All Forum Posts by: Rhonda Wilson

You can make money on such a deal, but you have to tailor your strategy to match the reality. I would only buy in an area like that if the cap rate were way above the interest rate on the loan. For example, if I can borrow money at 5% and buy property at an 8% cap rate, then I am making money on the bank's money.  In a stagnant area, capital appreciation is not a given, as it is in many cities. Another way to make money is by building equity by improving the properties. On this, I advise that you be careful in your spending. It would be easy to spend more in renovations than what the additional rent would justify. I personally like a 5-year or less payback on investments on improvements. One of the best ways to do that is to put in some sweat equity.

I would not. My response would be to fall back on the rental agreement and state what you are and are not responsible for. Specifically, I assume that you have agreed to provide an A/C unit. Therefore, you are also responsible to repair it. You have not agreed to provide electricity. Others have pointed out that you could set a bad precedent. Yes, some tenants will ask for one thing after another. If they think that you are squishy, they will push and push until you say no. I figure that if they get angry and leave, I'm better off as I am likely to get a reasonable tenant.