All Forum Posts by: Kenny Dahill

@Jendayi Brandon, raising rent on long-term tenants can be great since they're not likely to move out.  A few thoughts here:

• Gift Value:  In exchange for increasing their rent, provide them something valuable in exchange that benefits the property.  For example, new carpet or updated lights.  They'll appreciate you wanting to improve the property.
• Ramp Increases:  Depending how much you want to increase rates, explain what the current market rates could be.  They won't care because that's your problem, not theirs.  If anything, it'll indicate how much of a steal they currently have.  You could put together a 2-3 rent bumps for a given period of time.  Maybe it takes you 6 months or 3 years to get to market rates.  That's up you.  Or, you rip off the band-aid and if they leave then so be it.

@Harleen Kaur, congrats on the duplex!

I'm quite familiar with the slew of landlord software options in the market.  Over the last 1-2 years we have seen the industry change mostly in their pricing programs.  What once used to be almost entirely free, now has small fees associated with them.  Each software company is slightly different: flat monthly membership vs. transaction cost.

What's most important to you?  If you had to put a priority list together, what are those top 2-3 features you need?  Go ahead and skip online payment because they all have that.  But try to be very specific.

I would also factor in your future portfolio growth.  Without knowing your plans, if you have a goal of 20-50 units in 3 years or 5 units in 5 years, those could determine different software providers.

Best of luck in your search!

@Abbey Giwa, first rule of pro-forma's:  Excel is a tool, not a projector.  Therefore, you can always make the numbers work in your favor, even if not realistic.

If the numbers don't work, they don't work.  Investors get in most trouble when they force a tight deal to work because they believe they can beat their own projections.  We desperately want the deal to work so we manipulate Excel until we can justify the returns. 

Looking at your scenario, private money at 6% is going to significantly increase your cost basis.  However, if it's only a 12mo loan then look at the numbers for Year 2 & forward.  What happens once you get conventional loans for 30 years at 4%?

Since the Seller is a savvy investor, try to use that to your advantage!  Skip the private money lender and utilize the investor instead.  Ask them to carry the $200k home while you only get a loan for the $50k rehab cost.  It's a way for the Seller to net more money as well on the deal, in the long run.

@Daniel Fitzroy, guess I'm the odd one out here.  My first tenants became some of our best friends.

Generally, it's best to avoid that situation.  However, it's also your gut instinct and you know the situation best.  I have good quality rentals, in good areas (all within a mile of me) and attract a specific type of tenant.  When issues did occur, I made sure they understood the terms of our relationship first as landlord-tenant, then friends.  They were great with rent payments, that's what the biggest concern would be.

P.S.  Just found out this weekend that I'm still 'Landlord' in his phone anyways they moved 3-4 years ago.

@Toby Khan, I like the $1M rule but also consider the property's risk in itself.  If you know a property has more risk than others, it would be best to separate that riskier property from the others.

What would increase its risk?  Theft, age, hazards in the nearby area, etc.

@Matthew Ranucci, HELOC's are powerful short-term finance tools. A lot of investors utilize their HELOC to purchase and rehab the property, then either sell or get long-term debt with better rates and terms.

If you have the limits, I would consider purchasing and renovating the property on HELOC but converting to a 30y fixed note once the value has appreciated. You might create enough equity to warrant either a) 20%, so 'no money down'; or b) enough equity that you can utilize cash from your savings account.

If done correctly, you could avoid (1) refi every time you purchase a property which adds up.

There's a lot more to this decision that involves understanding your plan for this specific new property and future properties.

@Omari Heflin, it often helps to provide what criteria you are requesting your PM to have as well.  For example: Section 8, internal maintenance team, rehab contractors, specific owner portals, price range, etc.  The more you're able to define the ideal PM, the better the community can recommend the proper PM.

Best of luck, sounds like you have an exciting year coming up!

@Sathya San, yeah, that's a hard PASS!

There's a few reasons they probably have that in their contract:

• previously got burned from negligence
• know they are low quality and want to protect themselves
• unreasonable professionals

I understand PM firms have to protect themselves but there also needs to be a level of accountability.  A complete indemnification is a blanket to do whatever they want, however they want.

@David Guthrie, this is the moving companies risk and liability.  I agree with Scott, make the initial efforts to inform all parties and then step aside.  The tenant can probably use their Renter's Insurance as well, if needed.

@James York, if you can delay COE, have the existing landlord handle this.  It's their current tenants and you will have to honor their lease/law.

That'll put the obligation and risk on the current landlord to figure out how to get the tenants out.