All Forum Posts by: James Mc Ree

I agree with @Katherine Blazer. The key is your intent and at least your first year. You need to move into at least one of the units and live there, usually for a year. After that, you can do whatever you want. Read your mortgage to see if there are terms and conditions pertaining to renting the property. I haven't seen a "you can never rent" clause in my mortgages. It's a very good idea as this will count as 1 mortgage for your subsidized 10. Repeat 9 more times and you will have 40 units financed by low cost debt.

You can still buy the property with a residential mortgage if you don't plan to live there, you just need to check the investor box instead of live-in owner.

The terms of the lease can be "changed" by ending the current lease and offering a new one without this clause. It looks like the only terms that can be changed are the rent and term from what the OP wrote.

The ducts may actually need to be cleaned based on the age of the home and prior care. If you call a duct cleaner for an assessment, for sure they will need to be cleaned! Take a look at what the tenant is reporting and ask, "Would I want to live here like this with my young child?" It's about $400 to clean ducts near me, so not a big deal.

The bigger question is, "Do you want to suffer a vacancy?" Ending the lease at the end of the term or early is easy. Vacancy is often a landlord's biggest expense. Look over what else you might need to do to bring in a new tenant and decide if it is worth it.

I send a simple letter with 3 paragraphs:

1. Thank you for being my tenant. You have been my tenant for N years which I very much appreciate.

2. The rent is going up to X effective Jan 1. I explain X is a great rent compared to the comps which I include as a range effectively inviting the tenant to shop.

3. Let me know if anything needs maintenance.

I add a paragraph if there are terms and conditions being added or changed. You might be able to do that instead of asking them to sign a new lease if what you really want is only a handful of changes. Signing a new lease feels like a big deal. It might not be, but you can tell them these changes go into effect Jan 1 if you stay and they don't need to sign anything. Staying is acceptance.

#3 Can help the tenant accept the change if something gets fixed or improved, within reason. I also include reminders for winter weather: clear snow, turn off outside hose bibs, guard against mice - helpful guidance and reminders to soften the blow.

The interest from a cash out refi on a rental is tax deductible provided you use the cash out funds for capital improvements of the rental. Use of the funds to renovate the property would be deductible. Use of the funds to buy another property or something separate from the rental property would not be deductible.

A rate and term refinance with no cash coming out preserves the tax deductibility of the mortgage interest.

Reference: https://www.rocketmortgage.com...

@Kyler J Sloan I don't understand why you want to do this as it doesn't benefit you apart from the legal considerations:

Buy $100k. 6% Commission=$6k. Commission is split with broker so you get $3k. You pay income tax on $3k and end up with something less. Seller has no real representation. Buyer has potential liability for conflict of interest in representation.

Buy $94k. No commission. No additional tax. Seller gets more money in the end due to lower transfer tax. Buyer pays less due to lower title insurance and transfer tax. No need for representation. Both parties can hire a real estate attorney if needed. The settlement company should be able to guide the process.

You should just deal directly with the seller. There is no representation here. Trying to represent the seller to yourself seems like a clear conflict of interest.

Google "mortgage applications" and scroll past the ads to the MBA report. Google is your friend.

What question are you really trying to answer? For example, mortgage applications are down a lot this year. How do you incorporate that into your investment thinking?

To me, the combination of higher rates, lower mortgage apps and tighter underwriting means price appreciation is arrested for at least the next year or two and probably turns to depreciation over the next 6-12 months. Therefore, I am more conservative on bids and aggressive on negotiations. I am also in no hurry to buy.

Jim.

Scratches could be easily addressed with a little spackle if that is all it takes.

I handle this by writing terms into my animal addendum that animal damage is not included in "normal wear and tear" so that I can charge for all of these things. Consider doing that for your next tenant as it may help change your situation from an opinion on how bad it is to just showing it is animal damage.