All Forum Posts by: Nathan Seltzer

Thanks for the positive feedback! I increased the rent at lease renewal time. I first did a couple repairs and small upgrades in their unit. I sat them down 2 months before the lease was up, and explained that market rent was about $200 per month higher than what they were paying. I said because we valued them as tenants, we were going to keep their rent well below the market and only increase it by $50 on the next renewal. They were happy to only get a small increase, and they agreed. They did hassle me with a few unnecessary maintenence calls shortly after, but I cheerfully fixed everything and they settled down. 

Tenants are valuable, but they are also expendable. Don't be afraid to get a new tenant if that's what it takes to get near market rent. 

Greetings! I haven't been active on BP for a while because of my intensely busy life in the last year. Wow! How time flies! I just realized that I'm basically at the 2 year anniversary of my wife and I's first investment purchase and wanted to give an update and some lessons learned.

If you're interested, here's the original thread, which I posted just before we bought. Recap:

• Duplex: 2/2, 925 sqft. 3/2 1200 sqft.
• Purchase price: $165,000
• Gross Rent at time of purchase: $1625
• Down payment: $33,000

So! Re-reading my old thread, I can't believe I was whinging about paying $165k. If the market was hot 2 years ago, its on fire now. You can't shake a stick at a cash flowing duplex for under $200k!

We bought the property and got the original 2/2 tenant to move out so we could move in. That cost us $3000 in sort of a cash-for-keys deal. He had absolutely trashed the property, and it took quite some time to get the smell out from all the animal feces and urine. 

In August 2016, less than a week after buying the property we left for our long pre-planned vacation to Colorado. You might guess that our tenants had a massive failure of their water heater, which (with no experience and no contacts) I had to coordinate the $1800 replacement from a mountain cabin near Estes Park. Stress. Much stress.

Other than cleaning, we didn't do much to the property, except paint the interior and replaced electrical fixtures, which we mostly did ourselves (I'm not an electrician but youtube is awesome!). We lived in the 2 bedroom side of the property for a year, keeping the current tenants on the 3/2.

In June, 2017 we increased rent from $800 to $850. 6 months after that, we purchased a home to live in (with our 2nd child just 3 months old) and moved out, intending to renovate the 2/2 we'd been living in.

In August 2017, after moving, we started renovations, which (of course) took longer than expected and cost more than estimated. We wound up investing about $5000 for new cabinets, counters, removing some furdowns, etc. almost all kitchen remodel stuff. The renovations took a couple weeks and we got a new tenant very quickly at $950 month, which meant our total gross for the property was now at $1800.

So far so good. Knock on wood.

In September 2017, our original tenants in the 3/2 -- who had never missed a payment -- were late one month. Then the next month they informed us he had lost his job and they were breaking the lease to move in with family. We agreed to release them from the lease in exchange for 1 month's rent.

In November 2017 we then began renovations on the 3/2 side of the duplex. This side needed far more. We replaced the linoleum throughout with tile, except in the bedrooms where we used looselay vinyl plank. As with the 2/2 side, I did most of the electrical work myself, replacing fixtures, fans, etc. I can't tell you what a difference replaced the electrical sockets makes. Not only is it easy (if a bit tedious) but the new white sockets look amazing and have safety shutters which make them childproof. $150 at Lowe's did all the sockets and covers.

In January 2018, with renovations nearly complete on the 3/2 side, our new tenants on the 2/2 informed us they were breaking their lease to move to Mexico to treat a family member's very aggressive cancer. We suddenly were staring at an about-to-be vacant duplex. I made them the same deal, 1 months rent for release. I should mention at this point that I had screened the tenants and they had excellent credit scores and rental history with no criminal record. Things just happen, I guess.

After they moved out, it became apparent that their dogs had trashed the yard, literally destroying every scrap of grass and flower. We replaced some of it and put in a new cedar fence for $1600 to replace the one falling down. We finished the renovations of the 3/2 side for just about $18,000 all-in.

In February 2018, we put both sides of the duplex on the market at $950 and $1050 and got hit with over 50 inquiries in 8 hours. My wife and I decided to raise requested rent on both sides of the duplex to $1025 and $1125 per month (plus $25 pet rent, based on experience with pets so far) and still generated plenty of interest. We wound up leasing the 2/2 for $1050 and the 3/2 for $1150.

And that's where we stand today! YTD 2018 we've collected about $15,000 in rent with total yearly rent for the property at $26,400. We've had some maintenance concerns, but overall things have gone well, this year! Whew!

We just purchased another investment property and we're looking forward to (hopefully) smoother sailing from here on! Questions? Comments? Hateful diatribes?

Greetings, I am looking for my next deal. If you have a wholesale unit in Northeast SA, inside the box of 1604/410 and 281/I-35 please let me know. I am a buy and hold looking for one deal now and another in about 3-6 months.

If you have a deal, please give me details on the property, or if you have some experience and credentials, I'll meet with you. I will be purchasing using conventional financing, or FHA if the property is eligible. 203k prospects may work as well if the price is right. Thanks!

Please, explain for me what advantage I get from "learning how to buy from" you. It seems an odd way to go about business. Someone else wanted to sit down with me to teach me how to buy from them as well. Is this a weird trend or do you expect me to pay for the right to see deals?

Did you intend it to be [email protected] ?

Okay. But how do people normally structure the terms on a deal like this? 

The interpersonal advice--not legal advice--is to call her bluff. I've played hardball before with an imperious tenant, and the important thing is to be in the right. She wants something for nothing, which is unjust enrichment. She has no right to that. Here is what I think I would do (hard to say until I'm actually there):

• She is pushing you around because you have shown her that she can. As @Upen Patel said, your offer to her was only in the interest of minimizing your wasted time. I would withdraw that offer.
• I would document all the damage. If it exceeds her deposit (sounds like it does), I would send her the full itemization with a letter saying that I am not asking for payment of damages above the deposit, but if there is any legal action, I will countersue for the damages above the deposit.

She is not going to sue you. She couldn't afford rent, so she can't afford a retainer and no attorney would take her case without advance payment, because its absurd.

• She has no evidence a break-in ever occurred or that the sliding door was unsecured due to any malfunction. Just so you know, burglars never take just a few things and leave the rest. Since the alleged perpetrator was known to the tenant and she did not file a police report, there was no theft. Any judge or reasonable person would see that.
• Her lawsuit threats are vacuous. As long as you document within 30 days why you are withholding her deposit, you have fulfilled your obligation. Just make sure that you actually spend her deposit on repairs to the property and don't do it yourself. If you do it yourself, then they might decide you withheld too much.

If she then came back to me and asked for my initial offer of just paying for the grass under the trampoline, I would not accept it, but you could.

What I try to always do now is have a carrot-stick approach and give the other party a choice. In this case, I would have offered two options:

1. Pay for just the major damage and receive X dollars back, in return for agreeing that this ends all obligations between parties.
2. If she won't agree to option 1, then she will pay for all the damage that she caused and that I am legally allowed to withhold from her deposit. She can do anything she wants after that, but I am fully prepared to go to court, because I am within my rights, and I have done so before and won.

Let the chips fall at that point.

Just FYI, I've been on the other side of this too. As a tenant, I had an unreasonable landlord give me "move out instructions" when I gave my 30 day notice. The "instructions" said I needed to have all the carpets professionally steam cleaned and provide the receipt. That if any touchups needed to be done in the paint, that I would be billed, and that for any work that needed to be done, I would be charged a $100 "coordination fee" by the management company.

I had already looked up the owners name/address in the property tax records, but I called the management company and asked to be provided his name/address. They said they didn't provide that. I replied that they were legally obligated to do so, so that I could name him in the lawsuit that I filed if they withheld a dime of my deposit for bogus cleaning and coordination fees. The gave me his name and address, and a week later they also gave me my full deposit.

Playing hardball works, as long as you're not bluffing. You better believe I would have actually sued them. Small claims court is fun.

 That sounds pretty good. How do they make their money? Higher rates?

@Stephen Franco I would definitely recommend including CapEx in there as well, which would reduce your returns to a more realistic 5-15%.

Any reason you didn't include the address? I would like to do a little investigating before deciding if this is something I should pursue with you.