All Forum Posts by: David S.

I agree with @Michael Badin in that this is market driven.  See if you can ask a few realtors and a few flippers in that area. I think the realtors will love to give you insight into this as they may have a shot at getting the listing.

In almost all markets, a 5th bedroom in a 1700 square foot house adds no value or subtracts value.  I think you are right about the open floor plan.  I would definitely do a master bedroom with an en suite bathroom. Also, I would put great finishes in all bathrooms and the kitchen. I would keep it as a 3 or 4 bedroom.  Ask the agents and flippers if the 4th bedroom helps you in your area.

Picking a single older person over a young couple is a violation of Fair Housing laws set forth and enforced by HUD. This is discrimination based on familial status. Part of familial status discrimination is choosing a tenant because there are less people in that familial group.

Further, limiting your 2 bedroom to 3 occupants also violate familial status. Limits on occupancy is a little gray with HUD. Traditionally, there was a 2 person per bedroom rule. However, HUD came out with a memo in the 90's that stated that a living room could be used as sleeping quarters, therefore that would be 2 per bedroom plus one. There is further language in the memo about the size of the rooms and how many people that might influence the number. Extremely gray, but limiting 3 people for a 2 bedroom is definitely illegal. The only saving grace is if your municipality puts the limit at 3. That may keep you off the HUD radar.

I have read hundreds of pages of cases where HUD brought legal action against landlords who discriminate. Although a lot of reasoning by landlords at the time seemed fair in their minds, this reasoning was deemed illegal by the presiding judge. Best case scenario if you get targeted by HUD, you win the lawsuit, but you are out hundreds of thousands of dollars that you spent on attorneys. Worst case, a seven figure fine.

Also, HUD employs "shoppers" who check for this sort of thing. It is best to think you are talking to a HUD representative every time you deal with a prospect. I have been shopped a few times.

"Are you really evicting me for not paying $14?"  After tenant constantly refused to pay her part of the rent, only $14 a month.

While smoking a cigarette..."I won't have the money to buy the $1 AC filter until next month." 

"It is the landlord's responsibility to repair the holes in the sheetrock."  [hole caused by tenant]

"I don't have my rent money because the 4th of July is this month."

"I don't have the rent money because I had to buy school supplies."

"I don't have the rent because I had a high electric bill." [tenant who runs AC on 65 in the deep South during the Summer]

"I didn't break the window, the neighbor's kids hit from the outside with a ball." [window broken from the inside]

"You need to come unclog my kitchen sink ASAP, the smell is horrible." [sink had 3 lbs. of pasta in the pipes due tenant throwing it down the drain.]

"I flush grease down the sink with hot water.  It is not my fault the sewer line is plugged up, it is the landlord's fault."

"When do I get my deposit?" [While standing in 2 inches of water caused by the tenant flooding the apartment after they moved out]

"Why don't I get my deposit back?  I cleaned the place." [Tenant caused over $1000 worth of damage]

@Benny Gelbendorf

I think a lot of the negative feedback on wholesalers is area specific.  As someone pointed out, it appears to be illegal in Ohio unless someone has a RE license or buys the property first then sells.

Many of the best wholesalers in my area take ownership of the property before marketing and selling. I think that is the best anyway. You control the property 100% and stay clear of being illegal in certain states. It also avoids all of the BS explanations to the sellers and buyers and by the way, what is the that $5000 fee on the HUD for? There are also wholesalers who put properties under contract and never execute if they can't find an end buyer. That avoids this issue. But yes, there is a spectrum of the quality of the wholesalers, from bad to professional. Before a bunch of wholesalers get jacked up and for the record, I am not criticizing the use of assignments.

As @Tom Gimer pointed out, if you buy and sell in these markets, the wholesalers will come to you.  They pick up on investor sales and send post cards to them. Also, the best wholesalers already have a list of solid buyers.  So you need to get on their radar. They usually don't deal with novices, only professional investors.

Another way is start networking via the local Real Estate Investor Meetups.  If you are far away and cannot come to the meetings, you could contact the person running the meetups.  They should be able to give you some names of REPUTABLE wholesalers.

JIM K I hear you. I started out as the handyman landlord, but have gotten too big to this work anymore.  I did the changing filters when I started out. However, after issues with tenants working the night shift and some ladies in various states of undress, I decided to start leaving filters at the door. This occured with prior notifications and knocking at the door for at least a minute. However, upon entry months later, I would find about six new filters laying around and a 6 month old filter. 

REGINALD I have yet to charge a tenant for cleaning the inside coils. I only mention that it in my lease. My goal is to get them to comply. Further, I have yet to implement the 25 dollar maintenance fee for extra maintenance.  My letter is a warning. Moving forward, I will start inspecting this regularly.  If my inspection team finds dirty filter or evidence that is it not being done, I will hire someone to do it for the $25 a month.

Since the flood zone stuff was addressed, I will leave that alone.

My number one concern would be the area.  Is it Class A, B, C or D.  Unless you are getting a great deal, at 110k, I am guessing it is in a Class C area.  I don't know if you want to go down that road if you are out of state.  I would suggest that you move up in asset class to Class C+, B- at minimum.  Many PM's avoid less than Class B.  So that is a concern as well.

I would drive the area because Baton Rouge is very tricky.  You have Class D areas literally one street away from Class A.

Quick test: Call Domino's and see if they deliver pizza to that address.  Or check the Trulia crime maps.

As far as being able to rent it out, an updated nice home in a good area should be easy to rent out if the rent is priced right and you have a halfway decent PM.  If your place is not updated or the area is trashy, your DOM will be longer to find a qualified tenant.  Qualified being the key word.

Maybe the tenant should spend more time changing light bulbs instead of writing long winded letters.....

Changing filters yourself is not scalable.  I have it as the tenant's responsibility, but I have clause in my lease  that if they don't do it, they will pay an extra $25/month for me to hire someone to do it.  Also, they pay for damages or dirty coils if they fail to do so. I have found the best motivator is to explain to them that they may be without AC or it will come out of their pocket if I change it and they may also pay more on their electricity bill if they don't change the filter (the AC works harder and is less efficient with dirty filters). The thought of paying up to $75 more on their electricity bill really scares a lot of them.

Doesn't always work that well as seen in my notice:

Unfortunately, none of the people on here have seen your property, so we don't know what they are describing is accurate.  No offense...just looking at it from a different perspective.

Offer to correct deficiencies ASAP and continue to rent to them.  If they do turn out to be PITA's, then invoke the "happy clause."  If they continue to be a pain, it is my theory that they realized that they don't want the place after seeing it in person and are trying to get out of the lease.  

NO As someone who has spent 8 and 7 days without power for hurricanes, I agree with @Jennifer T. I did not ask the electric company to pay for my hotel for 8 and 7 days. They were working on the problem and fixed it as fast as they could. As @Caleb Heimsoth pointed out, next day service during the hot Summer months is excellent timing in the deep South. Going to a hotel room was their personal choice. Had you waited 2 weeks to call someone, that would be a different story.....