All Forum Posts by: John Williams

There's almost always at least a little room to grow SFR rents over the previous term, even in a declining market. Most tenants will not move over a reasonable increase. MF rentals CAN be a little different, but SFR is assumed in this post.

Any property manager worth their salt understands this. Firing your PM should depend solely on whether or not you can identify a better PM option in your area. Start by finding out their procedure around renewals, along with renewal fee, before making the move.

A GOOD PM should:

• Not only look to renew, but ALWAYS renew with an increase (even if it's small)
• Manage lease term expirations (Ex. Offer 14 or 15 month leases if expiring Dec-Feb)
• KNOW the local market, PLUS prepare current rental analysis at least 90 days prior to expiration to optimize rent growth potential
• Contact property owners with proposed increase PLUS lease term recommendation to gain agreement before sending out notices (some owners are actually afraid to raise rents and choose to play it safe so tenants won't move) 
• Send out renewal around 75 days prior to lease expiration; assumes 60 day notice
• ALWAYS have a Hold Over clause in the lease agreement of at least 20% daily penalty to encourage tenants to sign before end of term
• Should NEVER tempt an owner with an increase so large it pushes out tenants. PM tenant procurement fees and turnkey costs will far outweigh the alternative. Savvy landlords know this without even mentioning it. New landlords BEWARE.

Make sure this procedure is baked-into the PM agreement to outline responsibilities. If it's not there, ask them to add as a Special Stipulation. 

Investment Info:

Single-family residence fix & flip investment in Dallas.

Purchase price: $82,500
Cash invested: $56,000
Sale price: $184,900

Negotiated seller financing, absorbed a troubled tenant situation and managed tenant out within 60 days using my property management company. Rehab project began immediately upon move out and completed exactly two months later. Property was listed on the FMLS 12/4/18 and under contract on 01/07/19 for $184,900.

Unless you have good contractor relationships in place and a somewhat established track record, this isn't all that uncommon for small to mid-size projects. The relationship works both ways between contractor and investor. I do not however recommend paying 50% up front on a full rehab, house-flip, etc. as there is no reason for this. Try working out a draw schedule with agreed upon milestones and break the project down in this manner. That way all parties can measure progress based on performance and pay as you go. Perhaps 4-6 agreed upon milestones with payment terms exercised with each progressive step. 

I think you'll find that as your volume increases, both you and your contractor(s) should start to become more comfortable working with each other... relationships are key. Be sure and put it all in writing to keep the transaction as transparent as possible for all sides. Fences make good neighbors. 

I would highly recommend absorbing the nominal expense of re-keying locks. The first question the tenant will be asked by law enforcement following a potential situation is "who has access to the property?" If they tenant provided keys to a third-party, no issue for the landlord. If they did not, guess what? Landlord is the next stop. IF landlord is the source, that landlord could be liable for not delivering a "secured" property to the tenant. It's also a good practice that helps secure the property between tenants on behalf of the landlord. Good piece of mind, good business. 

If you are cost conscious and a DIY-type landlord, you can spend a little more and install a SmartKey system. This allows you to easily re-key the lock yourself for all future move-ins at no additional cost. These can be purchased at any big-box home improvement store. 

Investment Info:

Single-family residence fix & flip investment in Dallas.

Purchase price: $82,500
Cash invested: $43,000
Sale price: $184,900

Negotiated seller financing, absorbed a troubled tenant situation and managed tenant out within 60 days using my property management company. Rehab project began immediately upon move out and completed exactly two months later. Property was listed on the FMLS 12/4/18 and under contract by 01/07/19 for $184,900. Closing is scheduled for 02/08/19

What made you interested in investing in this type of deal?

I had previously negotiated subject-to deals and felt that would be the best approach to benefit all parties. The sellers were fantastic to work with, and a win-win deal was crafted for all.

How did you find this deal and how did you negotiate it?

Referral

How did you finance this deal?

Seller financing

How did you add value to the deal?

Complete redesign to include open concept floorpan and upgraded features throughout.

What was the outcome?

Property went under contract in roughly 30 days with a closing date of February 8 for $184,900

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

My property management company handled the tenant situation in providing a vacant property within 60 days and as an agent, I represented the transaction on the front and back end. I partnered with a local contractor, which allowed for an expedited rehab.

Investment Info:

Single-family residence fix & flip investment in Dallas.

Purchase price: $82,500
Cash invested: $43,000
Sale price: $184,900

Negotiated seller financing, absorbed a troubled tenant situation and managed tenant out within 60 days through my professional property management company. Rehab project began immediately upon move out and completed exactly two months later. I'm also a licensed real estate agent and as of today have the property listed for resale on the FMLS and GMLS.

@Parker Stiles

Hi Parker,

I just sent a connection request. After reading the post, I’d like to connect locally to learn more about what you offer. Looks like we’re Cobb Co. neighbors.

Talk soon - John

Interested in local networking with other north metro investors.

Hi Jotham - likely this isn't available, but if so message me. 

Thanks and Merry Christmas!

Is this property still available? Thanks and Merry Christmas!