All Forum Posts by: Anna Laud

@Jay Sheth

You bet! If any other questions come up please reach out = )

@Jay Sheth

Hi Jay! 

Assuming that you're indeed comparing apples to apples here and things like vacancy, rehab/updating costs. etc are all similar and it seems like the higher ROI would be on the two properties at $90K each.

Another thing to consider would be a simple probability here in 'odds of being paid'- i.e. think of these as properties "A" & "B" THEN solo "C"- if either "A" or "B" stop paying rent, it's with higher probability that the other in the mix would still have income coming in. 

If "C" were to stop paying rent (while in the midst of the eviction process) there isn't another part of this lumped portion of your invested (and borrowed)funds generating income (with the exclusion from other investments obviously, just breaking this question and specific question apart)

This leaves you in a bit of a quandary however as your renter quality at $700/mo and the other at $1200/mo could be different and you could also end up with a worse case situation than outlined (having dual evictions going vs one solid renter) -Giving the full argument for both sides/possible outcomes-

Having said that I assume, based on your description, that the combined tax assessment of both "A" & "B" parcels plus combined structure assessments, are similar or equal to that of singleton "C"- if not you could face a higher property tax payment on two properties vs. one. 

One more thing to think about would be the difference in your insurance costs- it's likely that there would be a similar situation to that of taxes in cost differences. 

Second to final note, (I only add this in as it sounded like maybe it was your first time purchasing two properties at one time) using borrowed funding- DTI (Debt to Income ratio) and credit score may be looked at with a bit more serious eye while applying for two loans at once- that being said, if both are in great standing, it might not be an issue.

All of that being said, it sounds like what you will be more personally comfortable with- again if all things (closing, rehab/deferred maintenance, taxes, and insurance) are indeed similar, and  you would qualify for two loans at once;

A.) slightly higher combined monthly rental yield + possible lesser quality tenants  

B.) slightly less monthly rental yield + possible higher quality renter 

I could be missing something here, but that does seem to be mainly what it would come down to! 

@Arthur Sorochkin

Hi Arthur! 

One of the best and most accurate places to find this information out would be from your State's Department of Education. Usually there are 'report card' grades given out to each school within the State and these are based on various State metrics, from population size, to standardized testing results, literacy rates averaging above/below grade level etc. 

The State page/site should offer you the most accurate and easy to understand results, they may even have a few Federal level rankings listed out as well if this applies to any of the schools you're looking at. 

I will give you the link for Indiana's site, just so you can see what I mean 

https://inview.doe.in.gov/   - try typing in 'North Central High School' and you will clearly see the State issued 'report card'- you can use this as an example of what at least one State (IN) considers information worth noting and use it to kind of base your own search on until you find your State's direct page.  

As for finding out a property's 'zoned' school(s) you will need to do a google search with the following terms;

The exact "school corporation name" (often City/Township combo) + "school boundary map"  

Usually two to three links will be above the one you're looking for as those top result are PPC ads (like from sites you mentioned) then below those you should see ".gov" ".org" or something State/district specific like "in.us" but it's likely not going to come from a ".com" location if an official State or public school site (which is what you want as redistricting happens often and the State's site will only be second in accuracy after the school district's site. 

If rezoning is of serious concern for you, cross reference with another search of again "exact school corporation name" + "school board meeting" + "redistricting" - you should easily have access then to any published school board meetings- super sleuthing would be to go through the "minuets" of the meetings to look for key words to determine the mention of and projected  dates/effected schools. 

Hope that helps! 

@Nicholas Parker

I'm unclear if you plan on staying in FL or not (or maybe working remotely and the REI advantage has you considering other locations?) but FL's laws for landlord rights are less strict than some other states (no rent control, late fee regulations etc)

So while it may not hit the ‘top five’ or so “landlord friendly states” per say (like IN, TX, GA, KY, CO- some like AZ too) it’s not out of the realm of possibility to move forward with the purchase of a property that’s fully occupied now, and have one of the tenants vacate.

When you're looking at these properties (in FL I'm assuming), it should say on the MLS description about the status of the leases for starters.

Then it would be a matter of seeing the actual leases and clarifying if there’s a notice of nonrenewal or termination- then just proceeding accordingly with what the lease has outlined. If it says the landlord must give 60 days notice- then do just that and you should be fine.

States have different laws about the occupancy of a unit to an owner and it's a little unclear on FL - but one thing to consider is cash for keys.

To ‘sweeten the pot’ (and your timeline) you can also select a favored unit and offer cash for keys in which you’re basically are saying “here’s the notice of me not renewing your lease as outlined with x amount of days notice/can we come to agreeable terms to vacate sooner” so with an agreed upon arrangement of them vacating (get in writing)- especially if lease has outlined that it will continue with transfer of ownership and not near end date. (Some leases do have this clearly outlined, others do not).

A better alternative would maybe be working with with an agent to make an offer contingent upon the vacancy of one of the units as a personal dwelling, letting the current owner take that as their role to handle (to terminate lease) as landlord- but I wouldn’t suggest a lowball offer at that point because the current owner will be perhaps wary of you deciding not to close the deal after all- so have a specific date in mind for this and agent should submit offer accordingly.

My best advice would be to speak with an agent near you and see what they have to say about it, preferably someone who has worked with investors in this situation before in FL and will be able to help you decipher the leases you are going to come across as well as have lender connections/established relationships to facilitate the process.

This would also help you establish which properties might be best fits, making sure you’re not inheriting any disgruntled tenants or worse, disgruntled tenancy at will situations and have a very clear plan of action set forth when you're offer ready. 

Hope this helps!

After you’ve worked through the formative steps of getting financing together and have a specific plan/location in mind, If you need help finding an agent to talk to near you send me a DM and I’ll try to help you find someone if you’d like so you can stay out of a bad situation

@Krystin Krebs

Hi Krystin!

The first thing that it seems like you need to do is acquire a copy of the zoning map and and local ordinances put in place- keeping neighbors in mind as well (I will get to that).

But you can get that information from local building dept, local planning/zoning etc.

After you’ve obtained this, kind of cross reference it with what is defined under the zoning/ordinance as permissible. - It can be very location specific from needing a permit for a pole barn (actual agricultural use, to not needing anything based on the additional being directly for agricultural use- just depends on your local authority)

If you’re zoned as cumulative - you are usually allowed to go down in impact on the land usage, but not up. Ergo - cumulative commercial would allow for residential in most cases as ‘residential’ would typically have less impact on the land.

But in this case, it seems like you might be working in the opposite direction- so getting in touch with your local zoning authority would be most helpful.

I mentioned neighbors as you might want to also verify that any neighbors would not be a stepping stone on your path to future plans.

Personally speaking, I own tillable ground that borders a US proving ground, that permits residential usage within a certain radius of the proving grounds’ metes and bounds description.

On another piece of tillable ground I own, there is designated protected forest as a bordering neighbor, which again impacts my own usage/future usage (for things like water runoff, etc)

Now another reason to verify what you have to work with is you may not own exactly what you think you do- make sure there are no grandfathered variances in place- again, personal experience here as another property that I own has a small partitioned off section where a farmhouse was allowed (I say ‘grandfathered in’ as it was partitioned/permitted off, build was over 100 years ago) and you might fall into that as well if there were ever at any point residential structure(s) on your land.

It seems like it might be easier to finance the land than the buildings, especially if using shipping containers - but you will for sure need to verify you’re in the clear to get things up and running. There are environmental impact factors, as well as bordering properties that need considered and researched before proceeding it seems.

My best advice would be to consider the true zoning as it stands and not simply take the sellers’ word on it, then verify all surrounding properties and their usage, as well as speaking with a few lenders in your area about your plans before signing anything.

If you enter into a land contract with them and fall short of financing for these containers or permissible (in favor of what you want to do zoning), you might be stuck simply with what the land is now in its current conduction.

In a nutshell, yes, it’s very likely you will need proper permits and verified zoning requirements to be met- just because it’s your land, doesn’t mean it's free to do with/exactly as you want in any way unfortunately, so just check things out first!

Hope that helps!

@Noah Everett Farmer

Hi Noah!

You're welcome for the information and I hope you find it helpful = ) I actually have a small REIA and due to COVID , it's transiting into a weekly email, then to meetings via Zoom etc, to keep everyone connected and in the loop. Be happy to add you to this, just DM me your email if you'd like. It's all walks of real estate life- from agents, lenders, to investors etc.

@Joshua Mellor

Hi Joshua!

I mean I think technically the legalities of it come down to the fact that you could text on a group chat as she herself has not told you to not contact her, but if you should is another issue. This could (in theory, worse case scenario) turn into the boyfriend confronting you- seems less than ideal or safe. While we are for sure in a texting day and age, and she may indeed think the money she's giving him is going towards rent being paid in a timely fashion, it seems like it could cause more issues than resolving them. While I understand your concern of her needing to know about rent not being paid on time, perhaps you could consider letters about the payments (if absolutely necessary) until you've talked with someone who can offer professional legal advice.

I say that as you would be doing your part to still offer her the chance to know, and still stay out of it pretty much. Doing your part to inform her, yet protect yourself against an unwanted (let alone unwarranted) issue. Really, it doesn't seem like there is going to be a lightbulb moment in, "Oh we need to keep our rent payments made on time" by either party- keep in mind if she were all too concerned about it and thought for a moment she was on the lease, it seems like she would be giving you the money herself maybe. 

It would be a pain (and $), but maybe help too in the eviction process to send registered letters of this nature - at least you would have documentation that they were sent - CYA for yourself. 

Really, it sounds like you need these tenants out and the best thing to do would be to have as little contact in the meantime or at least until you've consulted with someone who can tell you exactly how to legally proceed. 

If you do get any group messages, I would take screenshot those. I doubt it would go to full civil court proceedings, due to cost alone, but if it did you would be ready. Always try to have way more in these situations than you would ever need in your corner in other words. 

@Joshua Mellor

Hi Joshua! 

I would agree seeking professional legal advice on the matter but keep in mind the following as well when you do and while you wait to do so;

Assuming you’re in NY here on this one and the latest update to COVID related moratorium then in place as a concern;

“The Act places a moratorium on residential evictions until May 1, 2021 for tenants who have endured COVID-related hardship. Tenants must submit a hardship declaration, or a document explaining the source of the hardship, to prevent evictions. Landlords can evict tenants that are creating safety or health hazards for other tenants, and those tenants who do not submit hardship declarations.”

There are a few different pieces here- yes, you will need to give 30 days notice even for this now tenant at will, and following you may or may not receive payment for the 30 day period. You’ve created a tenancy at will by accepting payments without a formal contract- so even with monthly payments being late and in broken payments- its been accepted so seems to be an understood ‘verbal agreement’.

So if the tenant refuses to leave, then you will need to begin the formal eviction process, and be ready to have documents waiting, including screenshots of all conversations from now on.

Now there may be an angle to be used when gathering documentation with criminal convictions as a safety hazard, however simply being a ‘felon', expunged or otherwise, would be in violation of the Guidance on Application of Fair Housing Standards to the Use of Criminal Records by Providers of Housing and Real Estate Related Transactions by HUD, based on the Civil Rights Act of Discriminatory housing 1968.

But a safety concern could be any violation of the following it seems;

No violent or drug-related felonies

No crimes against children

No felonies committed within the last 10 years, and no imprisonment for felonies within the last 5 years

No crimes against landlords or rental properties

No convictions or pleas to any crime involving metal theft, vandalizing properties, or otherwise damaging properties.

No arson convictions or pleas

So if you know there are drug charges and drug activities (should be able to obtain dated public arrest records) this seems like it would apply.

The other issue here to be aware of is anything can be a form of payment in some cases- I would suggest not accepting anything at all once you give notice of eviction- not even a plate of cookies for example (it has happened, and usually tenants who have flirted with the other side of the law know renting regulations and loopholes better than those who have not, apart from legal professionals) and anything you accept will be used as proof for ‘acceptance of payment’, or could be and then you’re in more of a mess.

As for communication with the girlfriend, I would suggest that you do not maybe as it could be seen as harassment if the tenant has even taken a screenshot of him telling you not to do so- you were asked/told, and beyond that it could get messy, even with her name on the lease.

So yes, my best advice also would be to indeed seek professional legal advice and avoid all further communication until you do so!

Hope that helps = )

@Alecia S.

You're welcome Alecia! 'On on before' then with an exact date specified seems pretty cut and dry then but contacting the title company and your agent would be best, agreed. If you have multiple properties this agent manages, and have worked with this agent before, it's unlikely there will be any issue there it seems (always great news!) Plus it sounds like you may already have a working relationship with the title company as well, another good thing. I'm not sure why this transpired as it did  (distribution of information in a timely fashion to all parties involved), but if you truly desire not to sell, it sounds like you could be able to exit the deal after all and proceed moving forward in another direction. Hope this all works out in your favor! 

@Alecia S.

If your contract (sales agreement) has automatic extensions like “on or about” closing date, and it goes beyond this date without a signed extension you could possibly walk away (I say possibly as it is truly contract dependent). If you had an original date signed by both parties that was not met, you have the right as the seller to terminate the contract and re-list the house or sell to other parties that have made previous offers on the property.

It seems like maybe ‘seller’s cold feet’ in this situation as you’re talking the very next business day the deal would close, which could be inconvenient no doubt, but not unreasonable.

This could get a little less friendly quickly if you go onto ask for penalties for an extension etc (that would only usually happen with a much longer extension in terms of # of days to compensate for things like payments on your end {like two weeks further in holding costs if you don’t have a mortgage for example})

If you do decide to pull out of the deal and not proceed with the transaction, it seems like maybe you would need to consider your agent relationship as well, and the entire process of re-listing with a new agent would maybe begin anew.

I say that as even though it’s a seller’s market right now in most areas, it’s unlikely (maybe, again, I can’t say for sure not knowing them personally and this may be a friend of yours etc!) your agent wouldn’t consider this a pleasant experience/working relationship and you may be contractually bound to them (as your hired listing agent), but it’s going to linger in their mind how close you were to closing on the deal, yet wanted to back out at the last minute.

If they did a great job of marketing your home and you’ve got a decent relationship with them, maybe it won’t be an issue and you can easily keep working with them (they will market your home just as eagerly as the first time, etc)

Now there could be other factors involved that don’t seem apparent in your original message, but if you’re simply not deciding to sell at all there could be (again, a maybe as I don’t know the relationship between you and your agent) penalties for you to consider before doing so.

Your agent might be able to sue you for fess they acquired in good faith effort to sell your property - marketing, includes pictures etc. this can go into other things based on a procuring cause as well when breach of contract has been established;

If you went the FSBO route after ‘firing' your agent, any buyer that came through that was a result of the first efforts made by your agent could be grounds for a suit of commission as they were the original procuring cause (they technically brought the buyer to your property first with their efforts), if you went on to ‘bad mouth' your agent a subsequent defamation suit could possibly arise.

Unlikely as most agents will want to consider personal reputation and what a suit might mean accordingly, just mentioning so you’re aware that it’s unlikely yet not impossible there could be further impacts ahead.

So to recap;

Depending on your contract, yes you may be able to simply walk away at this point, but your agent will know this specifically. In the overall picture however (again, these buyers might have been difficult to work with and you’re just rather ‘over’ them at this point, to which your message didn’t flat out say) one business day isn’t unreasonable in the timeline of closing.

I personally would be irritated, yet see it as a deal still on the table and if all other items on my list had been met, basically asking price, I would advise proceeding- unless you have decided simply not to sell at all.

Hope that helps clear some things up and maybe offer insight as to what could possibly happen, from unlikely to not impossible = )