All Forum Posts by: Lisa Holden

This is part of being a landlord. You felt you would never have a vacancy? You should not go into it unless you know you can float that note for a certain amount of time. It's all part of the long-range strategy. This can happen anytime. My goodness, what would you do if they both were vacant?  Have you determined why the tenant bounced on you at midnight? (i.e. lost job, place sucks, weren't comfortable with you being the landlord?) If you or the building is the problem, you may lose the other tenant soon. Do you understand why no one qualifies for the rent? (shytty neighborhood, crime, rent too high?). If you have a low-end community, in many cases you will get desperate or bottom feeding tenants who live a transient life. People who tend to have strong credit and credentials can go elsewhere. Its just so many questions to answer but if you remain in this biz, you have to understand all these dynamics. No matter what the case, you have to be able to survive vacancies. If you can't, you can't be in this business. 

Best of luck, but there are so many things you are going to have to figure out. If you don't, no matter what investment you get, eventually you will be considering selling or a default. 

Talk to your friends who have rentals and have them walk the vacant unit with you and look over your listing.  Is the problem you aren't getting showings or that the showings are translating to people applying?  I get the criteria of 3x rent as income, but that also depends on the rent.  A $500 rental-not a problem, but a $2000 rental-maybe not.  It comes down to how much people need for their housing and other expenses and that isn't a percentage-that is a dollar amount.  Eg monthly phone bill is the same if you live in a $500 or $2000 a month place.

 What do you know about the area surrounding it? Are you investing Out of state with or without knowledge of the area?

 I would consider hiring a professional property manager to help find a tenant. Either the asking rent is too high or the property is not being properly marketed. I would not lower the requirements if this was me - a bad tenant is not better than no tenant.

If you sell, you will pay 5-6% or more in transaction costs, and you likely have a prepayment penalty (PPP) on the DSCR loan, which could easily add another 1-3% to the exit costs. This is all assuming it would sell for what you paid for it without requiring any repairs or updates to be listed. It will easily cost you 5-10% of the current value to sell it, which it seems like this property is probably worth around $200k, so you could lose another $10k+ in selling it.

@Lisa Holden - I would certainly NOT stop paying the mortgage outright... But do contact your lender and find out what hardship options they may offer and learn if you must be behind on the payments to qualify. How confident is your Realtor in being able to sell the property at or near the listed price - and will that sale result in a NET gain for you or just lock in a loss?

If you were to NOT sell and get the other unit rented, would that potentially be a better outcome for you both now and in years to come? If so, you might just need to lower your rental criteria. I recently lowered my income required from 3x to 2x. I also do not have a minimum credit score requirement - instead using the score to in-part determine the security deposit requirement at 1x, 1.5x or 2x rent. I care more about liens, judgements and collections than I do about a low credit scores for other reasons - which is often related to medical bills or student loans.

@Lisa Holden - I would certainly NOT stop paying the mortgage outright... But do contact your lender and find out what hardship options they may offer and learn if you must be behind on the payments to qualify. How confident is your Realtor in being able to sell the property at or near the listed price - and will that sale result in a NET gain for you or just lock in a loss?

If you were to NOT sell and get the other unit rented, would that potentially be a better outcome for you both now and in years to come? If so, you might just need to lower your rental criteria. I recently lowered my income required from 3x to 2x. I also do not have a minimum credit score requirement - instead using the score to in-part determine the security deposit requirement at 1x, 1.5x or 2x rent. I care more about liens, judgements and collections than I do about a low credit scores for other reasons - which is often related to medical bills or student loans.