All Forum Posts by: Ricardo Murph II

@Ricardo Murph IIob

Thank you all for your input. Your point of views have given me much to think about. I do not know if the dog is friendly. He puts it in the cage when ever a stranger is in the house. The all three dogs bark a lot. This could be one of the reasons why there is high turnover in the upper unit. I think in a single family house it is easier to deal with dogs of any breed. The compassionate side of me would like him to stay if he can pay close to market rent since he has family next door. The business side agrees with many of you and says he needs to go for now so I can improve both units and get market rent.

@Brian Garlington @Nathan G. I actually got and estoppel agreement signed after learning about in on BP. That is why I know the breeds. My issue came because I didn't seriously pursue insurance till closing. I only had general quotes to run my numbers. I will just ask him to vacate so I renovate. Pretty straight forward since he knows the place needs work. Does anyone have a vacate end of month to month lease document that you could send me or do I need to go to a lawyer?

@Brian Garlington @Thomas S. @Benjamin Small thank you all for replying. Sounds like I need to get him out and move on. His unit needs work too. I can just buy two of everything and maybe get some deals. To get him out I need to give him 30 days notice beginning of September to be out by the end of September? Is filing for evection necessary?

Just closed on a Duplex in Cleveland Ohio. When setting up insurance with a broker the company with the best rates does no allow for pitbulls. Well my tenant has a pit and two chihuahuas. He is on month to month paying undermarket rent. He has been there for 4 years. The upstairs unit is vacant. I was hoping to keep him around until I get the upstairs rented which could take a couple months since it needs some work. I was then going to put him on a lease if he wanted to pay market rent and pet rent. Or allow him to move out. The insurance broker say the dog has to be out in 30 days. The insurance premium for the plan that doesn't have any dog exclusions is an extra $1000 per year. What is the best way to approach this? I am not ready for a new lease where I raise rent $150 because the tenant might move and leave me 100% vacant. Should I look for more insurance and not share so much info this time? Should I just ask him for get rid of his dog without taking about a new lease? Should I just bring a new lease to him with market rent that includes no pitbulls and $25 per month pet fee per little dog?

@Erin Elam Those are both great areas.  I am focusing my marketing on other cities at this time.  If I come across something in those areas I will let you know.  Shoot me a PM and let me know your criteria. 

Thank you all for your replies.  @Nick Ferguson thank you for sharing your turnover strategies.  

@Jason D.  I now agree with everyone else that is saying I am over thinking this.  I am getting stuck in the definition not the intent of the vacancy allowance. 

@Eddie Werner I don't really want to do pets for this property since it is a duplex, but the current tenant downstairs (on a month to month) has 2 little dogs and a pitbull.  Once I get the top unit rehabbed and rented I was going to figure out how to get that pet rent from the downstairs tenant.  The downstairs tenant also currently has exclusive access to the 2 car garage.  All of this and he is paying below market rent. I will cross that bridge latter I guess. 

@Caleb Heimsoth thank you for the reply.  I guess I need to focus now on providing that good clean housing. 

@Account Closed thank you for your replies.  I have a target of $200 per door cashflow and with extra 4% a month puts me a little under. I am an analyzer so I think about these things a lot. 

I am getting ready to close on my first rental this week in the Cleveland area. I have run the numbers and it makes sense for my goals. I have been using the BP calculator using real numbers and rules of thumb. The couple rules of thumb that have bothered me are vacancy and property management (PM).

The vacancy rule of thumb is 1 month of vacancy per year. It takes time to turn a unit over and find a new tenant. This works out to 8%/ month or 8.33%/ month for those who like more significant digits.

What has bothered me is that with a 12 month lease it is the 13th month that the unit is vacant. I would need 11 month leases to get the 8% vacancy. I am sure to make the math simple and to be conservative teachers use this 8% number.

With vacancy every 13 months I must look at a longer time horizon. 3 or 5 years. In three years there will be 2 months of vacancy (5.6%) and in 5 years three will be 4 months of vacancy (6.7%). Is 8% a terrible number for vacancy? No, just on the high side which may not make sense for some markets. Turnover every lease also means to me the property is in a C-D  class area and/or there is poor management of the property. I don't see a reason to over estimate this. 

The other rule of thumb that bothers me is property management being 10%. There are some low cost online PM companies and flat fee structures out there. It does seem like the majority fall into the 8-10% range locally. I was talking to a co-worker that just got his second property and he told me that he pays 8%/month and 1 month rent for a new tenant placement

These means that every vacancy represents TWO MONTHS of lost rent! One month due to time and one month due to fees. Where is that in the BP calculators? Using the percentages from above I think I need to add 5.6% to 6.7% to property management in my calculations. This should be added to PM line because if I self-manage this fee goes away but vacancy does not. This makes it 16% monthly for property management. This to me represents the truer cost of theoretical property management.

In summary the previously numbers I used for PM and vacancy was 10% and 8% totaling 18%. Now I think I should use 16% PM and 6% vacancy totaling 22%. I may also have to re-think my profit per door target using these higher numbers.

Does this make sense or am I over thinking this? Are you using different numbers?