All Forum Posts by: John Sanderson

I inherited a bad tenant with a multi-unit I recently purchased. The first month, October, he paid by the 18th. I tried to work with him for November rent, saying he could make 2 payments as long as the rent was paid in full by November 5th. Seeing as it's the 4th and I haven't seen a penny from him, I'm going to assume his entire rent check won't be in my mailbox tomorrow morning.

This tenant is currently on a month to month lease with 60 day notice terminate. Since his lease began on the 1st of the month, am I correct in assuming that even if I give notice now, the earliest I can have him out is January 31, 2017?

Since I'm assuming that's the case, I'm planning on waiting until the end of the month and giving him notice before December 1st in the hopes I can work with him to collect rent for November, because based on the way things are going, I'm highly doubtful I'm going to see rent checks for December and January.

So, my main question is, if it gets to January 31, and he's still in possession of the unit, do I have to file for eviction or can I go straight to the police to enforce this?

Any insights or advice on this would be extremely helpful, thank you.

You'd also have to look at the terms in the fine print. For instance, I have a HELOC on what used to be my primary residence, but it's now a rental. One of the stipulations was that I had to live there for a year after opening the HELOC, but after that I was able to move with no issue.

I think that commercial loans generally have shorter terms, I haven't personally gotten one.

As for an analysis, all you'd have to do would be to plug in a 15 year mortgage as opposed to a 30 year mortgage. Obviously with a 15 year mortgage, your monthly payment is going to be higher, but you'll gain equity faster.

So if you're planning on forcing appreciation through upgrades or repairs, it's probably in your best interest to have a lower mortgage payment. 

For instance:

You have a property worth $100k, you get an $80k mortgage and it cash flows for $200/month with a 30 year mortgage but it only breaks even with a 15 year mortgage.. You do some upgrades and sell it for 110k after 2 years.

30 year mortgage:

You've gained $2,883 in equity from mortgage payments, you've made about $4800 from cash flow, for a total of $7,836 just from cash flow and equity from payments.

15 year mortgage:

You've gained $8767 in equity from mortgage payments, and you've had $0 from cash flow.

I also have to say I'm not sure how taxes will effect these numbers, as I've purchased 2 of my 3 properties this year, and I converted my own home to a rental this year as well.

I'd say if you're planning on holding the property for a long time, it'd probably be better to have the cash flow to be able to either re-invest or to supplement your income. 

I'd like to hear what others think as well.

Edit: I'd also like to point out that with the cash flow on the 30 year loan, you'd also be able to do the improvements (depending on their cost) using that cashflow, instead of out of pocket, as opposed to the 15 year loan where you'd have to do them out of pocket.

https://www.biggerpockets.com/company_categories/p...

I haven't personally used it, so hopefully someone on here can direct you to a good one to work with starting out. I would hope that all the companies listed on Bigger Pockets are reputable, but you may be able to get some advice by heading over to the Private Lending & Conventional Mortgage Advice boards.

You don't have to speculate about the ghost bidding. Auction.com discloses the fact they do it in an effort to meet the seller's reserve price. If the reserve is too high, you just let them keep bidding against themselves. If the reserve is a good deal, you've basically bid against yourself and won a good deal. Like @Jesse Vega said, they're actually helpful, as long as you stick to your guns. If the reserve price doesn't fit your numbers, just let it go.

Honestly, I would check with other banks. Unless insurance or taxes in that area are unreal, I don't see how your mortgage(including escrow for taxes and insurance) would be more than $690/month on a $70k loan.

Another avenue to go would be to go for private money, and then refinance with a bank after you've had the place rented out for a year or two. Private lenders will charge you higher interest, but they're generally much more lenient on their lending terms.

I use a PO box to collect rent checks and receive notices from tenants. I think the box I got was $56 for the year, but it varies by location.

Not sure how you feel about anonymity, but for me, $56 a year is a no brainer.

Personally, I just keep a spreadsheet of all my properties and units with an area to show rent collected for each unit. I check the PO box at the beginning of the month, and before I even hit the bank, I credit each unit that has paid, so I know who still owes what.

If you need access to this on the go, Google drive is fantastic, you can upload the spreadsheet onto your drive account and just edit it there. If you use something other than a spreadsheet, you could still try using a Google drive, although you may not be able to edit the file depending on what format it's saved in.

If the utilities are metered separately, it shouldn't be an issue to tell the tenants they're going to pay for them now. Either have them sign a new lease saying they're responsible for such and such utilities or make an addendum to the current leases. A brand new lease is probably preferable, although you could keep them month to month to avoid rocking the boat too much.

As was already mentioned, if the utilities aren't separately metered, you should probably steer clear of directly charging the tenants for utility usage. I think if this is the case, raising the rents for each unit to reflect your cost of paying utilities would be the best solution, however, you should sit down and try to get a pretty good idea of what each unit is going to cost you monthly for utilities so that yyu ddot sssrt oor charging them. Obviously different sized units and units with more or less tenants will have different consumption amounts.

Hope that helps!

The property is in a really good location and I don't doubt I'd have no trouble renting it out, but to give him the 60 day notice now would put him moving out in the middle of January, and even in the best location, I'm sure it would be hard to rent during that time period.

I guess I should've said that I'm leaning towards keeping him in place and giving him the 60 day notice around January 1st, unless he becomes current and stays that way.

Unless you think it would be faster/more cost efficient to evict him rather than give him notice. On that note, if I would give him the notice and he's not out after 2 months, would I have to file for eviction or could I go straight to the sheriff or constable? Sorry if this is more of an attorney-based question, just trying to get all the information I can and see what options I have available to me.