All Forum Posts by: Michael Garofalo

Mariano,

100% I would house-hack for your first deal. You'll learn what it means to be a homeowner and landlord, and offset your cost of living which is typically everyone's largest line item in the budget. Financing options will be better as well and after a few years you could leverage equity built in the house to invest into your next deal.

Hi Shalen,

The bigger question to ask is what class of property can you get at those various price points (A, B, or C) and which class do you actually want to be in? I own assets across that entire spectrum (A class I manage myself locally, B and C I have property mangers for locally and out of state) and I can tell you from experience that managing C class is a fair amount of work. The cash flow is better, but there is always some problem or tenant issue to address. If you have the stomach and want to be in this class that's totally fine, just set your expectations accordingly. 

I would advise against raising money from others for your first deal. I think the responsible thing is to get into something on your own merit, learn the business, make your mistakes an grow as an investor, and once you have more of a track record, then look to borrow or raise money from private sources. 

Hey Aaron,

I 100% support the decision to split the electric, as that is the legal and most fair way to do things, and will increase the desirability of the property whenever it comes time for you to sell. However, I want to preface this by saying this is definitely not a small undertaking in terms of cost or work involved, and will most definitely require permits and inspections with both your municipality and the power company.

Specifically for the electric service, my recommendation is to upgrade to a 3-gang meter socket: one meter for each unit and then one for common area electric. Even if you have no common area utilities now, it would be more economical in the future if you ever wanted to add another panel to cover miscellaneous common area lighting, CCTV, etc. If the existing service panels is in good shape and is sufficient for one of the units then I'd try to avoid replacing that. If things are overloaded you may want or need to consider upgrading to 200 AMP service however in my experience, 100 AMPs per meter should likely be fine.

As far as the lease renewal goes, I would just talk to your attorney and work in a clause that covers you for whenever the cutover may occur. Something along the lines of "landlord reserves the right to install additional electrical panels and separately meter the electricity...yada yada yada." I actually did this a few years ago with water (I submetered the units and wrote into the lease that there was a flat charge per person but that I reserve the right to install submeter devices at any time and then bill tenants accordingly).

Hi Abiy,

I am not an attorney, and I'd recommend you seek professional legal advice regarding this topic. That being said, I can tell you I've discussed it with my attorney and perhaps there are loopholes in various states but I was told pretty candidly that engaging in any activity like this would be considered fraud and tax evasion. 

Just my 2 cents but I wouldn't try to cut corners, find a deal that makes sense even if property taxes were to double and you'll be fine. If the property taxes have to remain unchanged for the numbers to work, it probably isn't a very good deal.

Hi Tara,

If it were me, I'd simply tell him if he and his mother want to live there, one of the application requirements is to provide 4 months of paystubs. If they are acting like this now, think about how they might act in the future with maintenance requests or if they rack up a balance for other misc things (like lock changes, late fees etc.)? Credit score is not a be-all-end-all in terms of predicting how good the tenant will be. In fact some of my best tenants (in terms of minimal headaches caused and paying rent on time) have scores that are between 550-600.

Just my 2 cents but i would strongly advise not rushing the screening process and waiting for someone equally as qualified on paper who isn't going to be difficult like this. If they pester you for updates or anything I would just say you are unable to move forward in the process until all required documentation is provided. 

@Travis L. I'd start researching and speaking with local banks to consider some type of portfolio loan or line of credit. Local banks are much more flexible and can do some pretty interesting things since they hold all the paper in house. Best bet is to meet with someone face-to-face to explain your situation and see what they would be willing to do for you, I'd recommend researching and setting up meetings with a variety as it may take some time to find the right one. I'd also recommend researching "asset-based" lenders which evaluate a decision to provide financing based solely on the house and deal itself (not your personal income or financials).

Thanks everyone for your input! Yes @Colleen F. ultimately we did find several holes which were sealed up and re-caulked and sealed. I'm going to overhaul the siding in a few years given how large of a project that will likely be.

BP community,

I've had issues with racoons for ~6 months for one of my properties. Previously a family made their way into the attic and then the chimney. I had rodent control remove them, place a cap on the chimney, and seal up a hole in the siding that they had used to enter the attic. Thought that was the end of it but got a call from one of my tenants last week stating something made its way into the attic again. Long story short, over the past week rodent control has captured 3 racoons and 1 possum. 

My question is: once we are confident these critters are gone, what would be the best material to use to deter them from climbing and clawing their way back into the house in the future? The siding is cedar shake and quite old, I could patch the area again with wood but I am considering re-doing the siding since this is a 100+ year old duplex and that would need to happen at some point over next several years anyway. My preference would be to use vinyl since this is a standard rental, but I would consider hardie plank if folks feel that would do a superior job at preventing the racoons from clawing their way back in. 

DC investors: would someone happen to have a recommended attorney licensed in Washington, DC that specifically has experience with assisting condo HOAs with foreclosing on unit owners who are delinquent on their monthly fees? If you have someone in mind please PM directly--thanks all very much in advance!

@Isa G. I think for that sized house and redoing everything, $60k is not going to cut it. I have dealt with every CAPEX project under the sun (foundation repair, roof replacement, sewer line and water line replacement, electrical overhaul, full cosmetic renovations of interior units etc.) and stuff you are not expecting or budgeting for is going to pop up. Even if you think something is fine, it might not be. I had a sewer line scoped at closing on one building, everything looked fine and a year later the pipe collapsed and I had to dig it out and do a full replacement. You should really have a plumber, electrician, structural engineer, and roofer get out to the property to see what is required regarding the overall systems before you even try to put together a budget for all the cosmetic stuff. The cost could fluctuate greatly if this house was built in 1970s or 1980s vs if it was built in early 1900s.