All Forum Posts by: Nik Corbaxhi

@Ken Vogel, you absolutely provide. What if the tenant decides to stay 1 year and at the end of the term they decide to take washer/dryer with them? Just banging around the walls and scratches along are not worth your time. 

Tenants can abuse washers/dryers all they want. That is what they are made for and that is part of the maintenance cost that you have to account for. In all of my properties appliances are all provided by me. If you decide against it, I would guess a lot of good qualified tenants will probably walk away once you tell them they have to bring their own washer/dryer. Take the hit of the cost and use it as an advertising tool to say brand new washer/dryer in the unit. 

@Nicholas Mann, great to hear that you are taking this seriously. 2-3% COC is absolutely not worth your time. You have to do better than that.

A couple more things to consider though.

1. Find a good real estate agent in the area and start building a relationship. Work with him/her to learn about the market, what properties are yielding better returns, and what are the "hot" areas in the town where investors are enjoying good yields. 

2. Once you know your market and the type of property you want, then start crunching the numbers. A good real estate agent should be able to provide you with comps of similar homes in the area. There are a lot of good posts here if you search for how to calculate ROI and COC including PITI + Maintenance + vacancies.

3. Set a goal for your return. DEFINITELY NOT 2-3%. how about as a first time property 8-10% after all calculations in number 2? This is very judgmental and I am sure other people here will say 8-10 is too high or too low. So you make your own rules on this one, but what is for sure is that 2-3% is absolutely not worth your time. Educate yourself a bit on the 1% rule if you are not familiar with it. Although it does not always stand, it gives you an idea of what the purchase price should be based on expected monthly rent. 

4. keep building your network of investors in the area. It could be as simple as asking your real estate agent getting you in touch with other people that are doing the same. Usually people are very open to sharing their stories and helping you understand how they got to where they are, similar to what they are doing here but better, over a meal or a beer or two. :)

Good luck and go out there and network. The wealth of knowledge is there, you just need to go look for it. 

@Greg Scott, I am definitely investing in the wrong states then. :) Although I am still to deal with an eviction, it could be a 3-6 month process in CT with a few thousand dollars tied to it. 

@Thomas Hartman, & @Nicholas Mann, if you guys have no experience with RE investing, I would strongly urge you to start locally somewhere, or near enough where you can get hands on with the process. You need to be well informed and get some experience in order to make your first remote deal work. What you read in the books is informative, but does not replace experience, and each one of the people here can have a different flavor of experience when it comes to reality. 

Not to crush your dreams, but you need to first learn the ins and outs of it before you can actually invest remotely and be able to make it work. Would love to hear other investors here as to what they have to say. 

Good Luck!

@Helen Mulu, why are you paying for internet, get that disconnected automatically. 

Seek professional help. I would start with local law enforcement. While they can't kick them out, they can point you on the right direction as far as what process to follow to figure out who they are and how to evict them. 

@Chris Wolfe, key words, "without permits". Depending on where you are, this is not going to fly until you make those units legitimate, meaning get approval from the city/town hall that you are good to go. not only you cannot get an address, but I would be very cautious of renting them until you have approval in hand. If anything was to go wrong in any of those units and someone gets hurt, you are completely exposed from a legal perspective. I would ask around to make sure you are not positioning yourself to a major lawsuit. 

@Casey Dimascio, this also highly depends on the condition of your property. You more or less know what condition the house is in and if any large ticket items (roof, furnace, remodeling) are coming your way. If those are in a pretty good state, I would say 3 months your rent should suffice. I totally agree with Wesley above that the more properties you have, the more reserves you will have, and easier it is to maintain as you can always use each of those reserves wherever needed. I have 4 properties and have 3 months or reserves in each. whenever I have a big item coming up (had to replace a hot water boiler in one of them for a cost of 8k), I start anticipating in advance. 

Hope this helps. 

Based on the responses, there are 2 factors that seem to play a role in everyone's decisions:

1. Investment portfolio - whoever is established and has enough income streams, is definitely taking advantage of the 401k, maxing it out. 

2. Age - if you are close to retirement, it makes more sense to start thinking about how you cash out rather than put cash away for retirement. 

Similar to @Brett B., my 401k just gets the minimum to get the match. the rest of the income gets saved for the next property. Once I have enough income from the properties to support the next purchase, then I would switch to the same model as @Erik W..

@Mauricio A. do this the right way. you pointed it in one of your options. Convert the 4th bedroom into a legal bedroom and get a permit in your city/town to do so. then you can advertise the property as a legal 4 bedroom instead of 3. A couple of issues that I see with your current situation.

1. the current wire is tripping the breaker. Was this wire there and was it done correctly or did the tenant add it? if the tenants added it, that is a no no. 

2. I would not add a new line (even with a licensed electrician) because your house is registered as a 3 bedroom. If something was to go wrong (house set on fire because of an electrical connection), guess who is on the hook for that? The moment the insurance finds out that it was used as a bedroom, you will be on your own. Not going to go in the worst case scenario here but you get the picture. 

3. if the current tenants are using it as a 4th bedroom, nothing much you can do about that, as long as you don't advertise it as such and it is only listed as a 3 bedroom in your lease. 

I know, it sucks to know that they are using the 4th bedroom and you could be charging a higher rate because of it. If you truly think it is worth the potential tax increase + labor + permit fees, then just go ahead and convert the 4th bedroom legally by obtaining a permit and eventually a certificate of occupancy once it is done. 

As for the payment, just ask for more money (because you know they are using that 4th bedroom) but still advertise/list on lease as a 3 bedroom. Maybe you can meet them halfway until you finalize the legal 4th bedroom. Instead of raising rent x, meet them in the middle. If they dont agree, you have an option to keep them at current rate or evict them.

Good Luck!

@Greg Scott, eviction comes with a cost and wasted time=money associated with it. I don't see how eviction as the best option here, especially if she has said that she is willing to move out if that is what Christian wishes. 

Christian - I think you should make a deal with her and put it in writing that if she does not make the payment by the 14th, she will have until the end of the month to move out. Make sure she signs it and work with her to get her out at the end of the month. Depending on how cooperative she is, you can even offer to pay some of her moving costs to help her get situated somewhere else. Don't offer "Cash for keys" because seems like she is willing to vacate on her own.

Good luck.