All Forum Posts by: Neal Little

I picked up a rental from a family member, used my own cash to fix and then rent...I am now refinancing....though I am also considering selling after the cash back refi...any tax implications I should consider?

Legally heat is necessary, AC not.

 I am with Rob Lane...take care of the customer.  Though in this case, you said you manage, not own, the property.  This may mean the customer is not the tenant but the owner.

If I am the owner, and not a slum lord, I fix the heat to as good or better.

If I am a slum lord owner I tell the property manager to not spend any money I don't legally have to spend, telling the tenants to buy a sweater...it's LA after all.

So you see my friend, the answer to your question really, is who are you?

We just finished the refi on our primary home, that is also a rental unit with garage apartment and basement apartment essentialy paying our mortgage.  We also got another rental unit from a family member who couldn't sell, so we took it over and invested some cash to get it rentable, which it now is leased.  We were put on the deed in August, our broker said it had to season 6 mos before we could cash back refi, meaning sometime in January.

In the meantime I ran across what I see as a great deal, but putting 25% in for the downpayment would wipe out our current cash reserves, which I learned the hard way is a no no, so I am adamant on that.

Filled out paperwork online for a HML that wanted 4 points to do the loan, at 11% for 12 mos. I put in the paperwork we have 10% available, plus we would be able to do the rehab out of pocket (another 10k or so. Cosmetic only.) But they also said they required 25% down...If I had the 25% I would go conventional. It is a buy and hold...

Growing pains, I know. I guess I was surprised at the HML as I thought this was exactly the kinds of deals they should be used on. More or less a bridge loan to purchase, then to season until the refi / cash back could be done. Am I missing something?

So I have an issue to discuss regarding sharing info on deals online.  Since the whole basis of this practice is essentially the 'hunt' for good deals, does anyone else worry about how much info to share? 

 Has anyone ever lost a deal because someone swooped in on you? Did you suspect it was due to oversharing?

With these new crowdfunding lenders, how restricted or regulated are they regarding info sharing?  I would hate to lose a deal while looking for funding because someone heard about the deal and back doored me.

I have had a couple examples of this in my experience, and wonder if anyone else has a story to share.

One example is I was a remodeling contractor in my youth.  I bid on a rehab that included other trades.  The customer wanted detailed bids as to my subs, my youth and inexperience allowed me to proudly share who they were and their experience.  Next thing I knew, the customer hired them all independently using my bid numbers and cut me out of the deal.

Another example was I was looking at a property I really liked, decided to offer.  My wife and I at the time were just starting out and were looking for funding options.  One of the people we were sent to for funding instead bought the property themselves, saying we didn't qualify for a loan anyway.

Both of these experiences has made me a little paranoid about sharing specific info too soon, and in fact I was a little nervous about Bigger Pockets membership having my location posted in my profile.  For example if I were sharing about a specific property in my area for feedback, it wouldn't be too hard for someone to figure out the property and swoop my deal.

One crowd funding source has as the first question the address of the deal.  I know that is required info, but how safe do I feel with these new type lenders with my deal?  I mean it could be that they hear about a deal through the application process and cherry pick for a partner investor.

How do I lock up a deal, to protect it from being swooped before I can arrange funding?

Those are the deals I like.  Nice job, good returns, low carrying costs.  I did a couple years ago and kept getting bigger houses, I thought I was supposed to.  The problem came when I was carrying 3k a month on a house I couldn't sell. Never again.  Slow and steady wins the race.  Congratulations.

 I suppose I am cheap too.  Tell you what.  You go Pro and so will I.

I feel like a jerk, but not really.  He had his family up from the coast to escape the hurricane, and his oldest one brought her cat.  Probably the only possible excuse there is.

However, this is a great excersize, it still doesn't excuse any issues that come up as far as damage and smells, etc.

And thanks to JR T. for the advice on changing our lease...in fact had that discussion last night at dinner.  We determined the daily rate has to hurt to be of any value.  So it will say something such as..'If the no pet clause is violated, there will be a non returnable fee of 200.00 for mitigating the hair and aromas, as well as a 50 dollar daily fee until the animal is removed.'  

Otherwise folks would just pay the 200 bucks and keep the pet.

Greg S.  I like cats and surely would not kill anyones pet over money.  Hopefully that part of your comment was an attempt at humor.

Thanks John  I understand that I can't just arbitrarily keep money from a deposit.  What are my other options?

The lease states NO PETS as well as my initial eye to eye interview.  My feeling is that he already intends to break the lease so what does he care if I threaten an eviction?  Although an eviction on a credit report looks bad, it isn't like a bankruptcy.  He may have trouble renting again, but his plan is to buy a lot and build a tiny house.

I suppose the best thing to do is give him a letter stating that NO PETS is in the lease, that he must get rid of the pet immediately or will be charged a daily fee?

Or I could say nothing and just take it up when he moves out and address any damage through the security deposit.

Or I could allow the pet with a non refundable Pet Fee that still allows for damages to be taken from the security deposit, making the Pet Fee a payment for breaking the rules of the lease.

I rented to a guy in Feb.  All of his references checked, had a good local job, was divorced but getting remarried, plus he was a nice guy.  I have three things I emphasize...Rent is due on the first, no pets, no smoking.

For 7 mos. he is Johnny on the spot with rent.  The eighth month we get in a texting battle about a late payment made with a bad check.  He covers all fees and we get back on track.  Month 9 he tells me he will pay on 3rd...thanks for the heads up, he pays.  A week later he says he changed jobs, likely will be breaking the lease two months early to move closer to his new job.  I explain he will still be responsible for any rent I miss until I find a tenant, to give me as much notice as possible so I can advertise.  I am really not too worried, I am in a 1% vacancy market in a very 'Hot' area of town.

As I was leaving the property last night, I see a cat in the window.  WTF?  He knows, we discussed it completely more than once.

What are my BMP options here?

Unfortunately these fixes are the reasons some tenants aren't interested in home ownership.  This is also the reasons Landlords use Property Management companies.  Real Estate is not a 'Passive' business.  There are always decisions to make.

Deciding what kind of investor to be is a challenge we all face.  If this is your one and only, the distance was the same when you bought it as when you have to go maintain it.  If you aren't interested in doing the maintenance, you need to hire someone...either a management company with in house maintenance, or a reliable handyman.

If you think this tenant is being a pain intentionally, you have to make a decision. It could be they just need a lesson in using the appliances.  You could also institute an agreement of x number of calls for the same reasons gets a surcharge...clogged toilets and garbage disposals are caused by improper use.  Learn from this and adjust your lease wording in the future to eliminate or minimize these calls.  Educating the tenant on the proper use would be the first step.