All Forum Posts by: Henry Kaldenbaugh

Your contractor will be the key.  Find one you can trust before you make your offer on the land and get your costs in order.  You will need this for your construction loan.  By doing  a detailed cost analysis with the contractor you will be doing your analysis of the investment.  

If you have construction skills you can be a subcontractor if you contractor allows it.

Our problem is tenant applicants who claim to have "Service Dogs."  Most of the time these are "comfort animals" another word for pet.  The Arizona Landlord Tenant Act states that we have to allow "Service Animals" and cannot charge  a pet deposit to cover their damage to the property.

We have one rental with  pet door and have charged an increased ($50/mo) rent for this unit.  Pet owners are standing in line to rent this unit.

The hot season is coming and it's time to get the evaporative coolers (swamp coolers) ready for summer.  Evaporative coolers function by sucking the hot dry air through filter pads of aspen or plastic mesh that are saturated with water that circulates via a pump in the cooler sump.

They need twice yearly maintenance to even achieve their 5-10 year lifespan.  The fan bearings need lubrication.  The belts need adjusting or replacement, the circulating pumps need to be cleaned of calcium salt.  The dirt and debris needs to be swept and vacuumed from the sump (pan).  The pan needs repainting and sealing from rust and inspected to be sure it has not rusted through.  The pads need to be inspected and cleaned if they are the plastic fiber blue pads and replaced if they are aspen.  The 1/4 " water lines need to be hooked up and inspected for leaks.

Usually the evaporative cooler is on the roof so it's up and down the ladder to perform all of the maintenance and inspections.  Frequently there is a sheet metal plate that needs to be removed from the duct under or beside the evaporative cooler and it needs to be stowed for summer to be replaced in the fall.  Occasionally the cooler will have a canvas cover that has to be securely stowed.

If the pan has rusted through, it will need to be patched or the whole cooler replaced.  I have been successful in having a sheet metal shop make a pan to set the cooler in to extend the life of the cooler, but these days those pans will be too expensive and it's best to replace the cooler.  A new 5000-7500 CFM evaporative cooler will run $650-800.  If it is on a pitched roof, it can be quite a chore to muscle it up.  This is a two person job and you might need a crane.

If you're rehabbing, the best place for the evaportive cooler is on a stand at ground level on the north side of the house.  Much easier to maintain at ground level.

Everyone with rental properties in the Southwest knows what I'm describing here.  We just replaced two and repaired two on our fourplex.  Now all of our residents have nice cool air at the flip of a switch.

Here in the Southwest, Az, NM, Utah, Co, we are at a mature market where it is harder to find deals. However, there are BRRR prospects everywhere. This spring we have closed and rehabbed a MFH and have it rented up. It has significantly improved the neighborhood with our exterior improvements and we are in a good cash flow position at a 10 CAP.

Looking for another but haven't found it yet.  Sellers are less than reasonable.  We just have to keep looking.

With as hot as the rental market is right now, I am surprised that your tenant is wanting to plan on moving out early.  @Jesse Peterson, is right.  What does the rest of the lease say?

@Nik Moushon,  if you can do better than 5.5% for 5 years go for it.  That's a great rate here in the southwest.

We just purchased a MFH and spent about 15% of the purchase price on CAP EX rehab costs, but we baked that into our offer. @Mindy Jensen is right the bigger pockets you have the easier it is to absorb the unexpected.  

Our bonus is that we significantly increased the curb appeal and value of the investment with our little rehab.  Had the previous owner done this, we never could have picked up this property.

@Robert Shedden, I disagree with @Nik Moushon and @Jason R.  If they are cash flow positive at 1.3 rent to loan or better, your lender will have no problem renewing your mortgage.  Lenders want the option to review the history of the properties before they commit again.  Lenders love to renew with good history.

@Stewart Hoy: This pertains to the end of the lease.  Usually, it is 60 days notice that they do not intend to renew their lease or request Month to month. BTW I would only go month to month for a short period of time, say their lease is up and they would like to stay for one month before relocating.

What you want to do during this period is induce them to re-lease.  You will give up more in turnovers than a few dollars incentive to release.  After all you already have their rental history, deposits, and don't have to clean up after them.  give them a free month to re-lease.

Here in Central Arizona the market is mature and a lot of California money is chasing the properties. I am looking for buy and hold rentals that will CAP 10-12%. There are not a lot of them at that price. We keep looking and networking the real estate community.

Having said that, we recently (1 1/2 months ago) closed on a 10 CAP deal that we now have rented up and almost completely rehabbed.