All Forum Posts by: Kevin S.

@Naz Hossain the whole point of the 1% rule is to be a quick rough approximation of if the property will cash flow or not. I plugged your numbers into my calculation spreadsheet with some assumptions (3.5% down - lowest down payment you can get using FHA), 4.5% mortgage over 30 years, rent of $2450, taxes of 1.5% annually, insurance of $180/month, 8% for Vacancy, 5% for R&M, 10% for CapX, and 10% for Management fees (even if you self manage you should still budget for this) and based on all that this place would lose you approximately $780/month, i.e. not at all a good investment. Based on my calc's just to break-even (i.e. make no profit or loss) you'd have to pay only $213,500 for the place.

You might look into whether the rents are under-market or not, if you could get a substantial increase in rent then that could make the property more appealing, but as of now based on the numbers this is one you should pass on.

@Kurt Krier I'd up your Vacancy, R&M, and CapX to 8% (1/12 = 8.333% so you basically save up 1 months rent per year), 5%, and 10% respectively. Lawn care also looks low, i'd budget at least $80-$100/month. Additionally, how did you estimate taxes? Is that based on what it was assessed at for 2018? Cause if they are using a low property value be prepared for a jump in your taxes next year. Additionally, have you considered trying to bill back the water/sewer to your tenants (I'm assuming those numbers were for all 3 units)? Overall looks like a marginal deal unless you can up rents and/or bill back water. Good luck!

@Mary Lou Zolko from your second post, it sounds like you don't really want to do it, so I would just inform your tenant that you will not be accepting any changes to the lease or the number of occupants at this time. After this I would recommend keeping an eye on the property, just to be sure they don't try and sneak the cousin and her kids in anyways (I'd also schedule an inspection within the next two months so you can see inside to verify). 

If you do decide to allow them to be added to the lease, make sure you follow all normal screening procedures that you do on the property (credit score, income, etc.). Good luck!

@Kelly DeWinter I have no knowledge of managing a job site etc, but I will say PARE IT DOWN dude, no one wants to read through pages of txt with all your asides etc.

@Brian Mitchell based on what you said you should either 1) deny or 2) say yes and charge her the $350 pet fee. Compromising on what your lease states is a dangerous precedent to set.

@Mary Lou Zolko How many bedrooms is the house? Typically I would not allow 7 occupants in a 900 sq ft home, you're just asking for trouble. I generally follow the HUD guidelines of 2 per bedroom plus 1 over all, so a 2 bedroom max would be 5 people, for example (2 x 2 + 1).

@Cynthia Rodriguez this needs to be posted on the Real Estate Marketplace forums, not on the New Member Introduction forum, and you'll want to post more info such as price, sq ft, possibly links to the properties on zillow, pictures, etc. Good luck

@Brian Mitchell What does your lease say? If it says there is a $350 fee for any pets, then follow your lease. If it says there is a $350 pet fee for only dogs and cats, then follow that and don't charge her. You already have a legally binding document in place, do what it says or why bother having it.

@Nicholas Morgan after reading through everything my opinion is I don't think she's going to bite for the offer you can put together. You've already stated her main motivator is moving close to her grandkids and $5k cash in hand just isn't going to get her a downpayment (let alone pay cash for) a house like you said she wanted. Plus you'd be stretching yourself just to cover this and you stated that there's going to be an eviction or cash for keys to get the other tenant out. 

@Charlie Moore assuming all 5 of them met all of your rental criteria (since you said they were "fantastic") then I'd go with the one you received a completed application from first, and for the rest of them send a short email or txt like @Nathan Gesner suggested. Don't provide any details on why they weren't selected to rent your property, staying vague is always a good idea, and most likely you'll receive nothing more than "okay thanks" as a response, if you even receive a response at all from them. I'm also with Nathan on the fact that you need to get thicker skin, this is a business and if you can't stand telling someone they can't rent from you then I question whether you'll be able to handle the harder stuff that being a landlord entails (i.e. bad tenants/evictions/etc.).