All Forum Posts by: Dan H.

If they lie on the application my lease states i (landlord) can terminate the lease and i do.  I recently had this exact situation of tenant lying on the application.  I gave them 60 days to find another unit.  It was not december, but otherwise it was a similar situation.   It cost me about 1 month of vacancy, but i do not want a tenant that lied to get the unit.  I also did not consult an attorney.   I just abided by my lease terms.  If they had not moved out, i would have brought in the best attorney available and charged the tenant for the legal costs.   Seeing they moved out when i requested, i didn't need to consult an attorney.

Do you really want this tenant?  This gives you what should be an easy means to get rid of what appears to be a less than ideal tenant. Use it to your advantage. 

Good luck

The reason that i would never suggest a single OTA is the all eggs in one basket risk.  What happens if the OTA start $crewing the hosts?   What happens if the OTA goes bankrupt?  If all your bookings come from a single OTA, do you have a business?  It certainly has a large dependency; you are at the mercy of that one OTA.

In addition, unless you are at ideal occupancy, alternate platforms can fill some holes.  In 2019 i was at ideal occupancy but none of my STRs are at ideal occupancy today.

Do what you want with regard to the number of OTAs, but i plan to never be associated with a single OTA.  My advice is to not focus on one OTA, but to be sure to be listed on multiple OTAs.

best wishes

$400k equity is producing $1600/month cash flow for a return from the cash flow of 4.8%.  I recognize this is not the sole source of return, but the other sources have their return increase with smaller equity position. 

In the long term expect RE to appreciate at a rate equal or greater than CPI. If i use 2.5% long term CPI and 75% LTV, the return from appreciation on a new purchase would be 10% or double your current return on that equity. i agree that a new purchase at 75% equity will typically not have significant cash flow and may even be negative when properly allocating for all expenses.

Investing to max equity without reserves is risky and you indicate would result in stress.   It is my belief your current situation is not a bad position (it is a goid position that will improve with time).  Positive cash flow and low interest, i assume, long term loan is an enviable position that with time will produce larger cash flow.   Why take a larger risk when you are sitting great?  Your path will likely get you to where you desire, it will just take a little time. 

Good luck

3 separate recent studies show it is currently cheaper to rent than own in virtually every large market and that it has never been more so than currently.  This depicts rents are currently lowest ever as measured against the cost of ownership.   The implication is to lower rents requires reducing the cost of ownership.   Unless there is a recession/depression the rates are not falling appreciably.  Without a recession/depression, housing prices are unlikely to  fall appreciably.  probably the best outcome is to reduce the cost of adding housing.  Note ADUs do the opposite seeing that small units in small counts is very expensive development.

I see nothing in anything you have stated that addresses what i believe has to occur to accomplish your goal. 

It is a lofty goal with no easy path to accomplishment, but what you describe seems unlikely to accomplish the goal.

Note most people on this site are RE investors.   They do not want RE values to fall.  Many/most new RE investors are relying on rent growth and appreciation to achieve their desired return.  It is a path not without risk, but it is a common path in this market.

Wishing everyone a successful 2025.

Our lease spells out what is reasonable number of holes per wall.  It is a number that virtually anyone would find to be reasonable (I believe it is 6 small holes per wall).  This is because it is fast to patch, but the fast can add up.  Also toggle bolt size holes can require texture which adds additional time.  spelling out expectations is never a bad thing.

So far it has never been an issue.  the one time that a tenant clearly went over the expectation they had occupied the unit 13 years and full paint job was expected (normal wear and tear).

I also have not found it difficult to match paint.  I question if the person that has issues matching 1) knows how to feather 2) has the original paint color/code.  I suspect I can feather good enough for paint that is to near end of life.  I have even had paint over 10 years that was in decent shape that I was able to match and feather.

Good luck

Thank You for your service.  Use the ge benefits that you have earned to their fullest. 

Are you sure prop taxes are forgiven?  This would be news to me.  Private mortgage insurance i believe is not charged on va loans.  Is that what you were referring to?

I think you have a good start and sometimes you learn more from mistakes than if all goes well.  

I do believe you are entering a tough market.  From the Great Recession to Q1 2022 it was easy to find RE that seemed very likely to produce outstanding return. 

In this era of increased rates, obtaining properties that will produce a good return are harder to find and often involve quite a bit of work.  

Good luck

Quote from @Stuart Udis:

@Dan H. How would an umbrella policy protect against a security deposit related claim? If the money is not held according to local landlord tenant law and/or was was spent (either intentionally or unintentionally), that act would be treated as an exclusion no different than under any other insurance policy. I have yet to come across a policy that covered for fraud or illegal activities. 

@Chris Seveney is correct, security deposit claims only arise if the funds are not returned. I would venture to say very few landlords correctly hold their deposits based on local landlord/tenant law but as long as the money doesn't walk away and is not wrongly withheld from tenants its highly unlikely wrongfully storing the funds will become problematic. By no means am I suggesting the funds should not be held correctly but there are other areas a landlord should focus their attention if they are concerned about tenant related liability. 

I proposed the question if the separation of funds was for asset protection.   It was a subsequent post in response to my question that OP made clear it was because the state required deposits to be held separate.  California does not have a law requiring deposits to be held separately (neither did Alabama when i had Alabama properties) and it seems like a significant hassle to address a virtually never occurring event (not having money to return deposit to the tenant). 

If the separation of funds was for asset protection (in this case there was another reason), it is my belief that an umbrella policy is easier than trying to maintain separation of assets especially when the property has been purchased with individual’s money and financing.  Again KISS principle.  I also like having an insurance company on my side in any dispute.

best wishes

Quote from @Bob Asad:

So I read that you can keep the last month's rent in your own account because it doesn't need to be separated; however, security deposits cannot be mingled with the landlord's other accounts or business funds.

If that's the case (in Florida), does anyone know if you have 2 SFH, then do you need two separate savings accounts for each tenant's security deposit or can you combine them?

In my state i have no such requirement on security deposits but i question the feasibility of doing this as well as how will anyone know as long as you have the means to pay the tenant their deposit when they move out. 

most banks charge for low balance accounts.  If i have only a single unit security deposit in the account, it will likely get a service charge.  In addition, 100 units would necessitate 100 accounts.   For these reasons i am confident you do not need an account per unit as having that requirement would be crazy complicated (the opposite if kiss).

in addition, how will anyone know that you are not following the law?  Taxes are private, 1099 are private.  I suspect it would require a court order to be able to show that you have not followed this law assuming that you have the money to pay the tenant their deposit at move out. 

for me, i would likely ignore this law.  However, if that is undesired i would create a single account to hold all deposits.  I would still use quickbooks to track the finances in that account snd all rental associated finances (we use it to track are personal finances also). 

by the way it is worth the cost of paying someone good with quickbooks to do the initial setup.  We did not do this and still encounter less than ideal setup the result of our initial setup many years ago.  Bookkeepers are fairly cheap, even good ones and should be able to setup for 2 units in a couple/few hours.  

good luck 

I do not like the name “deal killer”.  The name makes it sound like someone that will discourage all purchases. What is advantageous is someone that is good at underwriting and unbiased (only analyzes the deal based on the underwriting without other emotions).

Note i have a fair amount of experience and plan to place a competitive offer tomorrow that the underwriting dictates not placing a competitive offer.  So not only new RE investors could benefit from unbiased analysis :=).  

I especially believe in this challenging RE environment that some realistic analysis is beneficial.   It is virtually daily that i see purchases or considered purchases that appear to have no path to success.  One posted about buying a cheap quad,  i used her bumbers provided and my maintenance/cap ex to show negative $600/month.   Another post that person purchased a cheap property in april that just finished a $12k rehab (how could it take so long?) that is not renting (it is december).   I question the underwriting that shows this to be worth holding.  As mentioned, it is virtually daily that there are posts that seem unlikely to have any path to a return that warrants holding the RE.

i wish everyone be thorough and cautious in their underwriting.   If they do this, they likely do not need me to wish them good luck.  

Quote from @Bob Asad:

If I have 2 rental properties and charging 1st, last, and security; can I take the last and security for both places (combined) and put them into a Bank of America savings account?

In other words, I already have a checking and savings with BoA, but I would create a 2nd savings account (within my regular account) and put all the rental properties last months and security into that account (combined).

Is this the correct way to prevent co-mingling of funds, or what would you recommend?

Are you concerned about co-mingling of funds for asset protection or for some other reason?

My opinion is that an umbrella policy will provide easier and more comprehensive asset protection. 

With 2 rentals, i would keep it as simple as i could and one bank account is less complex than 2.  I would use quickbooks to perform bookkeeping for tax purposes.   I am a fan of KISS in most things and this is not an exception.  

Good luck