All Forum Posts by: Ralph Hunter

Though I would not recommend installing hardwood floors in a rental, if they are already there, I would hate to see you cover them up. IMO, I would rather have hardwood with some "character" than laminate. 

The durability of your hardwood floors are going to depend on they type of finish you use. It is really worth spending the extra for a high quality diamond hard finish. You may need to put on several coats and wait the required time between coats in order to get it to harden - but in the end, you cannot beat the beauty of real hardwood. 

I believe that you have the right idea. If you want to be able to get the highest possible market rent, you want the unit in the best condition. But generally new tenants want to find a spot before they need to move out of wherever they are renting. 

If you want to reduce the vacancy time, shoot for advertising on the 15th with a move in on the first. If your improvements are simple like painting or a few touch-ups, prospective tenants will be able to see past it. 

You could wholesale the deal to another investor. But that would mean that you would need to put the property under contract, find a buyer and complete a double close. Perhaps you could look into a bird dog fee. You present the deal to a couple of investors and if they go for it they throw you a couple of hundred dollars for your trouble. 

Ha ha ha! Great idea @Dan H.. I used that on my cat. Totally forgot about it. Works great. Cats abhor water. 

I would suggest the simple matter of talking with the cat owner. Perhaps she does not know that the cat is causing trouble. Simply and kindly making her aware of the problem maybe a solution all on its own. And if the suggestion is not taking. A live trap isn't such a bad idea either. Just shake it up a bit. Piss the cat off and then set it close to a dog. Should make the house pretty scary. Doubt he or she will come back. LOL 

I do not think I would recommend that approach. It may be considered an invasion of privacy. As long as no laws are broken, having people coming and going from the house is not a reason to think that the tenants are bad. There are a lot of loud tenants that pay their rent on time and do not damage the units.

Just follow the suggestions for completing your due diligence and I think you will be just fine. 

Sorry for the delay. To save space, I will refer you to an article that I have written on the subject here within BP. Here is the link: 

https://www.biggerpockets.com/blogs/7172/blog_posts/46252-what-is-the-50-rule

Let me know if you have any other questions. I will do my best to answer them. 

Another great option to consider is using a self-directed retirement account (such as a IRA, Roth IRA and the previously mentioned Solo 401(k)) to invest in real estate. Income and gains from these investments roll back into the retirement account. These are great ways to build wealth if you do not need the rental income right now to survive. Taxes are minimized or even deferred.

You are buying this property "buyer beware" meaning that it is up to you to verify anything that is told you by the owner or his or her agent. That is part of your due diligence. Here is what you could do to help limit your risk.

• Determine the market rent for each unit. Work with your agent to figure out if the rent that is being charged is the market rent.
• Have the owner supply proof of regular payments. This can be done through bank deposits or rental receipt stubs.
• Talk to each tenant to find out how long they have rented the unit and if they plan on staying.
• Make sure that each tenant realizes that after closing they will be required to sign a lease agreement. 

If you complete those four steps, it will not matter if the owner was lying, you will have enough information to make a good decision on your own. 

Since PM companies do not get paid if there are no tenants in the unit, they will already be highly motivated to get a tenant in your unit. 

Vacancy is related to several factors. Advertising and tenant approval are within the PM control. Forcing a lease by X days could lower their tenant qualification standards just to get a tenant in your unit. Personally, I would rather my PM wait 30 days to find a high quality and financially responsible tenant than rent it in 7 days to a loser. 

But there are factors that are largely out of the control of the PM. That could include damage to the unit, which takes time to repair. Locally high vacancy rates. An owner set rent that is above market. Etc. It seems unfair to penalize the PM for factors out of their control.

That is why I think your pre-qualification strategy would be more reliable than a penalty clause in a contract. 

If an investment property cannot cash flow, it is a bad investment no matter how cheap you get it. If a property cannot meet the 50% rule, then I recommend you pass on it and keep looking. 

In addition, if your current income, both from your job and your rentals, does not meet minimum lending guidelines, you need to consider your risk tolerance. If you spread yourself so thin that you do not have any reserves or excess cash flow, you are risking not only all of your investment properties but also your personal residence as well. A 3 month vacancy or a replacement furnace could create such a financial hardship that you may not be able to get out from underneath. 

IMO, it is better to take real estate investment slow and steady than risk more than you can lose.