All Forum Posts by: Greg Gaudet

@Ran L. I have a rental property under contract right now for over 20% below market value. That’s the main principle the BRRRR strategy is built on. In this case the seller just inherited it and he just wants to get rid of it quick without dealing with listing, showings and back and forth offers. I made an offer before he had a chance to list it and it’s a win win, we’re both getting what we want. Another deal I did this year was 30% below market value. That one was a foreclosure and I only had one other bidder to beat at the court house. When I refi/heloc these two in a few months I should be able to pull out more money than I even originally invested in the downpayments and just keep collecting cash flow. My point is that properties sell for 20, 30, 40, even 50% or more below market value every day. That’s how wholesalers make their livings! And flippers, and BRRRR investors, etc. But yes I agree, especially in today’s market I would want a record high sales price if I were selling. Thank God for motivated sellers!!!!!!!!

Aloha everyone I’m just wandering what everyone’s criteria is nowadays when evaluating duplex triplex and four plexes? I’ve been buying condos here on Maui that I’ve been able to generate 500-600 a month cash flow on about 100k purchase prices (HavIng the ability to self manage and save $160/month on PM makes a big impact, plus zero vacancies because of the extremely limited housing supply on Maui), but with prices rapidly rising it’s getting harder and harder to duplicate those deals - plus I just don’t want to have all of my eggs in one basket so I’ve been planning to acquire 1-2 more condos in this particular building before diversifying into 2-4 units In another market possibly. It’s just hard to get excited about spending 200-400k on a duplex to make half of what I’m making in these condos! What are you all looking for in terms of monthly cash flow when evaluating potential deals In todays super hot market? I’m particularly Interested in hearding from buyer of 2-4 units under 400k. Looking forward to hearing everyone’s feedback!

@Quinyana Mosley I’d just like to add a little heads up regarding guru education; many beginners fall for the over promising hype that a lot of the seminars are known for. Typically these gurus first bring you in by having a free seminar to teach you how to join their team of house flippers, then they say to start you have to take a $500 course, then at that course they tell you a $40,000 course is needed to learn what you really need to know, etc. (And they tell you to charge the 40k bc you’ll make it back on your first deal) A lot of schools out there do this, usually with a high profile/well known famous investor as the face of the training program. I’m not saying these are bad; I have heard graduates say that it helped them bc they needed someone to walk them through everything, but I think that 95% of people are capable of figuring it out with the help of BP, podcasts, books, REI meetups, etc. I think most people that pay for those classes are lolking. For the easy money, but nothing comes easy. REI is simple, but it takes a lot of work. Just based on you posting here, you’re on the right track. Anyway I just had to make sure you’re aware of these programs so you don’t get sucked into huge debt for something you don’t need! Aloha

Originally posted by @Nathan Gesner:

If the tenant causes an expense, I charge it back to them and expect them to pay it. If I pay $50 for the Sheriff to issue them a 3-day Pay or Quit Notice, I list the unpaid charges AND the $50 service fee and require them to pay the entire amount or I proceed with eviction. Same with court fees.

By the way, my lease includes a clause for "Application of Rent" that says any payments made are applied to outstanding charges in the following order:

1. Tenant-caused billings
2. NSF fees, late fees, service fees
3. Utilities
4. Security deposit
5. Unpaid rent (oldest to newest)

Let's say the tenant owes $600 in unpaid rent, $100 in utility, and $50 for the eviction notice. They pay me $600. I apply it to the $50 eviction notice, then the $100 utility, leaving only $450 to rent. They are still short $150 rent money so I continue with the eviction.

That's how I see it to be too. I haven't had too many late payments, mostly because I only have a few units and because my prior PM experience was vacation rentals. 

Thanks for your input. That's very helpful. I'll probably add something into the special terms on my lease mentioning that just so there's no arguing about it. 

Alooooooooooooha 

I self manage. I enjoy doing it, I rent to section 8 tenants and love the kind of cash flow my units produce; I think my favorite part of self-managing is that every time I visit my properties I am reminded of how absolutely amazing my life is and how bad I could have it. 

Anyway, I've been going through the Hawaii landlord-tenant handbook, googling, searching BP, etc. and haven't been able to find the answer to this. 

I have not had to evict a tenant yet, and that's really the only thing I'm dreading to deal with as a PM. Hopefully my thorough vetting of tenants will keep my evictions to a minimum. But as I'm seeing now even after the most thorough application process it's possible to get a bad apple. 

From what I've found, you can hold the tenant liable for all court costs if you win the suit and they are evicted (not sure how often we actually end up collecting, but we can try, right!). But what about when a landlord files for eviction, and then the tenant pays the past due rent, either before the court date or at the court date, allowing them to stay and continue their tenancy. It seems to me that the tenant should reimburse the landlord for the $150 fee that the court charges (in Maui, at least) to file the eviction suit and probably any additional court costs and lawyers fees as well.. but I haven't been able to confirm this. Does anyone know? I know there's only maybe 50 people on BP on the island of Maui, so how does it work in your state? 

Thanks for your input! Hopefully this tenant will just pay his late rent so I can focus on the other deal I have under contract lol But I want to figure this out anyway just for future reference and just know what to expect. 

Thanks for the input. A couple things to note - I cannot start the eviction process until Thursday (after the expiration of the 5 day notice pay or vacate). But come Thursday if he hasn't provided the documentation on the "service animal" AND paid the past due $115 of rent then I will absolutely be filing for eviction. 

But based on his comment accusing me of being in breach of the lease, I suspect he may be trying to find his own way out of the lease... which would be great, it could save me the time and expense of going through an eviction. So my reason for wanting to talk to him is just to find out if he really is trying to get out of the lease, and if he is then we can agree in writing to cancel the lease and that's a win-win. May be unlikely but it's worth checking into while I wait for the 5 days notice to expire. 

I do agree with a lot of the statements about how there are a lot of people that use the system so they don't have to work like the rest of us. (Heck, one of the reasons I take HUD is because I'm paying those people's rent through my tax dollars anyway, I might as well benefit from the cash flow of the taxes I'm paying!) But because of some of the things I've been through in my life (I went through some very dark times and was able to recover, mostly because people gave me a chance) I also try to give everyone the benefit of the doubt. While this guy is showing himself to be a stereotypical d-bag leach, there are also many people on HUD because they had an accident after working their whole lives and lost their life savings to hospital bills, etc. (just to give one example).

@Brian Garlington We have the same thing here on Maui... there are tons and tons of tenants with HUD vouchers searching for landlords that will accept them, but most landlords are too scared to deal with them. And HUD just issued hundreds of new vouchers here, so anytime I post my rentals I get dozens of people begging to be chosen. You're absolutely right, I could have the place re-rented in a matter of days. What really blows my mind is this guy's entitlement... he should be so grateful that HUD pays his rent and that he's one of the few HUD tenants that actually found a landlord to accept his voucher, but instead he wants to accuse me of breaching the contract and tell me I don't have a right to do a quarterly inspection of my property after he stopped paying his rent and lied about having a dog! lol Some people....

Looking for input from those landlords that have had similar issues, or just anyone that is very familiar with landlord - tenant laws, specifically in Hawaii.

My tenant moved in July 1st. HUD pays most of his rent, he only pays about $100. He's had a couple minor repair issues, and each time he has been very strange when trying to schedule (according to my appliance repair guy).

Then this month he missed his portion of the rent for the first time. He has a 5 day grace period according to our lease before he gets a $50 late fee. So on 10/5 I dropped by to deliver his "5 day notice to pay or vacate". When I knocked on the door I heard a dog bark, then people shushing the dog and scurrying around. 

Our lease says "except in accordance with Hawaii law regarding service animals and other classified animals, tenant may not bring pets or have guest bring pets into the unit without prior written consent by the landlord". 

Once he opened the door I served his notice and asked for an update on when he would pay. He said 10/6. And I reminded him the unit is no pets, and that I know there's a dog here. He said it's his gf's service animal (gf isn't on the lease, but I suspect is living there too). So I said then I need that documentation. He agreed to send it to me right away and to send the rent by the next day. 

Well the next day is over, I texted him a reminder, and he ignored it. Although he did send an email shortly after I texted him, copying HUD, citing the Hawaii law that a landlord must provide 2 days notice before entering. (because I texted him last week saying I need to do a walk through this week since it's been 3 months, then today I added in my text that I was going to try to do my walk through tomorrow). That showed me he's trying to twist the system and use it against me, because he knows that I gave him notice a week ago.

SO now I need to decide how to proceed. I'm planning to ask him to talk, and sit down and chat with him and see if we can't just be grown ups and clear things up. But I have a feeling this guy is trouble and always will be, so I'm hoping that we can both just agree to terminate the lease... I'm just so thankful that it's HUD rental, and I know I can still cashflow even if he doesn't pay and I have to go through a drawn out eviction!

Anyone have input? Thoughts/suggestions? 

@Tirzo Quintero Same question was posted by another beginning investor last week. Hearing these egocentric agents laziness really frustrates me, but take your business elsewhere! Maybe that agent has so much business and too much money, but there’s plenty of agents that will be happy to make the commission. That being said, I typically have an equation that justifies my offer price. Whether that equation has any validity is another story, but I can make an argument for almost any offer price lol (Can use price per sq ft, list to sales price ratios, the average sold comps prices minus what you think the property needs, etc.) I learned this practice from when I was responsible for presenting offers for one of the top producing brokers in the state of Hawaii, and I believe that is part of the agents job to discuss the right offer with you and then to write an argument for the sellers explaining why 135k is the right price. But if your agent isn’t savvy enough to make the argument that’s going to win the deal for you, you can always write your own argument and tell your agent to include it as the cover letter to your offer. One more thought; in my last deal negotiations I was bidding against 3 other cash buyers, my max price was 75k, but I ended up accepting the sellers counter for 80k just to beat out the other buyers, then I did a moisture inspection, found some water damage and was able to get a 10k repair estimate which I used to get the sellers to give me a 5k price reduction to 75k (I already knew there was moisture, and was already planning the rehab anyway so this was really just a bluff to get a price reduction) . So what I’m saying is that sometimes it’s worth it to offer a little more, or accept a higher counter and use a home inspection as a negotiating tool to get the price back down once you have the property under contract and the sellers already moving towards closing. Hope this info is helpful! There’s tons of great agents out there, find one that understands REI and make sure you’re valuable to them too! Gotta close deals with them, or at some point I would say it is fair to stop writing offers - but doesn’t sound like that’s the case here.

Originally posted by @Donald G McCartney:

In some of these cities it's not all that hard to find excellent cash flow rentals, and many of them come from turnkey rental providers, and they do not have to be in "war zones" as you describe. 

For example, I was looking at a turnkey duplex at recently in Toledo, Oh that could be bought for $44,000.  It had been remodeled, each side was 2 bedroom, 1 bath , around 1000 sq ft, renting for $550/month.  That's $1100 per month on a $44k investment.  The units were separately metered, so no electric or gas bills.  The turnkey seller was offering to manage the property for the first year at no charge, but 10% of the rents thereafter.  Out of $1100 per month, I estimated about $595 net, which is $7140 per year.  

The expenses break down as follows: 

Management  10%   $110/month, but free for first year

Vacancies 10%           $110

Taxes                           $100

Insurance                    $75

Maintenance  10%   $110

Total estimated monthly deductions:  $505     Net average cash flow/month: $595.

$7140 divided by $44000. equals cash on cash yield of around 16% per year.  

This property was not in a "war zone" as you describe, but is in the Old West End area of Toledo, which is not bad, probably a "C" neighborhood. 

Unfortunately, this property was snapped up by another investor before I had a chance to do the due diligence.  

Deals like this are fairly common in cities like this. 

I'll take that deal!!! lol

What a great Meetup tonight! I’m so amped up I can’t even sleep, seriously got so much value.. I spoke to at least 5 people that had tons of experience and guidance to offer, I could’ve stayed for 3 more hours. Can’t wait for the next one! Maui starting to step up!