All Forum Posts by: Kimberly T.

It doesn't look like anyone brought up one other point (unless I missed it somewhere): if the tenant pays for the new fan and install, then you may have an argument on your hands when she moves out and takes the fan with her (or, she tries to pay her last month's rent minus the cost of the fan if she leaves it there).  By having her pay for it, there's the potential for disagreement about who owns it when the tenancy ends.  We always pay for anything that's permanently installed in a unit (like a ceiling fan) so there's never a disagreement about who owns it.

I should point out that looking at this as a 1-year comparison of costs is not really accurate for your assessment of how to handle this situation.  Sure, over the course of 1 year, it may be cheaper to lower the rent, but what about the years to follow?  Will she expect to stay at that reduced rate?  Will you only be able to slowly raise the rent back up, and not immediately jump back up to where you would have been had you not lowered the rent?  $50 or $100 per month for a year may be ok to put up with, but think of the long term implications this may have for this unit and your total profit.

You could always negotiate with the tenant.  Tell her you normally wouldn't do it, but because she's such a great tenant, you're willing to meet in the middle and lower the rent by $50/month.  Maybe she'll be ok with that.

My reason is as many others mentioned: freedom.  For us specifically, we plan to have kids soon, and I plan to be a stay at home mom (sahm).  For me to be a sahm, we knew that we'd have to replace at least a good chunk of my income, so we started saving and investing when we got married.  We have multiple cash flow properties now, and we could easily afford for only one of us to work, so we're hoping to be able start a family soon.  I want to be there to take care of our kids, and to be able to be involved in their activities (and for my husband to be able to be involved too!).

I can't speak for the New Orleans area specifically, but I call several insurance brokers to get quotes because, as Braden stated above, they can shop several companies at once.  So if you call a few brokers, and they each shop several companies, you should be able to get a pretty good deal.

Yes, that should be in the offer you give.  In your offer, you should request the ability to perform an inspection (you should hire an inspector, but also walk through the place and inspect it yourself), request copies of all contracts pertaining to the property (leases, service contracts like pest control, etc.), and request estoppels signed by the tenants.  After the seller accepts your offer, you'll be able to do the inspection, and you should get copies of contracts and estoppels from the seller.  Offer contracts generally have language in them already that incorporates this stuff (or at least they have blank spots for your agent to fill in these requests), you should be able to talk to your agent if you have any questions about how this all works in your area.

I have a sample size of 13 different units with inherited tenants, and out of those 13, only 2 were real turds (trashed the units, didn't pay rent, etc.), but we knew that going into the deal from when we did the walk-through during our due diligence period in escrow.  One more was fairly bad (too many people living in the unit, causing a nuisance, etc.) and we just gave them notice to leave, and to soften the blow told them they could take the washer/dryer with them that came with the unit (we don't want those crummy old machines anyway - we don't include w/d with our units that have hook-ups).  Sounds like they are cooperating.

You can tell a lot about how the tenants will be by how they keep their home, their car, themselves, etc.  That's why walking through the units and meeting the tenants is so important to us.

Well of course Dave Ramsey says you should not finance real estate, he lost his shorts doing that himself!  So he's going to think that since it didn't work for him, it won't work for anyone (the classic one size fits all theory).

I have only listened to him a few times myself, mostly for that reason.  He doesn't seem to understand that you can study the market and buy right, and use leverage as a tool rather than as speculation.  Leverage is crucial in real estate investing, and many people have used it successfully.

Yes, you have to honor all existing agreements.  That is why you should request to review all contracts related to the property (not just leases, but other service contracts too, like pest control, cable tv, etc. that the owner may have) during your due diligence period of escrow.  You should also request an estoppel so the tenants can confirm that the info you were given in the lease is still current and correct (you never know if the owner gives you an old lease with old info, and maybe the tenant has actually signed a more current version).  This is a good checks-and-balances system to confirm info.  I also recommend talking to the tenants if you can, so you can find out if there are any issues with the unit (such as, "the landlord said they were gonna fix the a/c but they never did" - if you're buying it in winter, you may not think to check the a/c).

Tenants always wait to see how a new owner will act so they can see what kind of leeway they will get with things.  Some tenants will shape up if they see the new owner means business (paying rent on time, etc.), so it's important to enforce rental agreements when you take over.  You'll probably end up with some good ones and some bad ones, that's been our experience.  To us, we like the benefit of having tenants there so we can have rents to help qualify for the loan for buying the place, and if we occasionally have to deal with a crummy one, that's just part of the business.

A check for $500.  No joke.  The listing agent (who we'd also used as our buyer's agent) said he felt like the seller was kind of stingy on compensating us for some repair items during escrow, so he wanted to make it up to us a little.  He was getting both sides of the commission, so I'm sure that factored into it.

We've also received gift cards from agents, whether it was generic (Visa), Home Depot, or for a restaurant/store.