All Forum Posts by: Justin Fox

Price and reliability only.  Drive an old CRV and an old F-150.  I would look ridiculous getting out of a fancy car, people would probably think I stole it.

@Peter K.

Find out what the place rents for and if the tenant pays on time first (bank deposit proof).  I don't even know if it's worth the 66k, not enough info.

Is this money a result from deal I worked on?  If so, I would definitely prefer a $1,000,000.00 check at closing.  Does the $5,000.00 get auto-deposited into my account with absolutely zero past/future effort from me?  If so, I would prefer to take someone else's hard-earned 5,000 and spend it on my leisure.

Just say, "Nope, says in the lease the property comes with x, y and z appliances and you signed."

There's no limit on how much of a late fee you can charge in Texas, just like security deposits.  Having said that, you still would have to prove that the late fee is reasonable for the trouble the late payment caused you.  $50/day would be back-handed out of court.

You have to allow 1 days grace period.  So legally, you can't charge the tenant a late fee until the 3rd.  You can also post 3 days notice to vacate on the 3rd though and don't have to let them stay there, even if they have the money on the 3rd and want to pay.

I would also check into Harris County or the city of Houston to see if they have any local rules or ordinances on these types of issues.

Personally I would just wait until he's late again, post notice on the 3rd, evict and sell.  6 month turnover is no good.

@Victoria C.

You still have to pay for these things.  You don't get that money back at tax time, that money just isn't additionally taxed if it's deductible or a portion of it isn't taxed if it is able to be depreciated. 

You'll probably be disappointed in what is actually considered legitimate, deductible mileage as a LL.  It's pretty pitiful unless you qualify for the home office deduction.  The home office deduction requirements will subsequently leave you disappointed as well.

The safe harbor election may or may not allow you to deduct the cost of replacing windows and/or the piping.  It's pretty vague really.  I would consult a qualified CPA that knows RE well if you intend to try and deduct what would usually be classified as improvements.

@Vickie Bruce

I insure a property for either the dollar amount that it cost to build (unleveraged) or the principle balance (leveraged).  I use to have liability extended from my personal policy to my rentals but was recently told that this wasn't actually legit, that they had made a mistake.  Was pretty pissed that they led me to believe I was covered, but would have wiped their hands if something would have happened.  I'm currently getting a quote on a $1M liability policy that will cover all the rentals. 

Depending on the value you want to insure, you can get a dwelling-only policy for a rental as low as $577/year.

@Michelle Elsaid

I agree with @Ray Harrell

I would think that is only a problem if the tenant isn't compensated via money or reduced rent for performing an improvement or repair during the tenancy.  In this case I would just have everything spelled out in writing as to how much the tenant is putting towards the improvement, that it's because they (the tenant) find the current flooring sub-standard and that the thin-set, tile and grout are a permanent installation and that the amount she contributed does not entitle her to any claim of the premises or tile installation project materials.  Get her to initial each point and sign/date.

Handle the lease, move-in and etc like normal.  Possibly change the delivery of possession clause to make the estimated delivery date more flexible (if you can).

Make sure that she knows you're putting 50% of the total cost to install carpet towards a tile installation instead.  You want the contract to be an agreement that you're clearly honoring.  Who knows, this lady may hate the hardness of tile or how cold it gets.

@Michelle Elsaid

Price out the mats + labor for getting carpet installed and show her the bid.  Take the 50% of that bid from the tenant and instead get tile installed at a discount (let her know too).  Put the mats on an interest free credit card and pay it off with the CF.

This way you're securing a tenant and getting the tile installed at a discount.  Win/win in my opinion.

Make sure you have security deposit and 50% of carpet bid in hand before proceeding.  Also have a bid and expected start/completion date in hand from a tile guy.  So you can arrange a reasonable move-in date.

OR

Pass, and find a paying tenant that doesn't mind 20 year old clean carpet.

Just my $0.02  

@Account Closed

What if the properties in that area historically get ~100% appreciation every decade?

Cost/Gains After 10 years:
149,800 (DP)
141,921.60 (carrying cost (-1182.68/mo))
112,984.42 (Total Equity)

Value after 10 years: 1,489,000
Balance: 486,215.86
972,430 in equity.

Walk out of closing with $680,708.40 ($5,672.57/mo CF) after paying yourself back the total: DP and carrying cost.

This is a simplification also.  Could have decreases in out of pocket expense due to rent increases.  Also a little more cost upfront and at the end for closing.