All Forum Posts by: Leo R.

@Howard H. sorry to hear about your problem--this would be very frustrating.

In writing, send notice to the tenant (and the kids in the house) that you will begin the eviction process immediately if the property is not vacated by X date. Cite relevant portions of local/state laws that describe how the landlord is able to evict tenants.

Remind them that if you execute an eviction, an eviction record will appear on their background check, and will be visible to any future potential landlord or employer who runs a background check on them, and remind them that virtually all landlords and employers run background checks on potential tenants/employees.

Also, remind them that if the property is not vacated by X date, their deposit may be retained (mention this even if you planned to retain their deposit anyway because of the lease violation and property damage).

In your notice, reference the lease violation, the police record of noise complaint, and the property damage to emphasize the point that you have legitimate reasons to evict them and retain their deposit, if needed.

In a nutshell, remind them that they have a LOT to lose if they do not vacate, and that they have a LOT to gain if they do vacate. "Make 'em an offer they can't refuse", as per The Godfather.

Good luck out there!

In many markets, inventory is increasing. The reasons seem pretty obvious (higher rates = lower affordability = less demand = more days on market = inventory starting to pile up).

However, I've been wondering if there might be an additional (and somewhat less discussed) cause of the inventory increases:

How many properties are being listed by sellers who have been stricken by a bad case of fear of missing out (FOMO)?  Whether it's true or not, many property owners assume that we're at (or just past) a market peak, and that we might be on the precipice of a downturn (depending on who you ask). This mindset would likely encourage some property owners who were previously thinking of selling to pull the trigger.

Although it's usually not advisable to try to time markets, plenty of people do try to time markets (often at their own peril). I assume that some listings are FOMO sellers, but I have no idea whether FOMO selling is occurring at a large enough scale to have any tangible impact on the market....what do you think?

Interested to hear BP folks' perspectives!

 @Scott Trench --definitely. Plus, the fact that it's correlated with stock markets, isn't a hedge against inflation, there are anonymous "whales" with enough crypto holdings to influence entire markets, AND crypto institutions that are backed by nothing can easily go under leaving the investors high and dry, all indicate that it is far from "de-centralized" (which was an often-cited supposed benefit).

***Now, excuse me while I duck and cover from the onslaught of rotten fruit being hurled at me by the crypto bros***  ;)

@Trish Mccoy wow--that is a significant premium over the LTR value!  ...and these are all very useful bits of info--thanks!

@Jennifer Gardner It's also worth considering that potential property damage could vary widely from $0 in damages to thousands depending on the size, energy level, and behavior of the dog...dogs come in as many varieties as people, and there are some great potential pup tenants, but also some nightmares waiting to happen...

A 10 lb inactive lap dog that does nothing but nap, never runs indoors, and is well-behaved may not cause any damage at all...on the other hand, an 80 lb bruiser with Tesla-like levels of energy who runs indoors constantly, is aggressive, and chews up everything could cost you big bills and expose you to big liability.... (obviously, most dogs are somewhere in between those two extremes).

Good luck out there!

 @Trish Mccoy I think a lot of us (myself included) are interested to learn more about MTRs...it seems like a somewhat less-explored strategy than STRs and LTRs, and my impression is that there's not as much info available (I've listened to countless podcasts, watched videos, read articles etc. on STRs and LTRs, but haven't seen much media focused on MTRs).

Couple questions: your MTR that is getting $3750/month (with the pilots)  --roughly how much would that property rent for as a LTR?

Also, in your experience with MTRs, what have been your biggest "lessons learned"? (for instance, things that you definitely WOULD or WOULD NOT do again while operating a MTR).

Thanks, and good luck out there!

@Kaylyn Geiger you are correct to be wary of STRs heading into a likely recession...  

During an economic downturn, a vacation is usually the first thing people cut from their budgets, and when there's a housing market downturn (or just a broad economic downturn), STRs can get hit HARD with vacancy and property depreciation (not many people buy vacation homes during economic downturns, so they can be hard to sell during those times, driving down values).

Does this mean you shouldn't get an STR? Maybe, maybe not--it all depends on the numbers and your financial capacity to absorb the risk of things turning south. But personally, I would want to have VERY thick margins before getting into STRs in this economy, and I would suggest creating multiple "worst case scenario" financial models (that include significant vacancy and other unanticipated expenses) before pulling the trigger.

A potential alternative: MTR's (that can potentially tap into a somewhat more reliable tenant pools--like traveling nurses). I'm not a MTR expert, but I'm interested in doing it....there's a current thread on the STR vs MTR topic here:

https://www.biggerpockets.com/...

Good luck out there!

Good luck out there!

@Jennifer Gardner I'm always amazed by how many people have ESA's (they seem almost more common than non-certified pets these days!).

At the end of the day, you have to abide by whatever your local/state laws are regarding ESAs (and I'm assuming the law says you have to allow them--but I'm not a lawyer, so do your own research on that).

However, the good news is: if these tenants are otherwise good tenants (e.g.; they keep the place clean & quiet, pay on time, communicate professionally with you, etc.), then perhaps this isn't a big deal...I would MUCH rather have a good tenant with an ESA than a bad tenant with no pets.  Presumably, your lease includes a security deposit that will protect you from pet damage...

If the tenants are good, personally I don't think this issue rises to the level of needing to hire an attorney; I would just consult and abide by the laws, politely remind the tenant that pet damage will result in forfeiture of the deposit, and then re-evaluate the situation (and inspect the property for pet damage) when the lease term ends.

Good luck out there!

@Aaryan Patel things I wish I had done when I first started:

-learn more about what impacts DTI, and how that impacts borrowing ability (and learn to plan accordingly).

-screen potential tenants more carefully, and be more willing to not rent to tenants who present red flags (when you're first starting out, you're usually desperate to get rent income, and this can easily lead you to turn a blind eye to tenant issues that you should be paying more attention to). 

-use a more professional system of accounting (designed with guidance from a CPA who understands real estate).

-get a CPA who understands real estate.

Things that I DID do when starting out that I think were critical for success:

-find an agent with extensive first-hand experience maintaining and managing their own rental properties (someone who actually can swing a hammer and fix basic plumbing problems), and who is excellent at evaluating a property for potential issues before you make an offer. It's also critical that this agent acts as a true fiduciary and is willing to steer you away from a bad deal (even if it means they lose a commission in the process). Build a relationship with that agent over many years and many deals, and they will become a valuable partner.

-find a mortgage broker who is bluntly honest, conservative with their quotes, and highly experienced with a wide range of products that investors often use (i.e.; investment mortgages, cash-out refis, etc.). Again, build a relationship with that broker over many years and many deals--it will pay dividends.

-before you even make an offer, spend significant time under the house, in the attic, in other utility areas, and around the house looking for potential problems. Your due diligence process should start the moment you and your agent see the property, and should not rest solely on the inspector. If you don't know how to spot problems, have an agent who does, or pay a contractor to come with you. Personally, I spend significant time looking for foundation issues, significant settling or structural issues, and indicators of previous flooding (particularly flooding caused by groundwater rising up from underneath the slab)--these issues are usually deal-breakers for me. I also pay close attention to the windows, doors, electric, plumbing and HVAC (though, I am more willing to take on properties with issues in these areas if the price of the property is right).  ...it's no fun to cancel a contract because your inspector finds serious structural issues that you could have easily spotted at the outset if you had just spent 10 minutes looking around under the house...

-find an inspector who is thorough and trustworthy, and who is willing to answer many questions.

-do not speculate on future appreciation, and do not commit to a plan that requires future appreciation to pencil out. Particularly when you're starting, the property must cashflow adequately to protect you against worst-case-scenario events. You also want to target appreciation, but if the house doesn't cashflow adequately, it should be a deal-breaker.

-every time you have a positive experience with any professional who helps you with the property (e.g.; electricians, landscapers, property managers, plumbers, roofers, etc., etc.), save their contact info to build a rolodex of dozens of support personnel...this is your team, and much of your success or failure can hinge on their competence. You'll need their help again (eventually), and your goal is to build a relationship where you are their favorite customer, and therefore their top priority when things turn south.

-house hack--which comes with many, many benefits for a new investor (it's a relatively low-stakes way to get a property, and it's "training wheels" for learning how to be a landlord and successfully manage a rental...it also comes with owner occupant mortgage terms, which are the best. Overall, it's arguably the best strategy for a newbie to start investing in RE).

-buy a property with multiple possible uses and exit strategies, do not buy a property that depends solely on a single course of action to pan out. For instance, if a property could work as a LTR, MTR, STR, a flip, a BRRRR, a forced rent appreciation through value add, OR a personal residence that you'd be happy with, those are a lot of options....but if the property ONLY works as a STR (or ONLY works as some other thing), then you could be painting yourself into a corner.

-know what type of property you're looking for, but ALSO be flexible. We're often told that we need to have clear selection criteria, and this is true to an extent...however, in today's market, it also helps to be flexible enough to look at, and buy a property that has some fairly inconsequential issue that turns off other buyers (putting you in a better position for a deal). Nearly every single property I have came with some quirk that turned off other buyers, but that was largely inconsequential to my plans (for instance, an oddly-placed staircase, ugly old carpet, a location that was on a somewhat busier street, etc.)...if I had absolutely strict, inflexible criteria, I might not have looked at those properties.

-use a highly specific, professionally-designed lease customized to the specific properties that provides the absolute most protection from all the liabilities that come from renting a property. My current lease is over 30 pages (single spaced), and covers virtually any event imaginable. Excessive? Maybe. But when problems arise, I'm always happy that my lease protects me, and/or allows me to deal with those problems.

-build adequate protection via an LLC and/or an appropriate level of liability insurance (personally, I use both).

-don't bite off more than you can chew...base decisions on conservative financial models, don't try to buy a property that's way outside your financial capacity, or that would involve management headaches that you're not equipped to deal with...start small, and gradually build to larger and/or more complex strategies (as your finances and your expertise improve)... don't try to syndicate rehab flip a 50 unit D-class portfolio on the other side of the country for your first deal (unless you enjoy the extra spicy sensation of a new ulcer). Learn to walk before you try to ice skate in the Olympics.

Good luck out there!