All Forum Posts by: Jerry W.

OK I had a call from a tenant who was a little behind on rent and she said the water heater wasn't working.  She had some job interviews and wanted to look nice, but trying to shower etc. in cold water was tough.  I came over lit the water heater, it ran for about a minute then quit.  Did this 3 times.  I figured it was the thermocoupler, but it was an older model.  I have no workers handy, but I go buy a new gas water heater, drain the old one as much as I can.  Haul the new in by myself, get it all hooked up. I am over an hour into the process by now.   Start the water heater, it runs about a minute and goes out.  I get a bad feeling in my gut and walk out to the gas meter.  Yep, there is a padlock on it.  The gas was turned off but apparently had a leaky valve.  It would run gas for about a minute then the pressure would get low and it would shut off.  Wait 5 minutes and you could run it again for awhile.  My pride on digging in and changing out a water heater fast with just the tools in my glove box in about an hour quickly turned into embarrassment.

@Tuli Green, actually the information about not being able to evict someone might be true.  If you have not registered an entity in the state where you buy property most states will not allow your company to enter an appearance in court.  Furthermore they can often serve the Secretary of state and not your out of state registered agent and then get a default judgement against you.  I have researched a few states and found this true in each one.  I know most states require you to have a registered agent who resides in the state before you can legally do business in that state.  Not giving you standing in court is a method of forcing folks to follow the rules.  However someone would most likely need to challenge your status of not being registered to get to claim it.  It literally takes less than a minute to check to see if your company is registered however.

@Chris K., I have bought from many different sources, but overall I have gotten the best price from Sears.  I usually wait until I get the 40% off email adds, then I go and buy s few.  Lately has been tough.  I buy from Sears, Best Buy, Menards, Home Depot, and even Menards.  I will say hurry up and look into the Black Friday sales.  I have gotten quite a few from them.  Often it is just a matter of looking.  I currently have 2 refrigerators and 2 stoves still in the cardboard boxes in my warehouse.  Not because I want to have spares, but because the "deals" I ordered in March didn't come in until October and I had to buy from the floor and $250 more.  What I hate most is going over the $600 mark and not being able to expense them on my taxes and having to do a yearly depreciation.  I wasn't going to let my back orders get cancelled and pay $250 more per appliance.  My record right now is an electric range from Menards that is currently 8 months overdue, and I am betting my December delivery date gets bumped.  Oh well.

Here is my 2 cents.  First it is going to vary from location to location.  You can argue either side, but lets face it, even long term rentals limit housing opportunities for new home buyers.  Are we going to prohibit long term rentals for this?

In my area, the main problem with high housing prices and lack of affordable housing is not STRs, it is out of state buyers coming in and buying up everything they can.  Some are moving here some are speculating.  Over 80% of the deeds I prepare have the buyers address being out of state.  Five years ago less than 20% of buyers had out of state addresses.  

I have 2 STRs that I converted from LTRs, but in fairness they were really trashed.  Landlords, even of STRs tend to fix up houses.  In fact they usually fix them nicer than LTRs.  My STRs get a new coat of paint or new carpet, or even new kitchen upgrades much faster than my LTRs and I usually use higher end appliances.  I have only had officers come to my STRs once that I have heard of.  The neighbor called some in for parking their truck with trailer attached parked legally in front of their house in the street.  Turns out it was actually the guest of a neighbor.

I get in some areas where spring break brings thousands of college kids that you get rowdy parties, but I have never had a complaint of my STR in 4 years of operation. Having tourists from STRs actually helps the local economy in my experience. The provide jobs for many local businesses. In addition to spending tourist dollars, I pay folks to mow lawns, clean yards, clean up the houses on turnover, shovel snow off sidewalks, paint, replace flooring, etc.

All being equal, I think good STRs help the town, but too much of anything can be bad.  

@G.W. Weber There is a lot we don't know for giving advice, but I will try.  First you are right, mobile homes tend to drop a little in value each year compared to stick built houses.  However the newer mobile homes are actually pretty good, especially the doublewides.  The rent to sales price ratios are not bad, but not great.  You need to look at all of your costs.  Who pays utilities, cost of upkeep, etc.  The biggest problem in my area is pipes freezing in winter.  We often hit 20 degrees below zero and trailers are not properly skirted or insulated, or at least have heat tape on the pipes they can freeze up and cost you lots of money.  I could not see where you or the trailer is located.  You need to make sure it is protected for the cold months if you are not around to check on it.  The next consideration is checking on the septic system occasionally.  Many go decades without issues, some need pumped out occasionally.  The biggest problem is if your leach field gets plugged up and needs replaced.  

All of these things considered I have gotten back into trailers again.  They are usually more maintenance than houses, but with houses being so expensive lately, they are an asset class that is still affordable.  The description of your property is intriguing as well.  In my area land along creeks or streams are in high demand.  Those properties are at a premium now, and always seem to hold their value.

My thoughts are keep the property and rent it out unless you have a better investment in mind in the immediate future.  You can easily cash flow and pay down more principal.  I would also consider a 1031 exchange instead of just selling to save on taxes.  Possibly look at buying another rental and possibly consider a 2nd mortgage on this house to pay your 20% down payment.  With inflation ramping up land and even mortgages have inflation benefits.  First land appreciates more than passive bank accounts, and your mortgage payment tends to stay the same even when money gets cheaper.

Either way best of luck in whatever you decide.

Yesterday the United States Supreme Court struck down the latest CDC Eviction Moratorium.  They had already signaled in an earlier court case that it was not legal, but left it in place as it was going to expire soon and it would give time for relief money to be distributed.  I have not received a copy of the opinion yet, but it was made very clear that the CDC lacked the authority to issue it.  Biden himself admitted that his legal advisors were aware it would not pass muster with the court.

I have my opinions, but whether you are in favor of this or against this doesn't matter.  Keep in mind that several states and some cities have passed their own moratoriums that may prevent you from doing evictions, so please make sure of local laws before filing your evictions.  There are some freeloaders out there that desperately need evicted, but there are also hardworking folks who have been dealt a tough hand and are in a tough place.  Congress could pass a new moratorium, but that seems extremely unlikely.  There is also the problem of over crowded court dockets that may slow things a bit, and there is a real possibility of the new Delta strain causing courts to close again temporarily.

I don't want this to evolve into a purely political argument, but how many of you will be evicting tenants and how many, and how many are you working with who are behind and not evicting them?

I will start it.  I had 2 tenants who were massively behind on rent that I started evictions on.  Both were many months behind.  One said I could not legally evict him.  Neither of them actually lost their job to Covid and both trashed their places.  I explained to them they were not covered and I would evict them.  Both moved out before a court hearing.  I worked with 4 other tenants.  All of them were allowed to work for me raking leaves, painting, etc. for the amount of up to their rent.  Two of them did some work, but all ended up paying rent after getting stimulus money.  I currently only have one tenant behind that is not paying, but I have offered work and she initially declined and I gave notice of the need to move.  She has since started cleaning, but has kept having family a crisis on an almost daily basis.  If she is not working by the middle of next week I will give a 3 day notice.

Where are you at?  And what were your loses?

@Zeshawn Ahmed, I would absolutely rent to someone doing a VR.  They are making an investment in your property where the nicer it looks the better they do.  They will be buying nice furnishings, they will clean it after every guest, they will make sure the sink isn't clogged, they the rugs don't get torn, they fix everything bad immediately.  They will have extra insurance, they will likely be making a lot of money and will likely be a long time renter.  If you have to evict it will be a breeze since it is not residential the moratorium on evictions would have not applied.  I see very few downsides unless they are really crappy at it.

@Blake H., great thread.  It also shows a lot of guts to show your situation.  However not all advice can be sugar coated.  My best lessons came from times I failed, not from successes.  I don't know your situation so these suggestions may or may not apply.  First, your skill is very much in demand.  Look around and see how you can earn more money working the same number of hours or even take on extra hours.  It may mean a traveling nurse job, a shift that pays more money, a different employer at a different hospital, or possibly getting aggressive at getting a raise or promotion.  If you own your house why not house hack and rent out a room?  Maybe add a bedroom where it used to be a dining room.

While I think a $300K student loan debt is outrageous, I also understand how easy it is to get lured into using them.  The price of tuition and books is obscene right now.  It is the easy student loans that have allowed colleges to charge outrageous fees and get away with it.  You are clearly a good person, but you have made some mistakes here.  You won't learn from them if you don't own them.  

There is no easy answer, it will hard work, dedication, and persistence at the end of the day.  You have to have a budget and stick with it.  Get a safety fund first.  You don't want a flat tire or blown transmission or busted water heater to make you get behind on mortgage payments.  Next you have to find a way to earn more.  Your wife should look for ways to earn more and possibly consider a different higher paying job.  Next you need to look for opportunity.  That may be at work, or investing, or getting the job of mowing the lawn for a local business.  Opportunity is all around us, we just don't always recognize.

Finally remember to be grateful, you have a lot of debt and some problems, but you and your family are healthy, you obviously love your spouse and she loves you.  Right there are the best possible things you can have in life.  Let your love of them drive you to be better and more diligent.  Educate yourself, read the self improvement books, the financial freedom books, etc.  Stay the course and keep getting a handle on it by improving every day.

Best wishes on your progress.

@Jonathan Hernandez it is going to to depend on your lender.  The owner would have to take a second at the least.  I have done this myself, but I would not expect to have a loan company agree to do this on your first time or two with them.  I had a very established relationship before I tried it.

@Peter Amendola, congratulations on your VR.  Just like anything else there will be a learning curve, but getting in the game is the only way to improve.  Once you are up and running you may find new opportunities for more profit or a way to expand without so much money up front next time.