All Forum Posts by: Rob Wells

Hey Brian: Feel for you on your situation. I see it all the time in my office and we have to coach landlords like yourself out of sticky situations that you are in. First thing is First and insuring that you are meeting your obligations under the lease as a landlord and minimal Habitability requirements of your state for your unit. The A/C deal as to temperature in the unit is probably a Habitability issue so if you need to do a quick fix and get some window units to cure the problem do that. If you can get insulation in the home without having to displace the tenants do that. You can work on long term solutions after dealing with your problems tenants. You do the quick fixes to comply with your state Habitability laws to make the unit safe under the law and your obligations as a landlord in your lease; not to please your tenants. The second deal you are going to have to deal with is your tenants and their compliance with the lease. This is where you need to consider is it worth dealing with your tenants on a long term basis. Sounds like to me you are living out a nightmare with tenant and mama and the whole family bugging you on this deal and you got sucked into the drama. You should sit down with a good landlord attorney that knows your area to see what’s your options are in getting out of the lease. My favorite deal is cash for keys. At least where I’m at in CA, it takes about 60 days or so to complete an eviction from end to end so it may make sense to have an attorney draft an addendum to for you all to cancel the lease early and walk away. Look I see the posts on here about how you should have done such and such and I get you were trying to be a straight up guy and care. See it all the time and folks take advantage. The bottom line is you can be compassionate about your land lording practice; but you have to be firm and stick up for yourself and your business and not let folks take you to the cleaners. Don’t be afraid of enforcing your lease. Throwing out this resource to you as I’m a recovering “nice guy” this may hit home for you. Check out “No More Mr. Nice Guy by Dr Robert Glover” That book has changed how I deal with everything personally and in business. Simple moral of the book you can’t please everyone and you need to stick up for yourself. Just one last tip, when you talk to a lawyer, keep things to the point and make the situation easy to follow; many lawyers will be happy to bill you $300-$400 bucks an hour to hear how tenants mama called you up 5 times and how that made you feel as they are billing in six minutes intervals. Also find yourself a good handy man to put those blinds up for you unless you like that type of thing. Hope that helps Rob

Hi Guys

I wanted to run this idea of a house hack on the forum as I think it’s a no-brainer idea but my wife thinks I am crazy and opposed to moving and living with folks.

Here is my situation. I currently rent a 3/1 condo for $1,450.00 month and I rent a private office from a friend for my practice for $500.00. Total rent paid each month is $1,950.00. Condo rental is on a 1 year lease expiring 10/31/18, the office rental is month to month. I pay all utilities at the condo except water as it's covered in the HOA. I pay no utilities at the office.

Here is the proposed house hack. I have the opportunity to rent a 3/2 house from my immediate family member. The home is about 1800 sq ft with a huge undivided living room (about 500 sq ft) . The master bedroom is completely on the other side of the house to a point where I could sell it as its private suit and such.

The proposed hack would be this, family member is going to rent the property for $1,500.00, I can put in whatever lease term I want 1,2 even 3 years. I am looking at locking up the deal for at least 2 years. The going rate for rooms in my area is about $600.00 to $1,000.00 a month.

The hack would be I would market the rooms with all utilities paid and would shoot for the following numbers on the rooms. Charge $950.00 for the master suite, and $850.00 for the 2nd bedroom. Me and wife would stay in the 3rd bedroom. Target audience would be the medical professionals and or within the area; I am surrounded by two hospitals within a ½ mile radius of the property and I have two colleges within the city. I pretty confident I could get a professional to be house hack mates with.

Here is the additional twist, I would move part of my office into the living room of the house. I would be partitioning about 150 to 200 sq feet of the living room for my office, to do admin work, do the lawyer thing and draft documents and to store paperwork. I would be meeting my clients and have my mailing address at a really good family friend’s real estate brokerage office were I used to have my office about a 2 minute drive from the property. I am in the works now of attempting to negotiate a flat rate where I can use their conference room for client meetings. I am attempting to keep costs to about $200-300 a month max for this part.

The idea of this monster hack would be not only to reduce my $1,450.00 nut to live in a condo, where I probably spend only 1/3 of my time in (since I’m at work), I am also looking at attempting to deducting a bulk of the necessary utilities I just pay for with after tax dollars since my businesses (the law office) and the renting out the rooms will generate these expenses.

Here are my Anticipated Numbers

Rental Income

Room 1 $950.00

Room 2 $850.00

Room 3 $0.00

Gross Rent 1,800.00

Expenses

Rent $1,500.00

Electric and Gas: $300.00

Trash: $60.00

Internet $80.00

Alarm $25.00

Sling Tv: $35.00

Water: $100.00

Insurance: $50* (going to need to investigate if I need to obtain landlords policy or endorsement on current policy, projected cost of insurance)

Total Monthly Expense: $2,050.00

Gross Rent minus Expenses: -$350.00. Add additional rent for conference room $300.00 So total monthly nut $650.00

Prior Base Rent paying $2,050.00-$350.00= Savings of $1,700.00 per month x 12= $20,400.00 savings.

Only issue I am having is the Wife is diabolically opposed to 1) moving in to this property 2) does not want to live with other people. She has put on the table that she would be willing to allow me to rent out the 3rd bedroom and stay in the condo we are in but the whole point of this is to get our overhead down to as little as possible. I’ll run numbers here if I did the condo and rent out the home.

Rental Income

Room 1 $950.00

Room 2 $850.00

Room 3 $750.00

Gross Rent 2,550.00

Expenses

Rent $1,500.00

Electric and Gas: $200.00

Water: $100.00

Trash: $60.00

Internet $80.00

Insurance: $50*

Gross Home Expense: $1,900.00

Gross Rent minus Expenses: $650.00

Condo Expense:

Rent $1,450.00

Electric and Gas: $100.00

Trash: $30.00

Internet: $40.00

Alarm: $25.00

Tv: $35.00

Insurance: $14.00

Total Condo Expense: $1,694.00

Total Rent Minus Expenses: $1,044.00

Note: The numbers do not reflect vacancy, repairs and reserves. I would probably factor in about these items at about 15% or $382.50 per month on the gross rent if I was not living at the home. Also if I rented all the rooms, I probably would not have my office at the house so I would probably be paying an additional $500.00 in rent for office space.

Any thoughts or comments, let me know if you have done this before. BTW, I am looking into a 1-4 unit property but out where I am at prices are way out of line for me to purchase something. Duplexes that need like 20K worth of work in C- areas are going for $400K+. After I stabilize my home situation, I am looking at going into cash flow markets like in the mid-west and the south to get out of Cali. For basically no money down and stabilizing my home situation, I feel that this is a really smart move as I am controlling my housing situation and the family member that is allowing me to do this really has our best interest at heart. The house was just sitting empty for a year so to me it’s a win win all the way around.

Hello everyone,

My name is Rob and I am looking to start my investment journey. I am doing research to determine my starting point start for buying muti-family homes for long term for cash flow and one particular spot I was looking into was Indianapolis. My wife and I were previously down in Indy last year and were attracted to the prospect of investing here. 

I did notice that in my search for 2-4 units properties in the area there are a lot of properties that are under 150K. I have also looked at the rents as well and it appears that many properties will meet the 1% rule. That being said, I do have concerns given the other metro areas I have been looking at seem to be more pricey compared to rents. I am curious as to the rental market condition in Indy such as if homes are sitting vacant for months at a time, the rental market is extremely competitive to attract tenants and or if the rents are extremely flat. I have been looking at markets where the median rent is between $600-1000 a month and it just seems too good to be true with the prices things appear to be selling for. 

I hope to network with other BP team members in the area or RE investors that are currently investing in Indianapolis.I want to build a team, starting with a real estate agent, property manager and contractor. Please let me know if you have any recommendations and thank you in advance for your help. 

Hi Mary:

It depends on the county where your property is at. As a general rule, the closer your property is to a major urban center such as San Francisco, Los Angeles, San Diego etc) its going to take longer to perform an eviction due to local eviction controls and the county sheriff to perform the eviction. 

In more conservative counties where I personally practice in, where there are no local eviction restrictions, the completion time for an eviction is about 5-6 weeks from issuing the non-payment notice to having the county sheriff come out and do the eviction.

As I tell all my clients however the eviction landscape is quickly changing due to the lack of housing units statewide. Judges are now more than ever looking to make sure Landlords comply with state and local law. One little mistake and you case is thrown out. 

Tenants are also fighting the most routine evictions now with stall tactics such as demanding jury trials for example previously only seen in major metro courts like in San Francisco in order to gain leverage and time in our courts now. The whole goal of all this these tactics is to drive the costs of doing an eviction up to force landlords to settle due to the facts that most tenants have nothing to lose with tying up your property and making you spend more money. 

There is even a bill in the state assembly now (AB Bill 2343, See https://leginfo.legislature.ca.gov/faces/billTextC...) that is proposing that all the eviction time frames be extended. The major changes would be extending the time to pay rent in a termination notice from 3 to 10 days and extending the deadline to answer court complaints for eviction from 5 to 14 days. 

Bottom line is each eviction you have in California will vary and be different due to the current political environment we are in and also which county you are in. 

@ Greg H., I am not familiar with the particular type of deeds available in Texas. However if Texas has a deed such as joint tenancy deed  or transfer on death deeds as we have out here in California, the property as a matter of law would transfer to the remaining owners listed on the deed on the death of the deceased owner. 

Title does matter as the deeds could be titled in ways that under state law would not need court approval or intervention. For example if title was to a trustee of husband's trust; in that case, the property would be subject to the terms of the trust and be administered outside of probate in most cases.  

Fred Heller is right in that an estate attorney needs to review deal for Widow as we don't know how things are titled, is there a trust involved, is there a will and or if there is going to be fight over Husband's estate from family or anyone else. For Andrew, he could be waiting a while to get this property if there are any complications with Husband's estate. In any case where you buy property from an estate, you have to know if you are dealing with the one with legal authority to act. This can be tricky sometimes based on the circumstances.

The bottom line is the Widow may have unmarketable title to the property until court action is taken such as opening a probate. The title company will usually tell you this and then send you off to find an attorney to figure things out. 

Hi Andrew:

Your best bet is to have the title company run a preliminary title report to determine who the property owner is and how title is held. If the property is deeded in a way that title pass automatically to the widow, then the title company can most likely prepare the documents.

If however the property is not titled in a way that title passes to the widow automatically, the widow may need to initiate probate proceedings for the deceased husband. The underwriting department of the title company will let you know what you may have to do to complete your sale as if a probate proceeding is required. The title company will not issue you title insurance until the transaction complies with the law as they will be on the hook to make title right if they improperly close on your sale.

In your situation depending on Texas probate law, the Widow may have to petition the local probate court to be appointed as her husband's legal representative to complete your transaction. In many states including Texas, depending on the value of the husband's estate, there may be expedite processes to either get court orders that the property you want to purchase belongs to the Widow or to get the Widow Court authority to complete your transaction. In some cases a probate may not be required, and the Widow can execute affidavits indicating the estate is of small value and she is the lawful heir to her husband's estate to deal with the property. 
 

Your best bet is to find out what the title company says and if they tell you a probate is necessary you can work with the Widow with getting her to start the probate process and be the first person in line to get your deal completed. I hope this helps. 

Hi BP San Antonio,

I am looking to find some awesome property managers that I can take out lunch on my upcoming trip to San Antonio. I wanted to meet with property managers in the area since I am new investor to the area and looking for some key insights into the rental market such as rents, days on market, etc. of some neighborhoods I have been following online. 

I've been following San Antonio as my wife's family is from the area, it appears to be a strong rental market, and the costs of entry into the market are more reasonable than my home market in the San Francisco Bay Area. 

If you all have any suggestions or interested in  meeting up, please let me know so we can set up a time to meet. I'll be in town from April 23-27.

Thanks in advance,

Rob