All Forum Posts by: Kris L.

I have a property scheduled to close in a few weeks. There are currently tenants, and the contract states that the property will be vacant at close. Do I need to have something in writing from the tenants stating they have moved out? How do I eliminate the potential of a tenant coming back after close saying they still live there or something?

How do I protect myself if I do a final walk through day of closing and the property is mostly empty, but there are a few items left that they didn’t move out?

I just don’t want to close and have one or more tenants saying I wrongfully evicted them when I change the locks.

@Angel Perez

You aren't too far off my last BRRRR.

My all in cost was 232k, and I pulled 202.5k on an appraisal of 270k with rents of $1900. My feeling on mine was it certainly wasn’t a home run. Maybe not quit a sinhke, but it’s at least a fielders choice.

@Michael Plante

Brave waiving inspection on a sight unseen.

@Kayla Johnson

I’m a but worried about this deal for you to be honest. First, the property is over 100 years old, so it might have some very expensive potential issues. I think there is a very high risk that $20k is not going to cover all your non foundation items.

1. Foundation you already mentioned. We can leave that as is, though I’d get at least 3 quotes for repair costs.

2. Electric. Hopefully electric had been updated at some point in the past 30 years. You don’t want to find knob and tube wiring and have to rewire a 4 bed house. Also check the breaker box. If you don’t have 150 amp service at a minimum, you have to budget for that.

3. Plumbing. Again hopefully this has been done at some point since the Carter administration. A lot of older houses used cast iron piping. Some even used clay pipes. Replacing those if they are in bad condition is thousands.

4. You mentioned AC was stolen. Sounds like you need a few thousand there.

5. Permits. I don’t know the permits cost in your area, but where I am at, I budget 3% of the renovation cost for items that need permits

6. A 4/1 is often undesirable. Were you planning on making it a 4/2?

7. Roof, windows, doors, siding. Is the house weatherproof right now? If it isn’t, renovating will cost even more.

All this being said, it’s great you want to take action, but you really want to be careful with a property like this. Old and empty for a long time can be a recipe for very expensive renovations. At the very least, I would get an inspection before purchase. A few hundred spent on that could save you from buying a property that would end up thousands in the red.

@Alan Ouellette

The reason I am wary of condos and don’t hold them as rentals myself is the regulatory risk. Your lease stating tenants are responsible for fines from their actions is definitely a good thing to have, but it’s only mitigating a part of your risk.

For instance, let’s say your condo building has 100 units (made up numbers for easy math), and finds it needs to spend $1,000,000 on replacing the roof, siding, and HVAC. If the association was good, they would have that cash on hand to cover the expense, but a lot of them don’t, so you would get a demand called a special assessment for $10,000 to cover your share. That’s going to be for you to pay, not your tenant.

Condos can also decide to pass a rule to limit the number of non-owner occupancy of the building. If you have a vacant unit but that non owner occupied limit has been met, what is your plan?

@AJ H.

Mostly agree with the article, but property age seems really restrictive. Very, very few houses in this area are less than 40 years old, but it certainly isn’t a war zone. I would say effective age of the property might be a better measure.

@Alex Reamon

Any reason you don’t install a lock for $20?

@James B.

Unless the rent number is current under market, I only see about $300/mo max for debt service. Even at 2% over 30 years that’s only 82k financed.

This isn’t looking like much of a deal as a long term rental unless you are doing a pure appreciation play.

@Michael Plante

Rules against this with the intent of limiting personal ads.

@Bruce Woodruff

I don’t think murder has any statute of limitations, but to your point, yes. That is I believe when the clock starts.

An example was the asbestos litigation. Technically, many people were exposed to asbestos a long time ago, in many cases the statute of limitations would have run out from last exposure. But since it is a slow disease and can take years to be noticed, the statue of limitations clock starts when the damage was detected, not at time of exposure.