and the $3000 is actually a pretty decent price compared to the multiple quotes we got for a property with bedbugs last year. Maybe it's just the area we are in?

I agree with @Mary M. - Looks like a lesson learned for a cost you have to absorb. Maintenance costs shouldn't be covered by the tenants unless they caused damage themselves. 

We don't give our tenants a "walk-through" list of steps to take, but rather, we either go physically ourselves to the property or call up our local handyman to check the basic things before we call in expensive electricians or plumbers. Many good property managers should have a light-maintenance man available for these checks as well.

Seller didn't uphold his end of the deal so you should be free and clear to walk away if you choose, including getting your earnest money back. 

If you want to stick with the deal, there are two easy resolutions:

(1) Require the repairs to be made within a specific amount of time from closing, and move the closing date to then. In this offer addendum, also require another pre-closing walk through to confirm repairs are done. 

(2) Get an estimate for the repair costs and require seller to bring a cashiers check to closing in that amount, and then make the repairs yourself. 

Diversification is our motto when it comes to our income, and we try to incorporate that in our real estate investments as well.I personally think diversification is undervalued and not taught or applied enough when talking about concepts outside of retirement accounts, which is a shame.

We have single family and multi family properties located in different areas of our city and in the near future, will most likely have properties in multiple cities and states. We have only been doing this for a few years now, but when it comes to our rentals and our goals for future properties, we think about diversification in type of property and how they are obtained: neighborhood class, cities, states, turnkey vs BRRR possibilities, BRRR vs flip, tax liens & tax deeds, foreclosure vs auctions, etc....

Remember that diversification in income brings diversification in learning as well. We've learned invaluable lessons from purchasing different types of properties and being willing to take on different type of rehab projects. 

This is just from our experience in the Midwest. I'm sure this is vary from state to state:

1. Our properties with commercial loans closed at 5.8% this month, and 5.75% last year, all under $200,000, 5 year terms and 20 year amortization. 

2. Our interest rate is static during the amortization unless there is a "significant change in prime causing material change in the loan and/or hardship to the lender". It's all BS statements because the banks can essentially change the rate to whatever they want between terms, but it would be bad for business to be inconsistent. Prime + 1 is typical. 

3. We file that paperwork with the bank each year also. It's a win for us because when they have our updated info and we call asking for updates on the amount they are willing to lend us, they have everything they need and we get quick responses. 

Put the utilities in their name - if the cost can be separated and go directly to the tenant, always have the tenant pay it themselves. 

Not sure how it works in your state, but in the Wisconsin city that we own our rentals, if the water is unpaid it gets tagged on to your property taxes so we would be responsible for unpaid water bills. Water cost minimal so we've never had a problem with it, but if this is the case in your area, and you want to mitigate risk, you could always require a utilities deposit as well. 

I'll also endorse what @Thomas S. stated. 

Keep in mind what kind of flooring is actually there and what is underneath that flooring. The ammonia in cat piss is not easily removable (if, at all). It's one thing if a tenant's cat peed and they tried cleaning it up right away... it's a completely different story if it's not being cleaned up and soaking into the floor. When renovating, it will not be simply pulling up the old floor and laying down the new floor.... pull out the subfloor and remove the trim, possibly some of the try wall near the floor. Duct work/cleaning, if applicable, will be a need as well. 

Also In my experience, KILZ does not solve the smell issue if it's a case like yours and the issue has been long term.

Keep her on a M2M, not a 2 year lease as this gives you flexibility in raising rent because for reasons you stated already, you are far more likely to change the tenant situation than her as moving with 5 cats won't be easy. When (1) you've had enough of her, (2) see the property is deteriorating worse, or (3) have the funds to remodel, you then have timing flexibility of making your decision.

I won't repeat what others said - it's all great advice. I'd just like to add that you don't have to guess at the insurance rate... call up an insurance agent and get a quote, as that could improve your numbers as well. Depending on vacancy rates in your location, we just use 1 month of rent for  vacancy expense for our properties, which has been a reliable figure for us for the last 4 years. 

Read the Rich Dad Poor Dad books (at a minimum, the original book and then cash flow quadrant), research the different type of mortgages you can get, keep an eye on what things are selling for in your market (redfin, zillow, trulia, etc...), and I very much agree with @Linda S. mentioning trade school if you are interested in construction, HVAC, plumbing, or being an electrician. You can build equity faster and be much more successful earlier on if you can not only do some work yourself, but also be able to use your knowledge while walking through a property to determine it's condition. My husband's construction knowledge has been a god-send for us because of those exact things. 

You're on a good start by finding forums to learn from and using BiggerPockets. Just keep in mind that there is no 1 right way- you need to determine how you want to get, use, and manage your properties in a way that works for you and your financial goals. 

We ended up deciding against gifts or christmas-specific wording in any cards. We do however, at the beginning of November, send a happy holidays and end of year letter to our tenants. Instead of a gift, we reduce December rent by $50. 

We have a small portfolio of properties, so it's debatable if we'll continue to do a rent "credit"/gift in the future when we get more properties.