All Forum Posts by: Matt Schelberg

There is a free REIA meetup this evening in Millersville (15 miles south of Baltimore) hosted by me and @Gabriel G.  The main topic is rent court and evictions. The speaker this month is Brian Wojcik, who has a ton of experience with rent court and evictions -- he is a former property manager who now specializes in optimizing the rent court process. He'll be answering questions and educating us on the process. As always, the event is pitch-free with no selling or guru courses offered. Just good discussion and opportunities to learn and meet local investors.

Regular attendees include BPers @Ned Carey, @Russell Brazil, @Christina R., @Jarred Sleeth, @Anil Samuel, and others.

The meetup begins at 7:30pm. Location details are on our meetup.com page here. Bring your notepad and questions! Hope to see you there.

@Gabriel R. I second @Jeff Burdick's advice about the home inspection. It's sounds like you're unsure of the scope of work...which means you don't know what it will cost to rehab.  If the numbers don't work, get out of the deal by exercising the inspection contingency that's (hopefully) in your contract. 

If you are still committed to this project get a home inspection pronto!

@Bart Modzelewski The mortgage payment for the $96,400 refi seems a bit low at $604/month. Can you provide a breakdown of the PITI and refi terms?

Also be aware that Baltimore County charges the sewer fees to the owner on the property tax bill.  This is based solely on the tenant's water usage. A typical annual sewer charge is $200-$400.  This would reduce your monthly cash flow, so it's a good idea to include a provision in the lease stating that the tenant is responsible for reimbursing the sewer charge.  Because you will be getting the bill!

If you are all-in for 96k I think you'll do ok in Middle River.  That project cost is a bit on the high end, but if it's a nice piece of property in a good neighborhood I'd consider it.

@Adam Avinger Home inspectors are trained to recommend to the buyer that ungrounded outlets be kept as 2-prong receptacles when not GFCI protected. A good short primer on this from InterNACHI is here. Being a home inspector myself, I agree with @Steve Ramsey that most buyers are not going to care too much if 3-prong outlets are ungrounded.  They care more about whether they can charge their laptop around the house.  The bottom third of that InterNACHI link explains how you can improve safety by adding GFCIs upstream (albeit with the "no equipment ground" sticker).

All that being said, if you are renovating this house, why not have your electrician fish some new wire and replace a couple of the circuits with modern Romex in places where it is easiest? This will allow you to show the property with some nice, new 3-prong outlets without the ugly safety sticker. And the new owners won't be scratching their heads about where to charge their laptops!

@Nicole B. I think @Ned Carey is right about the absence of a requirement to redeem the ground rent.  I bought a property in Baltimore County earlier this month and was not required to redeem. 

I think of ground rent as a loan.  If a $90 annual ground rent has a redemption cost of $1,500 that's equivalent to a loan at 6% interest.  I can achieve a higher rate of return by reinvesting that $1,500 in another rental property, so it does not make sense for me to redeem the ground rent on most of my properties.

To clarify my question:  For self-managing landlords who want to continue self-managing their units, are there are any management tasks that you would consider sub'ing out to a third party?  Perhaps something you hate doing or something do poorly?

For example, I am terrible at billing my tenants for monthly water usage (in my state the water bills still come to the owner).  If I could pay someone else who does that better and more efficiently than I can, I would do that.

@Kim Meredith Hampton Those additional services are good ideas, thanks.

@Patti Robertson Yes, I could outsource, but for most functions I want to be able to control the quality of my management services. I agree that PayNearMe is awesome -- most of my tenants use it.  Great idea about NightTenders -- the troubleshooting feature they advertise is fantastic.  That is one function I'd definitely outsource -- huge efficiencies from the volume they are able to handle.

@Jeff B. I take your point, but not all states require a license for property management.  My state (Maryland) does not.

Thanks for the ideas.  

@Nicole B. I got my home inspectors license for similar reasons -- I wanted to be able to pull the trigger on deals more quickly and to have more confidence that I was building a complete scope of work.  

Since you're already on your way to becoming an agent, I'd recommend starting out with some home inspection self-study on internachi.org.  They have some great online learning tools and classes, including videos.  Then if you decide it's something you really want to pursue you could sign up for a licensing course at a local community college (usually $750-$1,000).

The biggest enemies of cash flow are vacancy and turnover.  This arrangement gives you more of both.  Eight unrelated people under one roof means no one feels responsible and you will get more wear and tear.  Plus, the last home insurance application I filled out asked me if there would be more than 3 unrelated persons living together in the house...you would have 8.  

Besides being paid upfront, what are the positives here?  If it's a nice neighborhood, why not wait until a family comes along and stays for 3+ years?

@Edwin K. Your contract can include an inspection contingency that allows you to terminate the contract within a certain time window (the inspection period) and get the deposit back.  This is an excellent reason to use either a buyer's agent or a real estate attorney to ensure you are protected.  They will provide the wording in the contract.

If the inspection reveals something bad, you could also ask the seller for a price reduction.

Keep in mind that my response at the top of the thread was for a small multi-family property being sold by another landlord. If a new investor is buying an SFR listed by an agent, you should definitely be represented by a buyer's agent to protect your interests.