All Forum Posts by: Joe Hines
Joe Hines has started 2 posts and replied 118 times.
Post: Eviction advice needed

- Investor
- San Jose, CA
- Posts 118
- Votes 108
Sounds like a professional. Yi, did you screen the sufficiently? Sounds like there might be some things to learn from this experience and potential improvements to your screening process.
Lots of information on this site about screening they might be beneficial.
Post: Managing Properties Out of State

- Investor
- San Jose, CA
- Posts 118
- Votes 108
My PM fees are 10%, which is pretty standard for North Florida. I also include in my financials 10% of rent for CapEx, 5% vacancy (thankfully my vacancy rate stays below that estimate) and 5% for Operational Expenses for minor repairs.
Post: Rental property help

- Investor
- San Jose, CA
- Posts 118
- Votes 108
Agree with @Jim Goebel. From the information you've provided, your net on the SFH investment is going to be tight, especially so since you'll need to factor in CapEx and OpEx costs (usually 5% and 3% respectively, depending on property condition). A more firm strategy would be to sell the SFHs and 1031 Exchange the proceeds into a commercial property. I'm doing that now with some of my portfolio, focusing on liquidating the lower performers.
I'm sure you're aware that the commercial market is very different from residential rentals. It's a different universe of regulations and the whole financial structure and costs are handled differently. Do your research and be sure this is something you want to get into.
Post: Managing Properties Out of State

- Investor
- San Jose, CA
- Posts 118
- Votes 108
Agree with @Kenny Dahill. All of my properties are remote and I factor PM fees into the cost. It's good to have 'boots on the ground' when things go sideways. I also have bi-annual Business Reviews with my PMs to ensure we are keeping rents at the market level, inspect for regular maintenance needs, etc. Pick a good manager and push them. This is your business.
I get your point, though: It hurts to see those costs when I do my accounting each month and look over my property performance reports, but I do rest better and train the PM to improve.
Post: Help!!! My tenant told me they saw a rat OUTSIDE of the unit

- Investor
- San Jose, CA
- Posts 118
- Votes 108
You've shown you are open to treating for rodents and you've taken reasonable steps to resolve the situation since they've only been noted outside the unit. That issue seems settled from what you've described. The junk on outside areas is a new and different situation. Since your lease includes a clause about keeping outside areas clean of debris and belongings, I'd give them written warning with 30 days to comply. If they fail to do so, then dispose of it and bill them as Matthew Paul suggested.
I'd add that I would clearly communicate with the tenants that these two issues are separate. If rodents are seen closer to the unit, then you'd have to have the area clean of debris anyway before further treatment could be performed.
Post: Are home in the floodplain typically harder to sell?

- Investor
- San Jose, CA
- Posts 118
- Votes 108
I think you're right on both points.
If it is in a flood plane, the mortgage company is going to demand the flood insurance. You can absolutely use that to lower the price of the property, especially given the more intense hurricanes and rain patterns that are predicted. I have a similar situation in Florida. My neighbor and I are both on a lake, but he as a small 1 acre lot that is situated much closer to the water (mines over 70 acres, so I have a lot more flexibility and can get away from the flood plane). When he bought the property, he brushed it off as a '100 year event'. Buyers seem much more aware of flood risks now, however, and they are passing on his property even though he's baking the flood risk into the price. In the end, the property is worth what the market can bring and at the moment the market seems to be sensitive to flood issues. So, while you may be able to get it cheaper, you may have a hard time selling the property later.
If you don't feel this is correct, you could always get it surveyed to verify. Looks like you're going to need the flood insurance, though.
Post: What is your average cost per unit?

- Investor
- San Jose, CA
- Posts 118
- Votes 108
Hi @Brian Beadle,
What numbers are you referring to? Purchase price? Are you flipping or buy and hold renting? What type of property? SFH, small apartment (1 to 6 units)? Large apartment?
Post: Tenants and property tax increases

- Investor
- San Jose, CA
- Posts 118
- Votes 108
I've not ever heard of tax increases being independently and directly called out in a lease as something that could drive a rent increase outside of a lease renewal. From my own experience and what I know of others, you just have to factor tax increases into your overall rent increases, just like you would insurance, PM and inflation increases.
It doesn't hurt to socialize the tax increase and give the tenant some warning that rent will have to increase, but I think you're going to have to eat this until you can get the rent up to reflect the increase.
I have a rental in Austin and I'm in the same boat.
Post: Septic Install - Deductions/depreciation

- Investor
- San Jose, CA
- Posts 118
- Votes 108
I had a similar situation last year and can offer few thoughts...
- For the new system: From my experience, a new septic system is a capital investment and that will need to be depreciated. Be sure your accountant is aware of that when you do your taxes.
- For the existing system: If there is any residual value of the existing system (which it doesn't sound like there is), I believe you can deduct that residual value the year when the system was removed. Be sure your accountant is aware of this, too. They will need to look at the entire value of the buildings and infrastructure, attribute part of the value to the existing septic system and deduct that portion as an expense, minus what might have already been depreciated.
- For the work required to destroy the existing system: You're right, this is considered a land improvement and will have to be depreciated. I know. It sucks.
Post: What is 1% Rule for Renting?

- Investor
- San Jose, CA
- Posts 118
- Votes 108
There's an almost uncountable number of posts and blogs covering the 1% and 2% rules on this site. In summary, it is a quick and dirty test of a property's economic viability as a rental. As an example, a single family home (SFH) costing $100,000 would need to generate 1% ($1,000) or 2% ($2,000) per month in rent.
This is just a quick indicator, not a complete analysis. I'd recommend looking at the Rental Property calculator under "Tools" on this site to do a more thorough analysis. It's pretty good. One of the many calculations it performs is a 2% Rule.
BTW, a very good way to begin understanding the terms and mechanics of buy-and-hold analysis is to use the calculator and learn every calculation it is making. You'll walk away with a good grasp of things and get a lot more out of the podcasts, too.