All Forum Posts by: Mark Douglas

@Gerald Demers I didn't think to put it in the lease.....   Quick note on the lease**

Section 8 tenant, so I requested her rent increase in October.  They approved the request, and the current lease will expire at the end of September.   Before all of this, I was going to renew a 1 year lease under the increased rent amount.

@Ralph R.   @Account Closed    Should I just let the lease expire and not renew?  That would get everyone out, so I could actually screen my own tenants going forward.

@Nathan Johnson I say if you're confident in your market and the ARV, go for it man! Tag me in your success story so I can read it in a couple months !

Upon the purchase of a rental, I inherited a tenant.  The lease agreement only has this person's name on it.  I had this person sign a new lease with me.  The person on the lease has two or three people living in the unit at any given time.  I didn't necessarily have a problem with it, the tenant was paying rent, and there didn't seem to be any issue with the other people staying there.  

Now it seems that my tenant is having some pretty substantial personal problems with these people, but for whatever reason, continues to let them stay. 

Is there any recourse that I have, against these other people?  They aren't on the lease, but they are certainly "dwelling" there.  I don't want to evict my original tenant since there aren't any problems there, but these other people are giving my tenant major problems, which in turn are giving me problems.  

@Derrick W.   For me, I'm shooting for $2,500/door at minimum.  Some say just keep setting aside 15% gross rents, each month forever, which couldn't hurt either.  You can never have too much squirreled away.  Comes down to your comfort level

@Nathan Johnson  You may consider drafting up a partnership agreement, for this deal.  You want to spell out exactly who's responsible for what, when, where, why, how, etc.  The last thing you'd want is to get halfway through the rehab and have a big disagreement about somebody not doing their part, or "I thought we agreed on ________", etc.    The agreement doesn't bind you for life, it can be specifically for this deal.  And don't worry if you come across as taking it too seriously - it's better to over-prepare than to go in halfway, where expectations can be misunderstood.

Also, you really want to nail down the ARV before getting too far into it. It sounds like the price will leave you some margin for unaccounted for expenses, but you still want to be in the ballpark.

If you aren't already working with a realtor, I'd recommend reaching out to one to help hone in one at least 3 or 4 solid comparable properties.  Sometime, features such as a large lot, and outbuildings can make it tricky to compare apples to apples.  I don't know how far "across town" is, but in some markets, a half mile's distance can present very different property values.   

Just something to keep in mind, not to deter you from it.  Hope it all works out !

@Jamil Hossain

I got some solid information on LLC formation from Rob Hazard, found him on Avvo. PM for contact info

@Moshe H.  From my experience, the length of tenancy usually doesn't "roll over" to the new owner.  The duplex I got had a tenant already in it when I purchased it.  She's been here for 6 years, but the lender didn't count her income as rental income, because it hadn't been under my ownership at all.  

Having said that, I came across a lender last week that is able to count up to 75% of the rental income from day 1, without me having to wait 7 more months till I reach the 1 year mark.

Just depends on the lender, I suppose.  That lender that can do the 75%, is a smaller, regional bank.  It seems that they tend to have a little more flexibility with their regs.

@Moshe H.  Seasoning refers to the length of time the building has been occupied with renters.  Lenders usually want at least 1 year of "occupancy" to validate that the business can generate consistent income, and support the loan. 

I'd ask from the refinancing lender what their particular requirements are before closing on the hard money loan.  If your hard money lender will go to at least 13 months, and XYZ bank only needs 12 months of seasoning, this should give you enough time to stabilize the building, and confirm to the new lender that the project can generate income. 

@Courtney Fletcher  They don't send a "scout" to drive by and make sure you're living there :) the criteria is that you purchase the house "with the intent to live there yourself" It's sort of a moral thing.  Generally, one year is accepted.

@Chris Heeren  $45k for a 5plex is fantastic man, congrats.  Stick to your market if it's working for you!