All Forum Posts by: Daniel O.

This is a tricky subject. Tenants have rights, and for those with severe allergies who decide to rent in a pet-free building because of those allergies, those rights include the right to live in space where their allergies are not triggered. What's a poor landlord to do? 

Communication is key. People assume that you have a pet free policy because you don't like animals or don't want the wear and tear on your property. In reality, you may have a pet free policy because you or your tenant(s) in other units have severe allergies. Problems arise when not everyone understands this. 

If you intend to maintain a no-pet policy as an accommodation for someone with severe pet allergies, it would be smart to have them provide a note from their doctor verifying their need for a pet-free environment. If you do end up having to go to court because someone objects to the no-pet policy or feels they were discriminated against by it, having that letter in hand with a date that goes back before someone with a pet made a stink will help you look much more reasonable in a judge's eyes.

@Dustin Schaefer When you say you could bump rent to get it to cash flow at $125 per door, what is your starting point?  In other words, what is your purchase price? What is the place currently assessed at for tax purposes, and what are the taxes?  If you purchase for more than the current assessed value, you will want to also factor in an increase in your property taxes. 

Other questions you need to be asking and building in to your evaluation: What costs is the landlord responsible for, and are you including them?  What utilities does the landlord pay? What vacancy rate are you using, and is it realistic? Is the place in an economically diversified area, or is it vulnerable to problems based on the decisions of one employer in the area? Is 10% realistic for the property management?  I would expect slightly lower for a multi-unit simply because of the efficiencies. Even if the place doesn't need anything right away, you should be setting aside reserves to cover things that will eventually need to be done. Are you factoring that in? How did you arrive at 7% as the cap rate for this place? Is that based on comps?

Have you factored in all of your costs, including vacancies, to get your NOI, or have you only included management? Without seeing your math, its hard to know just what you are looking at.

I would encourage you to sharpen your pencil and go to work to make sure you have addressed these considerations in your analysis. Once you have done so, then you can start to get a sense of what the place might be worth to you. Not worth to someone else, but worth to you. You can do that by dividing your NOI by your cap rate, which brings me to my final thought. A 7% cap rate seems high for what you describe as a "nice area". I suspect that whoever priced the place was using a much lower cap rate.

Good luck.

@Mark Stone Tough situation from the standpoint of your conscience, but not in terms of your business. You already served notice that she / they had to be out by the end of March. Now that her circumstances have changed to where she will be even less able to be an acceptable tenant by paying on time you are asking whether to keep her week to week? I think you already know the answer. 

The idea of giving her half the security deposit is a good one, but don't plan on taking any damages out of the other half. You need to split any damages equally, and you will need to hold the other half for the other tenant when he gets out. You may also have some issues with what to do with his stuff.

Bottom line: even if it costs you some $ to get her out, it will be money well spent. Just make sure you follow the laws for your area, get receipts for any $ you give her back, etc.  Good luck.

Just so we're all clear here, the walls separating two duplex units are not necessarily anywhere near to being an obstacle that would prevent a bullet, even from a relatively mild handgun, from passing through into the other unit or through to the outside where it could strike an innocent bystander. If I were living on the other side of the wall from someone who discharged a firearm indoors, I'd have serious concerns about my own safety. This needs to be part of the conversation with the lawyer and the police.

@Ricardo Murph II I'm afraid I don't have the expertise to recommend for or against a particular brand. Rheem is the one I am most familiar with. Might be worth starting a discussion hear on BP.

Good points all around above. An additional consideration is lead paint. Even if your jurisdiction does not require it, mitigating lead paint is a good idea and can cost a chunk. It is likely present in a 50 year old structure.

@Account Closed You might consider doing a combination of learning about real estate investing by reading books and attending REIA meetings, reading stuff here etc., AND taking a class or two each semester at a community college. A class on plumbing or electrical systems or hvac or something related to building trades will serve you well throughout your life. With the skills you will gain in the class, you will be better able to evaluate the properties you will be looking at, as well as to save money handling repairs yourself. And you will have a marketable skill that you can put to use anywhere in the country if you decide to move around. Even if you don't want to work in the building trades as part of your strategy, having this knowledge will help you understand what you are looking at, negotiate with contractors, etc. I agree with @Michael Beeman, don't spend a lot of time on the Rich Dad coaching. There are more useful and productive ways for someone your age to spend their time.  Good luck. Taking a year off before college is a great idea!

You might also consider a tankless hot water heater. These are very common in Europe and are gaining popularity here in North America. They are cheaper to make and cheaper to run than the old-school models, and because they are smaller, they can often be installed closer to where the water is actually needed, meaning less water running down the drain as you wait for warm water to come out of the tap. They are more efficient than conventional hwh because you are not running them to keep water hot "just in case" you might need it 24/7. For those with natural gas or propane, they can be a great choice. Oh, and they tend to last longer than the older type.

I don't know the laws in your state, but my thinking would be something like this: The difference between using a lawyer and not using a lawyer could well be the difference between getting them out at the end of March and getting them out at the end of May or June. From that perspective, $750 is cheap. Also, you may stand a better chance of collecting what is owed if you use the lawyer. Does your lease say anything about collecting reasonable legal fees in the event of a breach?

Good luck.

@Matthew Tierce I think the situation you describe makes sense and would move me toward going for it. I don't think I'd do the home warranty extension. Instead, take the $1000/ year and make a payment to principal to reduce what you owe more quickly. Normally I wouldn't recommend doing that, but if you can get to where you are not paying PMI, that is a worthwhile goal that would save you a good bit over time.