All Forum Posts by: Patrick M.

@Juan Rango one of the most frustrating times for my wife and I were when we hunted for a rental and we kept bidding on duplexes. We were consistently out bid on them by cash heavy retirees and investors. Our mentor would always say "It happens for a reason." Drove...me...nuts! every time I heard it! I wanted that duplex or triplex!

One year later a 5 unit fell into our lap and if I go back over the numbers we would have been bleeding on those duplexes or tri's. The 5 cashed great and gets better with each vacancy!

It all happens for a reason

@Juan Rango More people should appreciate what you have come to realize- that those of us who "own" rental properties (not syndicates or lenders) do not collect passive income. We work for it and while each year it becomes easier it can be demanding.

With that being said- don't let the fear of a bad tenant scare you off, just hedge against it. There are several ways- from strict vetting to investing in 3+ unit properties so no one tenant throws you off.

I am a W-2 professional and I do not benefit from many of the tax breaks that others on here benefit from because I am under the AMT- sure I can reduce my taxable income from the properties but I can't utilize a loss to offset my overall income. I imagine from a financial planners point of view this may not look good. (Sure down the line I can utilize these losses as carry forwards)

But one thing we do benefit from is having a cushion of from our jobs. Personally, having tenants I cannot imagine living with them on a house hack- that is your call. I would find it to be an absolute nightmare. But that is not to say that you can't do it.

Also- consider that this might not be the time for you to do this. We all have our timing for these things and it may be that you will be in a better position to take on a 4 unit 5 years from now and you will gladly pay a management company to run it for you.

But please believe this- It is a whole hell of a lot of fun more than it is a bother. And each time you are able to give yourself a raise by cutting expenses or rehabbing and or raising rents is very rewarding.

I use Cozy.co and am very happy with it

But I thank you @Justin Yung for your honesty and empathy at a time when you could just as easily make a sales pitch to win over customers. I am hopeful that your candid response will. Thank you

I would check out Cozy's new offering- It does not sound like it checks all of your boxes, but knowing there commitment to expanding the resources they can market to Landlords I would be surprised if it didn't in a year.

As someone who utilizes Excel and OneNote- I am a big fan, but I would consider springing for Adobe Acrobat- you will have an unlimited cloud drive, be able to scan any thing from your phone and organize and pdf all of your documents/mailings etc.

We are halfway through a complete gutting and renovation of a 4plex. In the rented downstairs apartments we replaced the baseboard heat with HVAC and we were able to place the 2 furnaces in the ceiling area between the 2 floors. I still pay for the gas for the heat but the tenants pay the electric/AC.

Now, we have the 2nd floor apartments partially framed out. We are going to put in central AC and we were going to run radiators throughout the apartments. This is a very old, brick building- new roof, all windows replaced and it will be completely insulated and air-tight. The 2 apartments are 800 sq ft and 915 square ft. We have the old boiler in the basement which used to run all 4 apartments- so it is overkill but we would still use it for the time being. There is no way for me to place furnaces for the 2nd fl apartments,

So- today as we contemplated running the radiators we gave some thought to using an electric heat pump instead. Especially since we will already have the ducts for the AC. I have a couple of concerns- the first of which is that I will not be able to have a dual fuel system for when the temps really drop, so I understand it will draw a lot of electricity at those times.

This will also force my tenants to pay their own heat which isn't a game changer- but is not the norm in my community. They will have complete control of their thermostats and they will be a higher priced rental. But it does add to my concern about how much electricity the unit may use. (The tenants would still have gas for their stoves.)

Does anyone have any experience or insights into fuel pump usage in this region and what kind of utility cost it may incur?

I concur with a lot of what @Mike H. has said. And especially the eviction issue. I know that it was raised with Cozy and they advised doing exactly what Mike recommends- shut off the tenants account. Problem solved.

I enjoy Cozy and I feel it is a win/win. It is free for all unless the tenant uses a credit card. And if the tenant is in a bind and has to use a credit card, the fee is still less than the late fee I would charge.

Cozy has many other benefits as well- check them out!

@Sharon B. for my figures the only capital improvements pass on would be ones that directly benefited the residents as a whole: making a parking area, renovating the basement for storage, etc. The rest I would consider maintenance and upkeep regardless of how I claimed them tax-wise (i.e. faucet= maintenance expense, new roof= capital improvement).

I would definitely want to pin down my market rent. I had a mentor to help me at times before I felt comfortable- If you lack this I would suggest contacting a realtor and giving them your business if they can get a higher rent. I am usually very much against this...

I don't know your market- but over the last 3 years where I am, on a whole rents have increased quite a bit. To have had no increase in rent for 3 years and still be at market is surprising for me. That is why I suggest the realtor.

I also don't understand the "don't worry about it if they are nice people, continue to lose money" mentality of some others. It sounds like you are a very conscientious landlord and maintaining and upgrading your property. You deserve to be paid. You are not a charity...

(just had to make sure that url was not www.smallerpockets.)

It is important that you have an accurate market rent forecast for your property- contact a realtor.

I don't know if I am reading this correctly. The property is operating at a loss & the tenant is "soft threatening" you every renewal? I can't speak to that. I also can't speak to not increasing rents 3 years in a row.

For my units I use the (to be phased out on vacancy) rental control ordinance in my town as a guide. That sets a floor or 1.5% or the annual CPI of my area- whichever is higher plus any increase in property taxes. An increase of $25-35 is fine by me. I like this because it is less of an arbitrary number if a tenant were to raise an issue and I always know I could get a bit more at market if they decided it was too much. This does not include any capital improvements.

You have a great annual CPI for LA 2.8% as of last month. If you had maintained this strategy for the last 3 years (2015: 1.4%, 2016: 1.1%) your tenant would have seen nominal increases in his rent all tied to a fixed formula and you would now be poised to increase his rent from roughly $2410 to $2475. You would have $300/yr more than what you are after now and you would not have shell shocked your tenant later.

These are much smaller numbers which a tenant can absorb over 3 years rather than a 1 time 4.25% hike. It is modest but you would have had:

2015: $360/yr more income

2016: $300/yr more income

2017: $780/yr more income

Instead you wish to hike it immediately to $1200/year a gain of $240 less (plus the yearly value of $) And in the tenants mind it is arbitrary and personal.

With that being said I would increase it to market, but thereafter establish a formula that you adhere to. Tenants always have the capacity to impress us with a good deed or good maintenance or maybe just not being complainers- You thank them by renewing their lease, not giving them a rent reduction.

As the CPI demonstrates- every year that we do not increase our rents we are effectively giving our tenants a rent reduction, to the point that your unit is operating at a loss. Or put a more flattering way, you are operating a charity without the accolades.

Best of luck!

I am fully integrated into cozy on all of my new tenants and some of my old. I have used their background check but I prefer a .pdf'ed credit report from the tenant. I have drawn a tenant from their listing. I don't care about receiving the rent payment a couple days later- if I did I would pay the nominal fee to get it sooner.

I love being alerted to the initiation of the rent payment- really that is all I care about. I used to have my rent sent to a UPS box which cost a couple hundred every 18 months. Although my buildings are in the neighboring town the rent was sent to the sorting center 60 miles away and days get tacked on... so here I am from the 1st to the 5th 6th or later going to the UPS store sometimes needlessly. It made it very aggravating for no reason. No longer- and I save on the cost of the box.

I have also witnessed how attentive cozy is to concerns raised by users- great stuff. Thank you cozy!

Reading through it it sounds like a very concerned tenant who is giving your asset far more care then would be expected. A call to the plumber would confirm what they are experiencing. 

They have given you everything at your fingertips to confirm what they are experiencing. If it is true then they have every right to be far more irate then they are. My opinion. If this was happening to me I would withhold my rent.

On a side note- I don't understand why landlords incentivize the destruction of their property. Making a tenant responsible for repair costs will cause them to ignore problems that need attention. All problems start off small- why wouldn't you want these addressed immediately? It will also beg them to hire shoddy handymen. Considering this increases my appreciation for the tenants you have.