All Forum Posts by: Randy E.

@Arreanna Cromartie,

First you have to determine if it's a "rough" neighborhood or a working class neighborhood. Is it a place where people are making very little money and have none left over, or is it a place where there are open air drug deals during the day and cars broken into every night?  There is a difference.

Next, if you decide to buy and manage there, SCREENING is your highest priority.  Do not be in a rush to sign a tenant.  Make sure the tenant you end up signing is as good as you can possibly get.  Screen properly, and you will have very few problems with the tenant.  Screen poorly, and you can have many problems.

Single people don't stay single forever.  Some landlords on BP are very adamant about not allowing this.  OTOH, I agree with @Kyle Lewis that if there aren't any problems, I wouldn't worry about it.  Either love will run its course and he'll disappear after a few months, or love will get serious and they'll eventually move out or sign the lease together.  Or not.  <shrug>

I couldn't imagine being the manager of a 400-unit apartment complex and being worried about the overnight guests of each and every apartment.  Stipulate the "no roommate" clause in your lease, then wait until it becomes  a problem before worrying about it.  Life's too short for me to micro-manage the love life of my tenants.

THIS!  One hundred times over.  And over again.

Some older houses in the south have no insulation in the attic nor walls.  I've used blown insulation for the attic in an older (1930) house and that made a TREMENDOUS difference in the heat efficacy/bill.  It was not even close to $800.  I bought the insulation from Lowes, and at a certain amount they rent you the blower free of charge.  I paid a laborer $40 to go into the attic to spray while I fed the machine from the ground.  I was all-in at less than $300.  But that was about 4 years ago.

The tenant at the time said the house was much more comfortable and the heat bill was lessened by 1/2 to 2/3.  I would have blown insulation in when I bought the house, but I never went up into the attic to see -- the access panel (not door, but yes, panel) in that house is about 18"x20", and I didn't want to struggle with squeezing through.  Now, I make sure every house has insulation in the attic.  Heating costs will be insane without attic insulation.

Regarding the whole house attic fan: I had one installed in a different property that did have adequate insulation.  I had never been in a house that had one before, or at least not to my knowledge.  Once I had one installed in my rental, I have to admit that with that fan on high and at least one window open (preferably at least two, one front and one rear) the house stayed very comfortable through a slight rehab during turnover in the hot and humid southern summer, without using A/C. 

If you decide to install an attic fan, I recommend paying extra for one that is proven to run quiet.  I didn't pay for that feature, and on the highest setting that thing sounds like a plane landing in the hallway.  The lower two settings are not so bad, but the highest setting is unbearable.

sorry.  Wrong Aaron popped up.

Aaron at the appropriate time, notify the tenant you will not renew his lease.  If the tenant is breaking the terms of the lease and that is upsetting you, it's not worth it.  If the tenant is repeatedly argumentative with you, it's not worth it.  If you have a constant fear that the tenant is waiting for the perfect opportunity to file a lawsuit against you, having him as a tenant is not worth it.

If he is on a month-to-month lease, notify him immediately that in 30 (or 60 or 90, whichever is the law in your state) days, his lease is over.  If he has a longer term lease, notify him that you will not renew the lease when it expires.  Then get a new tenant.

Negotiate 2 months rent from the tenants.

Market the house with a 12-month lease, and lease it to new tenants.

When you return to the area in 9 months, stay in an apartment or do some traveling for 3 months.

When the 12-month lease ends, do not renew and move back into your house.

I'm buying a house in Winston-Salem this week and hoping to find a closing attorney that can handle the closing before June 29.  It's a cash deal and should be easy and straightforward.

Any recos for fast and reasonably-priced attorneys?

If you can flip a $1K cash flow for a $4K cash flow, I think that is the move to make. My personal feeling (not saying the the smartest REI move) would be to try to do both. However, if that's simply not possible, then yes, sell now and get the property that will cashflow $4K/month.

Still, do your market research on your current property.  It might be that you should receive $400K instead of $350K.

@Jorge P., a dissenting opinion from a little pockets investor.

Unless you are in danger of drowning financially, I would keep the property and proceed with the reno, even if it goes a little slower than you plan.  

There seems to be the opinion that this offer is a unicorn, some magical improbable thing that will not happen again unless all the stars align property at exactly 3:58am on a specific Thursday in June. My feeling is if one offer comes in at $350 today, three more are waiting in the wings, and in three months you might be receiving $375 offers. Selling quickly at the first sign of dollar signs is something REI ignorant people do when they receive a "We Buy Houses" postcard in the mail. It's not what an experienced RE Investor does.

Instead of rushing to sell (when you don't necessarily need to,) I think you should be conducting some market research.  You bought at $200K three months ago, hoping to reno for $180K and sell for $600K.  Now some guy is offering $350K.  I think it's time to re-evaluate your original assumptions.  Maybe, after a $180K rehab, the property will actually be worth $825K-$900K.  Maybe the area is appreciating at a much higher pace than you originally estimated.

My point is, don't assume the other person is making a mistake by offering you so much so soon after your purchase.  Consider the fact that maybe you made a mistake in your original estimation of how much the property was worth.  Maybe the area is appreciating much quicker than you expected.

I'd be happy to reno and rent.  If the area is appreciating, rents are also appreciating.  You'll make more in rent now, and will be able to sell for even more later.

Of course, if you are drowning financially, maybe you do need to sell now and move on to the next deal.  However, if this is simply a case of spending a little less on personal lifestyle choices now during a cash poor period while you complete a couple of rehabs, I say absorb the lifestyle pain now and enjoy the profits down the line.  Delayed gratification and all that.

Just my opinion,

Randy