All Forum Posts by: Michael Craig

@Matthew Rembish Awesome story and post! Quick question, would you want to scale faster than one rental property a year if your funding permitted? If so, could you refinance after you bought, renovated and rented out the units to pull your money out (even if that meant pulling only 50% or less of the equity to get the bank approval and cash flow you require)? Seems like you are capable of turning over a few houses a year.

@Anthony Michael Mugnaini yearly increases are very common and I know people who even include an annual increase clause in the lease. Additionally, you can raise rents to however much the market allows once lease expires - you just have to weigh in if it is worth losing a tenant if the increase is too high.

@Anthony Michael Mugnaini it seems like the $103 is only including the principle and interest - excluding taxes, insurance, reserves, vacancies and other costs such as water, lawn care etc.  

Once you have taken into account all these extra expenses then you will have a better idea on if this property will be putting or taking money out of your pocket each month. Having a property taking money out of your pocket each month while rented is not fun. Some things to consider, can you raise rent (seems like interests is high in your market)? Can you refinance to get a lower monthly mortgage payment?

Good Luck with your new home and deciding what is best on your current one.

@Brian Kolb if there are separate meters then have utilities in their name.  Tenants consume less when they are paying for utilities. Also, when the account is in their name then they are responsible for making payments, not you.  

@Jason Thomas one alternative is to implement RUBS - Ratio utility billing system. Essentially this splits the utilities evenly throughout all your tenants. I am not familiar with NJ so you may want to see if you can do this in your area.

Another thing to point out is what are other units in your market doing for utilities. If water is included in competitors units, you may want to include water in your lease to stay competitive.

@Jasmine Anderson seems like you guys have put a lot of work into finding your first deal. Do the cash flow numbers you listed reflect reserves, vacancies and other costs (like water bill)? 

The biggest regret you tend to hear on podcasts is that the guests wish they can go back in time and buy every property they could that would have positive cash flow. 

@Johann Jells very short term thinking to price your property value at the worst time of the year.

@Johann Jells if what @Alyssa K. is saying is true and her property is priced at market value then that is where the price should be set. By lowering your rent you are devaluing your property - good luck trying to get it back to where it should be.

I was in this exact same situation last year at this exact time, I lowered the price and the application rate stayed the same. The tenants who who ended up renting it out beginning in the first  of February would have paid original asking price had I held pricing (because that is market value). The only time you should lower list price is if it is not at market value.

Now if you are the only $1,650 house in a market where people pay no more than $1,400 for rent then you are not at market value.

@Alyssa K. You can always negotiate a lower price. The reason you're not getting qualified applicants is because there is very, very little demand this time of year. Market value is market value. Lowering the price will not increase the amount of qualified tenant applications. 

@Angel Bodon I am curious why big companies near by would want you to furnish your rental apartment? Tenants are likely to have their own furniture and will need somewhere to place it. This is also an additional cost for you. Lastly, what happens when the tenant moves out? Now you're stuck with used furniture.

I find year long leases more passive. It is also easier to manage the move in/out dates of your tenants, which can help if you are in a seasonal location. With M2M, your tenant can end the lease anytime (with 30 day notice) - good luck and have fun renting out an apartment around the holidays. Regardless of what you decide for lease terms be sure to SCREEN, SCREEN, SCREEN.

There is a lot of info on the forums about screening, but if you have questions let me know. Good Luck with renting out your apartment and hope this helps.