All Forum Posts by: Jacob Pereira

Agreed with almost everyone here; don't mix business with family. By all means, connect them to your realtor, fellow investors, etc. but don't try to make a profit here. Any money to be made is not worth the strained relationship.

There's a market at every price point, but in my experience, higher-end homes tend to have much lower margins. I just sold a 300k home which I used to buy a 250k duplex that brings in almost twice the rent. It's more work too, but not all that much more.

@William Johns, almost every piece of advice here is right on the money. 

I know it hurts to pay someone to get out even though they already owe you money, but they have the upper hand here. They'll owe you a lot more before this is over if you can't incentivize them to leave voluntarily and you'll have lost income, court fees, and potentially revenge damage to deal with. I once offered a tenant to pay for their moving truck if they left the place spotless when they left, and that was enough to avoid a lengthy eviction process.

Everyone who says you need to fire your property manager is also correct, in my opinion. I'm assuming that "very behind" is more than 3 days late, which is when your manager should have posted first notice. I would say that most of the time when rents become very late it's 50% the tenant's fault, and 50% the manager's, because the manager either wasn't firm, didn't properly vet the tenant, didn't take the time to understand the situation, didn't make the rent payment their first priority before cable, electric bills, water, car payments, etc. 

Refinancing your loan will also make you legitimate. Right now at best you're being dishonest, and at worst you're breaking a local law. A few thousand bucks in closing costs are a small price to pay for peace of mind and maintaining your integrity.

Let us know what happens, and good luck.

I think we need just a little more information to give you a truly informed decision, but I can tell you that if you plan to hold for the next 30 years and never refi out the equity, paying points is almost always worth it, but if you plan to sell of refi again in a few years, it probably isn't.

With the limited info you gave, here's what I'd do; call two other lenders and ask them what their criteria would be to give you that same rate of 3.875. If they have better terms, go with them, if they're worse, you can be secure in your knowledge that you're with the right company.

I'm with the consensus. buy the rod, and also an inner lining. It will buy some goodwill (if you even want to retain this tenant), give you some control over the aesthetics, and it will cost you a lot less than the time it takes to argue with him and write this post does. 

@Brendan Novisky, I'm going to disagree with the consensus (as I often do). First off, there's a bit more data that you can gather to make a better estimate.

Call the insurance company and ask what they would charge; they'll give you an exact number. Poof, one more unknown gone. Similarly, figure out what actual rents are.

More important than actual rents, though, are what you COULD be renting it for. Gone are the days where you can just buy something and have it be a great investment vehicle off the bat. Now you need to see value that others miss, and one of the easiest ways to do that is buying a place that had a landlord that was "too nice" and rents below market and simply bring it in line. 

Also, is that 8% your cap rate, or cash on cash? If it's the former, it might be worth doing; if it's the latter, put that money in the stock market and get the same return (over time) without any of the work. I know on BP I'll get nailed for saying that, but there's a century's worth of evidence that says you'll earn about 7-8% in a diversified stock portfolio with dividends reinvested. 

In my area the housing authority specifically has an officer who investigates housing fraud, and illegal drug use can count in that in some situations. Find that person and let them know what is going on; your lease also most likely has a clause for illegal drug use. Let the housing authority know, and while it won't be immediate, they will eventually send you a letter with the last day of payment. At that point if she refuses to leave, you're set.

You unintentionally started up an old debate, @Rafael Norat, you can read a lot more here: https://www.biggerpockets.com/forums/67/topics/304...

Personally, I'm in the gray camp, and I like Benjamin Moore's Revere Pewter HC-172. But it doesn't really matter, as long as you're filling your units and getting top dollar for them.

@Marcus Johnson and @Eddie T.,

Presumably he's already factored repairs into his equation; he mentioned cash flow after CAPEX, OPEX, etc., so provided he made good estimates there, he should be good.

I know small, cheap homes get a lot of hate on this site, and, full disclosure, I've never bought one below $170k before, but I think this could be a great way to get your foot in the door. Try for a HELOC if you can, but otherwise just bite the bullet and put your cash in. It's not the best deal I've ever seen, and I guarantee you'll do more than $1,200 worth of annual work on it in the early years once you consider calling contractors, managing tenants, accounting, etc., but consider this part of your education.

Best case, you see a bit of appreciation as you get tax benefits and you can sell and move on to something bigger, comfortable in your newfound knowledge. At worst, you're out $15k and got a more valuable education than than that comparative art degree that your high school girlfriend ended up with.  

The Moats Realty Team have been helping me for the last year and a half, and they're awesome. The wife focuses on the residential side, and the husband focuses on the investor side, and then they have a few workers for research, admin, etc. 

Full disclosure; they give me cookies when I refer someone to them, so I certainly have an interest in sending them clients. I'm sure you can just google them, but feel free to PM me if you want me to send you their contact info.