All Forum Posts by: David S.

To save legal and reputation issues as well as protect you against future AC repairs, offer half of $1700. It is just the cost of doing business. However, it sounds like you have a functional compressor. So the problem is a MASSIVE FREON LEAK which makes the AC a huge future money pit. More than likely it will need a complete replacement. R-22 parts are extremely hard to come by nowadays and the last few leakers I have had needed a complete replacement. The new refrigerant R410A does not have compatible parts with R-22. 90 % of freon leaks are in the evaporator coil. If this is the case, you can take a shortcut and replace the air handler but use a R-22 orifice instead of a R410A orifice. However, it is best to do a complete replacement, especially since the condenser is old as dirt.

There is a lot of great advice here from some heavy hitters aka successful investors. I believe your best bet is to study the MLS just to get a feel of what is "retail" so that you know your market by heart. However, off market deals is where the real money is made. I have acquired a ton of great deals from tired landlords like some folks here. I started by simply networking with as many as I could, although at the time I wouldn't call it networking, just simple conversations. I used to keep a notebook and took detailed notes of EVERYTHING, every property, every conversation with RE investors, etc. That is probably something that I need to get back to.... There are a bunch of other ways to buy off market deals, direct mail, signs, placing Craigslist ads, responding to wholesaler's Craigslist ads, calling for rent signs, tax delinquents, code violations, driving for dollars, putting together a bird dog network, RE investor meetups, etc. Like folks have said, this is a marathon, not a sprint. I have went through years long drought of not buying properties and then I have had periods where 5 excellent deals drop in my lap at one time and I am then scrambling to get them under contract and close them. One last piece of advice. I always carry a blank standard purchase agreement form in every one of my vehicles. If you come across a great deal, PUT IT UNDER CONTRACT ASAP. This is a competitive market. By the time you scramble looking for a contract, the deal will be gone. You don't have a deal unless you have it under contract. Good Luck and Happy Investing!

@Michelle Felux I was in agreement with you until I saw that it has been 2 months since the filter has been changed. Unfortunately and in my opinion quite inaccurately, many filters state that they must be changed every 3 months. The tenant can argue that it has not been 3 months, therefore they are not responsible. I specifically state 30 days in my lease and I also warn tenants of the inaccurate idea that it will last 3 months. Since, you stated that is was a good tenant, I would send a warning letter that next time the tenant will be charged for repeating this behavior. And while alot of folks dislike the pleated filters because they clog easily, they better protect the AC coils. The cheap ones don't clog, but everything ends up in the evaporator coil. This is an expensive repair if the coils are so dirty that they have to be removed to be cleaned.

Sebastien, I think he meant $800 per door, so a duplex would yield $1600 a month. 

Originally posted by @Sebastien Hitier:

Originally posted by @Brent Coombs:

Originally posted by @Awais Sheikh:

@Joe Scaparra Where do we even get 2% in the country?

The answer is often "in the country". ie. Where demand does not outstrip supply.

It's quite common in many markets to be able to buy, say, a duplex for $80k, that rents @$800/m. ie. 2%. Please, do a bit of research. Cheers...

It seems to me that the 2% rule asks for $1600 for 80k. So $800 rent and price no more than 40k per door to get the 2% rule.

So in general, you do get the 2% rule with a $750 rent wherever you can get a unit in tenantable condition for 37k.

I would add that besides market value of the land, average cost of construction of new house is $150 per sqf and insurance puts replacement value at $70 per sqf. So such houses prices at 40k do trade at a large discount.

@Michael Hayworth  I wasn't clear if you advocated asking for the additional funds.  I completely understand the single 7 day extension only, as I have been on the seller side of this with a bad buyer's lender.  I am now going to do a fixed SINGLE extension from now on just because of this experience.

I have also been on the buyer's side and asked for a single day because of a lender issue and a holiday near the contract close date.  The seller asked for about $800 for a single day because another mortgage payment was due and that amount would cover 150% of that payment and I thought it was a d*** move.  Ironically, before the issue came up, the seller asked to close one day earlier because he was going out of town and I happily agreed without asking for money.  We ended up closing one day early, without any extra money coming from me.  I was 95% sure we would, but I got proactive by asking for an extra day.

@JD Martin I do agree to go ahead and give a 7 day extension without charging as well.  However, as I stated above, I probably wouldn't do multiple extensions.

@Ben G.

It is my understanding from what I read that there are no fixed rate mortgages for 30 years in Canada.  They more or less like a commercial loan in the US.  Fixed rate for 5 years but amortized over 25 years, then they are due after 5 years.  Then you have to refinance with the current rate.

@Ron Sharp

I would think that you should have a stronger reserve fund because you are right, you have no idea whether your future interest rate will be 5% or 15%.  You can pretty much assume that these super low rates are not going to last.  I would also assume that the loan will adjust at a much higher rate so that I would be prepared for a worst case scenario.  Think "stress test."

Yes I do.

You are doing what most us are doing i.e. income needs to be 3X rent, proof of income, clean criminal and eviction check (sometimes "1st time renters" DO have a rental history but conveniently forgot that they just got evicted).  Also,  you should ask for proof of identity as well.

When I can't get a "perfect" applicant and something like this comes up, I may ask for an increased deposit.  Certain screening services will actually recommend this.

Originally posted by @Steve Vaughan:

 Even if there is no rent increase, I give notice of one every April.

I'll raise the $10, but also attach a discount memorandum of $10 for paying on time and being awesome.   May sound silly, but they appreciate it, and if they don't pay on time or get complained about, the $10 (or however much) is in effect.  Just an idea.

Great idea Steve!

So basically the late payers or the one's with lease violations would get the increase while the one's who play by the rules get the same rent.

Also, could be similar to the 80/20 rule.  Those 20 percent (or less) cause 80 percent of the work.  Therefore, you should be compensated for it. Or manage them out.

Good and great tenants are the backbone of your business. Each year when I do my Schedule E, I notice that my most profitable properties are the ones with long term tenants who take care of my property i.e. make a home for themselves and who pay (CLUE-No turnover costs).  So, should one of them fall on hard times, I will work with them considering they have had no lease violations. There is another thread on here about an elderly couple who were good tenants for 5 years and ran out of money.  A lot folks said throw them out ASAP.  5 years and timely rent deserves some leeway.

However, you will have the types that will take kindness for weakness.  It is a matter of WHEN not IF you are going to get burned.  Now these types need to hit the road.  Also, if a tenant disrespects your place and you have a strong lease, then technically they are in lease violation.  I give less leeway with tenants who have had multiple lease violations.

And that goes with aggressive rent increases.  If you are a hot market, then great you can do this.  In slower markets, is that $10 a month rent increase worth a couple grand in turnover costs and all of headache to find another great tenant?  Sometimes not raising rents is a BUSINESS decision! 

@Jennifer T.

Do you know what part failed on the outside unit?  If it is the compressor, then yes you may have trouble locating that part because of the R-22 phase out.  However, the rest of the parts on a condensing unit i.e. fan motor, contactor, capacitor, wiring, etc. are universal.  Therefore, those parts can be swapped out.  Even a hard to start compressor can be given a hard start kit.

I completely understand using window units in certain 100 year old houses.  Definitely hard to retrofit. When I was in the Upper West side of NY, guess what I saw hanging out of the windows of 5M$ condos?  Window units.