All Forum Posts by: Daniel O.

The proposed massive cut to discretionary domestic spending and increase to the defense budget is something that investors need to be paying attention to. IF the cuts do come to pass, we can expect to see a reduced number of federal employees. Those employees buy or rent houses. And they spend money that supports a whole host of businesses around the country. We may also expect to see reductions in subsidized housing and other social assistance, with the attendant increase in vacancies and turnovers. It would be naive to think that the increased spending on defense will offset those changes.

In addition, many of the things that make real estate such a compelling investment could be altered in ways that cause us help or harm. These include 1031 exchanges, mortgage interest deductions on multiple properties (a big one!), changes to how depreciation is calculated, etc.

At the end of the day, there is no new money to fund the various things that the administration wants to fund. Congress has little appetite for increasing debt, so the money has to come from somewhere. I would not be greatly surprised to see proposals to reduce the mortgage interest deduction by a few percentage points to fund a major infrastructure effort.

Tile does not hold up as well as one would think. The individual tiles are fine, but the grout is the issue. And if someone drops a cast iron skillet, the tile cracks. I'd go with a single solid piece of whatever it is you decide to use. Getting food juice down inside the grout leads to a smelly mess.

@Allie J. Each loan agreement is a little different, though they are generally quite similar. It is possible that the poster you reference has an agreement that precludes what he or she wants to do. So long as you are acting in accordance with the terms of the loan agreement that you signed, you should be fine.

The less than ideal situation with tenant 3 relates to the previous owner, not then tenant. By that I mean that unless you have reason to think the tenant is a problem (late rent, etc), I would just try to update the situation with a new lease. If there are no maintenance issues, I would raise the rent but be clear that you are doing it to bring it up to market rate comparable to other occupied units. But before doing that, make sure you know the local landlording laws.

No carpet. No carpet. No carpet.  Require all tenant-owned furniture to have padded or nylon foot pads. Metal rather than plastic hoses to connect all plumbing (washer, toilets, sinks, etc.).

@Allie J.  Welcome to BP.  What you are referring to is people who represent that they intend to live in the house, when in fact they have no such intention. That is mortgage fraud, and depending on the circumstances, may result in felony charges. To quote the chief tweeter, Not Good!.  But as @Brandon Halley says, once you have fulfilled the owner-occupancy requirement, all is well. For a young person getting started or a young couple with flexibility, this can be a really powerful way to jump-start a real estate investment portfolio, particularly if they are doing things to add value and thus increase rents before moving on to the next property. Even without the BRRRR strategy, this is a very powerful way to take advantage of time (do it a few times for a few years while young) and subsidies that encourage owner-occupants by giving them cheaper mortgages. And the beauty of it is you can do it with SFRs, duplexes, and up to 4-unit buildings.

I'm with @Natalie Schanne. Sounds to me like Grandma is anchoring this family and that she is a center for familial social activity. I also wonder whether the neighbor has an issue with the race or ethnicity of your tenants. If the neighbor is unwilling to call the police, its most likely because he/she knows he is in the wrong...or they don't want the police paying attention to them. Bottom line is that you have no credible evidence that your tenant is doing anything other than being a good grandmother.

Explain to the neighbor that unless there is something illegal going on, you have no basis for breaking the lease and evicting them. Sounds like the neighbor is the problem here.

I'd be looking to the seller's agent to kick in some $ to make this all right. The tenant who has been there for 5 years has been paying slightly below market rent, but she has been paying it and she has been keeping the place nicely. The new tenant is a bit of an unknown. He will pay a little more, but may not keep the place as nice or may have other issues. If it were me, I'd be looking to keep the existing tenant and raise her rent to market. A good tenant who will be living on the other side of your wall is a good tenant to keep. Why does the seller's agent get to cause you this problem AND keep the change?  Give him the option of paying the new tenant's first months rent in some other place or you walk. Consider routing the request by the broker he is working for.

A handful of thoughts based on what you presented. You need to have a home inspector really go over the place to give you a sense of what systems will need repair or replacement over the next 5 plus years. Depending on what he or she says, your maintenance could be low. You also need to build in capital expenditures, e.g., for a new roof, furnace, hw heater, etc. Depending on the age of the systems, you should set aside somewhere between 80 and 120 bucks per month and build up a reserve fund to handle those items. If this is a place that might need to be painted on the outside, budget for that too. And finally, don't assume you won't have to put any $ into the place right away. License? Lead cert? etc.

It may be appealing to buy a place that already has a tenant in place, but you do so at your peril. You should do the full check on this person that you would do on any other applicant. If there are any red flags, let the seller know you will only buy it vacant. That may mean the seller pays the tenant to leave early, or you wait to close until the lease is up and the tenant is gone. But the last thing you want is to inherit a tenant you would not have rented to in the first place.

PM me and I'll send you a handy spreadsheet that I use for evaluating properties for purchase as rentals.

@Jasmin Mcduffie, you didn't say whether you were interested in something that was already rehabbed and ready to go or something you would put some sweat equity into. There are still some great deals out there if you want to do the work that needs doing yourself or have someone reliable and reasonable to do it for you. You also didn't say whether you intend to manage it yourself or have a PM do it for you. If you are going to work with a PM, I suggest you begin building that relationship now, and ask them what areas and types of houses attract the kinds of tenants you hope to have. Your PM may also know of landlords who are looking to sell assets, possibly giving you a chance to find something you like without too much competition.

Take a look at Reservoir Hill as well. There is a lot happening there with some good potential for appreciation as well as income. But as others have said, things are very much block by block. Finally, as you have probably realized from reading postings here on BP, some investors suggest avoiding Baltimore City in favor of Baltimore County because the city bureaucracy is harder to work with and taxes are much higher.