All Forum Posts by: JD Martin

@Mike H. said "But whenever a tenant pushes off a showing or giving me a deposit, I know there is a significant risk of them backing out. 

Amen brother! Anyone in sales knows that the individual that leaves to "think about it" will probably never be back. Of course I don't expect potential renters to bring the deposit & first month with them when they come to look at the house, but once someone has looked at the house, said they like it and that it meets their needs, and the price is affordable to them, and I have pre-screened them through the in-house application, I expect action or I am going to move forward as if they never existed. 

That is one of the major advantages of using a tenant-paid credit/background screening service. If the tenant balks at completing the application & paying for the service, or delays or attempts to delay completing same, I know almost instantly that they are not serious about renting my unit, and I can continue forward looking for an actual renter. Looky-Loos will run you ragged in this business. I have a unit that I was putting our sign in the yard about a week before it would be available. A guy across the street saw me putting up the sign and asked about the rent, said it was just what he was looking for, his nephew lived in that house and he wanted to be nearby, blah blah blah, gave me his number and asked me to call him the minute it was vacant so he could look at it. I did so, and him and his wife walked across the street, looked at it, raved about it, then came up with a week's worth of excuses for not moving forward from that point, during which time I rented it to someone else.

First come, first served. It reduces/eliminates the possibility of claims of discrimination, and puts real money in your hand. This, however, is one reason I only do open houses - then I don't have to worry about this possibility. When people come in, I tell them first qualified tenant with a signed lease and money back to me gets the unit, plain and simple. I number applications as I get them and just go down the line. I hold a unit for 48 hours for a qualified tenant that has made it to the last step - they have submitted our in-house application, filled out and paid for the credit check, and all of their info meets minimum requirements. After 48 hours, it's open season again. Half the time appointments never show, which is why I don't do them anymore - that, and I want showing units that are 10-20 minutes from my house to be on my convenience, since I work a "regular" job besides. 

I have a tenant right now that took a little too long looking at one of my units, and someone swooped in during the week she was going to think it through and signed the lease, and wire transferred the money so it would be in the account Monday AM. I went ahead with the Saturday open house anyway, and she came and I had to let her know that unless something happened with the wire transfer the place was rented. It worked out for her, because I had another unit that was going to come open in a couple of weeks, and she ended up renting that unit, which was probably a better fit for her anyway.

If I had a dollar for every person who "definitely wanted" the unit, I would be retired already!

I think it is really area and property specific, but using 1 month vacancy, average, and some percentage of annual rent for maintenance and capital expenditures is probably reasonable. That would work out to 8-9% vacancy and whatever reasonable condition your property is in, and what expenses are yours to deal with. In the case of a condo, you usually don't have to pay for roofing, foundation, siding, and in some cases plumbing, electrical (other than heating systems), so you might be able to scale back your maintenance/capital expense percentage because you're already paying for some of that stuff in your HOA. Only experience will tell you what kind of numbers you need for a property, but a reasonable rule of thumb is the older the property, the higher the maintenance/replacement budget should be.

 I would begin with another job - if you were making 4 figures a week, and have no savings, I am going to go out on a limb here and say you really aren't prepared to be a real estate investor. You can't invest in real estate without either using other people's money or your own, and you need real dollars to make it happen - you can drop 20 bucks a paycheck into your mutual fund, but that isn't going to work with RE. Whatever route you go, you need funds to make it happen, and you don't even have a safety net to provide for yourself, apparently. This may sound cold and harsh but I think it is reality.

You can't really focus on being an investor if you don't know where your next meal is coming from, so I would focus on that part of the equation first. People who lost their job and it ended up being an entry into their new career almost always were more or less prepared to make the leap anyway, and losing the job just gave them a little nudge. You sound like you're falling into the abyss. 

If the "all cash" is money you saved up from another source, there's certainly less profitable places to put that much cash, so from that standpoint it's not bad (about 6% annual return, not considering maintenance, vacancy, capital expenditures). If the cash came from another source - HELOC, HML, etc - it is not a very good deal. Further, if you had to leverage it in order to access your cash, you would be upside down, so from that point of view I would try to put every penny you get from the property in rent into a cash fund so that you rebuild (assuming you need to rebuild) your reserves.

I wouldn't worry too much if it was cash lying around, however. Even factoring in vacancy & capital expenses, you'd be clearing 3-4% return, which is something. And you did a deal, and get to learn from doing a deal.  

As long as you are following all laws, if she keeps up you certainly have a case for harassment and/or a protective order against her, which is what I would do. If you don't mind spending a few dollars, you can get your/a lawyer to send her a "cease and desist" letter regarding her behavior, which may or may not be effective but at least lets her know you mean business and aren't going to put up with her BS anymore. 

PS: If you are not following state/local laws, then the problem may be with you rather than the neighbor. Be sure you are following all laws and meeting all codes so you can rule that out as a source of her behavior. 

Although I am a cash guy, I believe leverage will give you the greatest return on your investment. As long as you have a very healthy cash reserve, and the properties have strong cash flow, after you pull equity, it can be a good way to build a strong and diverse portfolio.

 Actually, your original post doesn't say anything about that. You said that you couldn't make it on Wednesday because you didn't have the cart but could if absolutely necessary otherwise you would just do it Friday and the tenant said no problem, and that nothing was mentioned about the rent at all in that conversation. I don't believe that conversation would even take place like that - you saying "I will come Friday and you will still pay rent" and the tenant said "Yes, Friday is fine and I will still pay rent" because it sounds like BS. What I think happened is that you made the remark not believing the tenant would take you seriously, kind of like "I'm gonna kill you" isn't literal unless you are Jeffrey Dahmer, and you figured you met the obligation by just making other arrangements (again), and the tenant saw it otherwise. I honestly think you should consider it a learning experience and learn from it instead of demonizing the tenant, who may be a get over but frankly is probably right here. Why not ask the tenant to split the difference? Were they reasonable tenants before you made a ridiculous offer and then failed to meet your obligations?

Sorry, but I have to agree with everyone else. You made an unfortunate offer, and then you didn't follow through. Your example of "what if I said the house was yours to keep" doesn't hold water because no one would consider that a fair exchange but many people would see the exchange of a month of rent for a couple weeks of a malfunctioning fridge reasonable, especially since you made the offer. I doubt you are going to find any validation here, so I would suggest you move to evict, take your information to court and see what the judge says. My prediction is that you lose and end up paying costs besides.

 That's not a terrible idea, especially if you live in a very rural area, but that can still be hit or miss. Most serious builders/contractors will have a professional supplier somewhere, even in rural areas, and that supplier is usually not Lowes or HD. That's not a knock on those places - I shop both of them quite frequently - but they just don't offer the kind of material or service that most professionals require. For example, finding quality lumber for professional use at either place is time consuming and often fruitless; the first 3 layers of 2x4s in either are usually warped, split, or full of run-out, and pros don't have time to be sorting through homeowner lumber.