All Forum Posts by: Meredith Mihm

Help-- should I do this? I just negotiated an owner financing deal that I am happy with. I like the down payment and the monthly payment. The property is distressed, and I will be getting it for a good price. He wants to amortize it 50/50 interest and principal for the life of the loan (30 years), I'm not sure exactly why, but tax reasons.

The potential problem is that he will only do it if, when sold, we owe him the entire amount WITH interest. So if we had to sell it in the first few years, it might be hard to break even. I don't plan to sell, but this makes me a little bit uncomfortable. Other than that, the deal is a very good deal. Should I do it?

Details:

4 plex-- income $3000/mo, Purchase price 140K, 40K down at 6ish% interest, amortized over 30 years (so no more than $700/mo payment)

(Expenses: tax $225/mo

Insurance: $150/mo

sewer: $200/mo

lawn/snow: $50/mo

capex/repair/vacancy: $700/mo

(So almost 1000/mo cash flow)

But, if sold, the total amount owed with interest (initially 197K after down payment) would be due.

I would have to put in at least 30-40K to correct deferred maintenance, but ARV should be 250K-300K.

Am I missing anything? This is a good deal, right?

2 Votes

I'm in Winona too! Welcome. Did your parents buy those three houses on Grand street?

1 Vote

Saint Paul, Minnesota

Quote from @Scott Mac:

Welcome to your community laundry room.

We're glad your here.

If any problems call this number: xxx. xxx. xxxx

(and be ready for calls)

Yes! It's always the simple things that I miss, thanks! I'll put my husband's number on it 😁

2 Votes

Quote from @Leo R.:

@Meredith Mihm I'm not an expert in coin-op laundry, but presumably there's a lot of plumbing...and, in my experience as a landlord, plumbing inevitably springs leaks...and when tenants don't report those leaks fast, it equals big problems...

So, I'd have a clearly marked contact (e.g.; a plumber/maintenance person) for tenants to call in the event of a leak/flood, with a big sign that says "IN CASE OF LEAKS/FLOODS/OVERFLOWS, CONTACT: ..."... and maybe some other instructions for them to follow if there's a leak (like instructions to set up a "slippery / wet floor" sign if there's a leak)

Definitely let us know how it goes--I'd be interested to hear how it performs and what lessons you learn in the process once it's been up and running for a bit...

Good luck out there!

Thanks, this is a fabulous idea!

1 Vote

Quote from @Nathan Gesner:

- Laundry room is only for residents

- management not responsible for lost or damaged clothing, laundry soap, etc.

- Please clean up after yourself!

Thanks!

0 Votes

Hi! Our first coin-op laundry is almost up and running. I'm trying to put together a list of rules to post. I'd be grateful to see the rules that experienced landlords are using. It's in a 7-plex, FYI. What am I forgetting?

so far:

1. Hours: 7:00 am- 10:00 pm

2. Don't overload the machines

3. Discard lint after each use

4. No sitting on the machines

5. Clothes left sitting in a machine longer than 10 minutes may be carefully moved

6. Clothes left overnight may be discarded

7. Management is not responsible for lost or damaged clothing

0 Votes

Hi Adam,

I'd love to check out your next meet-up-- I've been looking for something local, and yours only thing I've found (we're in Winona, but we invest in Wisconsin too). Do you have anything on the books?

Thanks!

0 Votes

Quote from @David M.:

@Meredith Mihm

To start, that is part of being a landlord. You will go through a bunch of "short stay" tenants until you get one that stays for multiple years. At least its a good rental market so you should be able to get another tenant in quickly. That's good, too, that you can find well qualified tenants.

Yes, I've rented to applicats that aren't "well-qualified." I don't go strictly off of credit scores, etc. Lets face it, good people are good people. Not to start an argument, but just realize that there is the one point of view that the US financial credit system, especially after the '07-'08 crash, basically disenfranchising a whole swath of the population. You can't get a loan unless you use the financial system and have a sterling credit history. What about all the people who don't have bank accounts? Or, those who, perhaps slightly misinformed, don't have credit cards specifically to get into debt issues? But, now they don't have a credit history.

I don't think you can specifcally "find" somebody who can't afford to buy... Sometimes it works in your favor. Nearly two decades ago, a young couple rented from me. After a few years, we talked and they were conflicted on renewing their lease because they wanted to buy a place and start a family. They were estatic when I told them I didn't mind doing month-to-month. Gues what... I was really happy that these trouble-free tenants who always paid on time stayed another 2.5 years!! It took them that long to find a property they wanted to buy.

Yes, when I started I had my "down beaten" times when my units kept turning over. After thinking it through (as above), I realized this is part of landlording/renting. What I didn't know was I'd get a set of tenants that stay about a dozen years, each.

Hope this helps. Good luck.

Thanks David, that's heartening to hear, and it makes sense to me. We have had great luck with tenants in the 2 years that we've been at this, and have had no issues at all other than these two broken leases. Fingers crossed that the next tenants are long-term...

0 Votes

Quote from @Bill B.:

Dunno, I only do great tenant and I only do SFH. My average tenant stays about 8 years. About the time for a kid to get out of school. In 20 years the shortest was probably 3 years the longest are at 10-12 years currently.

Do they have less than 4 beds, 2 baths? Do they have double or triple garages? Do they show at least as well as houses in the neighborhood that are for sale? Nice laundry appliance, SS kitchen appliances & granite countertops are so cheap they should be a given. These tenants tend to have a lot of stuff making moving a pain, and they want their kids to have a stable home and school life.

Maybe ask your PM how long their average tenant stays. They can see people who move yearly and look for a more stable tenant. Maybe start doing 2 year leases? (Most of my renewals were 2 years but with rents increasing so fast we’ve pretty much stopped.after 2 years they could be facing a 30-50% rent increase. 10-15% per year is more palatable.)

You can’t discriminate based on family. But most couples or couples with 1 small child aren’t looking at 4-5 bedroom homes. They get a 3 bedroom and then move when child number 2 comes along.

GL. This has been a good 5-10 years for filling vacancies very quickly. But you don’t want the problem when it’s hard to find good tenants.

This one is a 4 bed, 2 bath that is nicer than most of the houses in the area, but no garage, so that may be part of it. I'm actually managing it.

0 Votes

I think I have a problem I haven't read about... choosing tenants that are too good to last. My last two sets of tenants for our single family (I just found out about the second set today) have BOTH broken their leases to purchase their own homes. Is it my fault for choosing people who are so responsible and have such great credit? Do you try to rent to people who can't afford to buy, or who have circumstances that make it unlikely? Both sets have approached us with the understanding that they are ultimately responsible, and the first set did pay for a month that it sat empty while we found tenants, but I would like to have someone living there for at least one whole year.

1 Vote

All Forum Posts by: Meredith Mihm

Meredith Mihm has started 19 posts and replied 78 times.

Post: Owner financing: interest due on sale!

Post: LLC question and new investor inroduction

Post: Coin-op Laundry Rules

Post: Coin-op Laundry Rules

Post: Coin-op Laundry Rules

Post: Coin-op Laundry Rules

Post: June 2022 REIA of Western Wisconsin and La Crosse Meeting

Post: My tenants are too good?!

Post: My tenants are too good?!

Post: My tenants are too good?!