All Forum Posts by: Nathan Seltzer

@Tim Yang You need to check with the HOA about leasing individual rooms. Many forbid it. It may seem stupid to you but the HOA literally has complete discretion and they can change the rules at any time.

What Sue Kelly was talking about is simply that the money you use to buy a condo has to come from somewhere. If you want to get creative with financing, then you're talking about hard money lenders, partner investors, second mortgages, master leases and seller financing. You don't just go out and get a 0 down mortgage at your local bank. Them days is done. You mentioned that book from BP. Read it!

I won't comment on whether or not condos are a good investment, because I am totally inexperienced, but your plan to rent out individual rooms with shared living spaces is typically only  acceptable to certain tenants, like college students. Not sure that will work in Aurora, and I'm not sure that's who you want as roommates. 

You sound impatient to get started. That drive to get moving is good, but it can get you in trouble if you don't exercise temperance. My wife and I talked about duplexes and researched the market for over a year before putting in an offer. Don't buy a property without knowing more about the potential positives and negatives. 

If you can afford a condo, you can afford a multiplex (or nearly so). No one said it had to be a 10 unit apartment building. Find a distressed duplex. If there aren't any deals that make sense within your striking range then take Sue's advice: save and wait.

Good thoughts here. By the way, legally you can't claim the full value of the washer. Unless it was new in box, you can only take its depreciated value. Washing machines depreciate over 5 years, so if it is 1 year old, it is 80% value, 2 years 60%, etc. If it is older than 5 years, you can only charge the replacement for an old washing machine (generally $50-100) and you certainly can't charge the full $650 new value.

@Johnny Dong A few questions:

• Are they paying more than your asking price for rent? If not, tell them goodbye.
• If they are paying more than your asking rent, then you need to look at the details. How much more are they paying? Does that cover the cost of the renovation? Does the renovation increase the home's value? By how much?
• What time frame do you have to complete the basement? Who is drawing up that contract? What if you don't complete it in time? What happens if the work is not to their satisfaction?

Look at this situation like a poker wager. If you get another tenant instead at whatever rent you were asking, you won't be sorry. If you do this, you might be sorry. A good gambler only bets when the upside potential outweighs the risk. Make sure there's a good upside.

All that said, ask yourself why they would offer to pay a year up front. To me that seems very dumb from their perspective. Withholding rent is one of the only recourses a tenant has against an unresponsive landlord outside the court system. Why would they offer, all on their own, to forego that?

They don't sound dumb to me. They sound cunning. If you accept a year's payment, then you basically can't get rid of them for a year. I don't know what they are planning. Maybe they are going to be great tenants, or maybe they will have loud parties, not mow the grass, make their neighbors hate them, park 6 cars in the street and leave your house a wreck. My suggestion is to run and don't look back.

If you do this (and I would definitely not) do not make the lease agreement contingent on the remodel in any way shape or form. They should be completely separate agreements. If they insist on this point, or any point that seems odd, then you've probably discovered their game. But you don't need to discover their game, and I wouldn't bother. 

All expenses in all business get passed along to customers, including taxes. Landlording is not different. 

Think about it. All of your income from the property comes from the tenants. Therefore they cover all your costs (assuming you have positive cashflow). 

If you're asking if you should put that as a line item in the lease, so that the tenant has to pay you rent as well as an additional fee to you or the HOA, I think that is foolish. It complicates things for everyone and will make you appear like a real cheapskate to your tenants in a way that just raising the rent by that amount would not. HOA fees don't fluctuate, so its very easy to know what the cost will be and factor it into your expenses along with repairs and capital expenses.

I suggest you keep it simple and keep the tenant paying you only rent (and water if its a shared meter).

We are moving forward on this property, and close in about a week. Still waiting on the appraisal, but it should be fine.

We have negotiated with one of the tenants to get him out for $3000. I'm going to be out of pocket about $30k at close, and with the lower APR for having this as a primary residence, I think we're in a good position.

As mentioned above, there are a lot of issues with the property that will need to be addressed over the next 1-2 years to get this thing caught up on all the deferred and ignored maintenance, but the foundation is good, and it has a new roof. 

I agree that we're paying retail and I can understand why some wouldn't want to. I don't mind paying retail as long as the cash flow and ROI justify it. I don't really value the idea of only buying if you're getting it under market. Of course, getting it under market is better, but to me, that doesn't preclude at-market deals if everything works out numerically.

 Yeah that made me ill to read. 

@Dustin Beam Sorry man, I didn't mean to imply that you hadn't done any of those things. I don't know, or care, and I wasn't speculating. I was giving examples of how everything that "happens to" someone is either no one's fault, or their own. 

There is no "point of no return" for an eviction. You can have all their stuff sitting on the curb and then sign a new lease and they can move it all back in. You were obviously asking if you should start the process. The end of the process is 14-60 days away, depending on your state's laws. By the time you get there, you'll know more.

And I actually made good supplemental income in college from sitting at poker tables, but that is a whole other story.

Some of these posts are shocking in their brutality. It is obvious that the eviction process starts early and that a notice needs to be posted, but its also obvious that the OP is a new landlord and is trying to get a frame of reference. 

@Dustin Beam Every problem that you will ever have as a Landlord is your fault. If an AC unit goes out, you should have the cash reserve to fix it. If the property isn't cashflowing well, you need to raise rent or cut expenses.

Don't act surprised or blame the post office for being incompetent. If the post office doesn't forward mail, then you should have contacted them sooner, or filled out the appropriate form, or verified the forwarding address.

Everything that happens badly could have been avoided, and your job is to learn from your mistake so that it doesn't happen next time.

In this situation with this tenant, the prudent course of action is to both start the eviction process and try to figure out what is going on. Those things are not mutually exclusive.

As others have said, its very unlikely that she forgot or decided not to pay if she's been there for a long time. Its far more likely that she sent her rent check to the same place she's always sent it. She may have even prepaid the rent before going on vacation and the previous owner forgot or "forgot." 

But that doesn't matter as far as you're concerned. Start the eviction process and start your investigation if you want. Even if its just a big misunderstanding, you will solidify your seriousness in the minds of the tenants who see the rent demand and they will be less likely to try to push you around in the future. And from what I can tell of your post, it sounds like you will lean toward being a pushover, so it will benefit you to have a hardliner first impression.

I fundamentally disagree with the posters who are suggesting that you treat your tenants like inhuman cash machines. Especially I find it a little sickening to suggest that you can abuse them because there is little risk they will challenge you.

The right thing is usually obvious, but we muddy the waters by overthinking. You have to start the eviction process because you are running a business, not a charity, but you don't have to charge the full $50/day (which by the way is almost certainly illegal, regardless of what the rental agreement says) and I would probably offer some grace being that you're the brand new landlord.

My 2 cents!

 You seem to equate budgeting with not going to Starbucks. Why can't you just put Starbucks in your budget, since it literally makes you happy?

More importantly, are you truly suggesting that budgeting is not a good use of your time? Your budget is your financial plan. Without a plan, you are taking a passive role in your own life. Does that lead to more "memorable life experiences" or less?

@Jonatan Barbera thanks for the reply. I was hoping I would hear from someone with a perspective of the downside. 

Something I don't understand is where people see downsides to a property like this and so I fee like my perspective is skewed. Here's my thinking:

• Cashflow: Our mortgage/taxes/insurance will be around $1100/mo. Rent on the other side will be $900-950. We have cash reserves and we'll be $700/mo positive compared with paying $900/mo rent ourselves, which is what we're doing now. If we need to move out, we will be cashflowing the property well above expenses
• Value: I do think $165k is a lot, but the rent appears to justify it. What causes someone to become a motivated buyer? What would keep me from just sitting on the property if/when the market turns down? Why do you think I'm overpaying? Not arguing, genuinely interested.