All Forum Posts by: Ryan Spath

@Jenni Lee

Congrats again on taking steps toward your first rental property — that’s a major milestone!

It sounds like you’re doing everything right: you had an inspection, brought in contractors, and now have a clear picture of the property's condition. The issues you've found — especially the original HVAC, leaking plumbing, and outdated electrical — are significant and go beyond typical wear and tear. These aren’t cosmetic fixes; they’re essential systems that affect safety, functionality, and long-term value.

Given the $1,500 plumbing bid and a $16,000 HVAC replacement (plus other minor repairs), asking for a $10,000 price reduction or credit toward closing costs is very reasonable, not greedy. You’re simply trying to make the numbers work based on the property’s current condition — and in what looks to be a softening buyer’s market in Sacramento, you’re in a better position to negotiate.

It’s perfectly okay to communicate that while you're excited, you’re also willing to walk away if the deal doesn’t align financially. Being upfront and professional sets the right tone — and shows that you're serious, not emotional.

Let us know how this one goes for you...

We allowed this once and will never do it again. We no longer renew tenants that are late more than one time in a twelve month period. At the next renewal it may be time to move on a find a tenant that can pay more timely.

@Bill B.

Thanks for your input.

I jumped in and did what I could because we had a similar situation happen in a home we personally lived in — we were displaced for about 30 days. From that experience, I knew that if I acted quickly and took control, we could minimize both the inconvenience and the overall disruption for the tenants.

I’m curious about your reserve strategy — you mentioned keeping only $5–10K and relying on a high-limit credit card. We also have access to a high-limit card, but we’ve always felt more comfortable keeping a larger cash reserve on hand. Right now, we’re holding ours in a high-yield savings account earning just over 4%.

Would love to hear more about how you think through the balance between cash-on-hand vs. credit flexibility.

@Aaron Williams

 thanks for sharing this. I’m really intrigued by this strategy, both for myself and a few clients who are looking for higher-yield opportunities in our local market.

Did your client end up selling the property, or is it still available? I’d love to know more about how it was performing — specifically:

• What were they getting in rent per room?

• Were they self-managing or using a property manager? If the latter, what was the management fee structure like?

• Any key lessons learned from that setup (tenant quality, turnover, maintenance challenges, etc.)?

Co-living and rent-by-the-room models aren’t very common here either, but the cap rates you're mentioning (7.3%–9.5%) are hard to ignore — especially with traditional rentals in our area barely hitting half that.

Appreciate any insight you're willing to share. Thanks again for putting it out there.

Every landlord’s nightmare became my reality while I was on vacation.

At 6 a.m. on a Sunday morning, I got a message from one of our tenants in Florida — there was a leak. Not just a dripping faucet or a loose fitting — a slab leak, the kind that sends a cold jolt down any property owner’s spine.

Thankfully, the tenant was quick to act. We had them shut off the water at the main, and I contacted a local plumbing partner who was able to get out to the property within a few hours. After further inspection, our fears were confirmed: a copper pipe had failed underneath the slab — a known issue in this market — and this now marked the fourth unit we’ve had to re-pipe due to similar problems.

By some stroke of luck (or fate), my family and I happened to be in town on vacation, so I was able to personally oversee the situation. Here's how we handled it:

• Carpet removal to prevent mold and speed drying

• Industrial fans and a dehumidifier brought in immediately

• Drywall and baseboard cut 6–8 inches from the floor (no moisture detected with a meter, but we didn’t want to risk it)

• 96-hour drying period with equipment running continuously

• Drywall & painting contractor brought in for a full room (and full house, once we committed to a complete re-pipe)

• New carpet and padding ordered

• Re-pipe scheduled and completed

The Cost Breakdown:

• Carpet and Padding: $527.84

• Drywall, Trim, Paint, Finish Work: $2,200.00

• Paint Supplies: $87.70

• Full Re-Pipe: $5,242.20

• 🔻 Total Out-of-Pocket: $8,057.74

Yes, we’ve submitted an insurance claim and are optimistic about some coverage, but this situation reinforces a point I think many newer investors overlook: you must be well-capitalized.

The Reserve Rule We Live By:

We personally aim to keep a minimum of $10,000 in reserves per door. When we dip below that number, we aggressively save to rebuild our cushion. This gives us peace of mind and flexibility when the unexpected (but inevitable) happens.

Whether it’s a slab leak, HVAC failure, roof damage, or a tenant issue — you don’t want to be scrambling for cash when time is of the essence.

So Let Me Ask You:

👉 How much do you keep in reserves per unit?
👉 Have you had to dip into reserves lately, and what did it teach you?

I don’t share this story to scare anyone — but rather to emphasize the importance of building your portfolio defensively, not just optimistically.

We're open to allowing the tenant to repaint the interior, provided a few conditions are met to ensure everything is well-documented and up to standard.

Before proceeding, we would like to know the exact brand and color ID/code of the paint they intend to use. This will help us ensure the choice aligns with the general aesthetic and quality we expect for the property.

Additionally, we will notify the tenant that they will be responsible for returning the room to its original white color at the end of the lease. They can either repaint it themselves using the original paint specifications or cover the cost of our painter to do so.

We agree that drafting a short lease addendum outlining these terms would be a smart step to clearly set expectations on both sides.

Congratulations on reaching the third generation of investing—what an incredible legacy! I can only imagine the stories and wisdom your family has gathered over the years.

We don’t have much experience investing in California ourselves—just the occasional visit and some eye-popping Zillow browsing! Florida, on the other hand, is a vast and dynamic market. I grew up in South Florida and went to college in Jacksonville, so it’s been home for quite a while.

We currently hold a handful of buy-and-hold properties along the East Coast in a small town, and they’ve performed well overall. That said, insurance and property taxes have definitely crept up in recent years—something to keep an eye on.

Make sure you connect with a top-tier local agent—they can make all the difference. If you ever need a referral for Indian River or Brevard County, I’d be happy to connect you with someone great.

Best of luck, and welcome to BP!

Scott — Congratulations!

Since you asked, here’s what I would personally do:

I’d look to purchase four new duplexes similar to the one at 17 Scott Street. It’s a solid example of the type of property I’d target.

Using Rentometer to pull rent comps, it looks like $1,900 per side is a reasonable estimate for this type of unit — giving you $3,800 total monthly rent per duplex.

Here’s the breakdown for one duplex:

• Purchase Price: $489,900

• Down Payment (30%): $146,970

• Estimated Closing Costs: $15,301

• Total Initial Investment: ~$162,271

Assuming a 7% interest rate, plus:

• Annual Taxes: $3,480

• Annual Insurance: $3,480

Your estimated monthly mortgage payment would be around $2,861.52.

That leaves you with approximately $938.48 in monthly cash flow per duplex. Multiply that by four units, and you’re looking at $3,753.92/month, or about $45,000/year in net cash flow.

Since these are brand-new builds, capital expenditures (CapEx) should be minimal for the foreseeable future. I'd let the cash flow accumulate until it could fund the next property purchase — then repeat the process until I reached my target number of doors and desired cash flow.

For property management:

• I’d use something like RentRedi to manage tenants and collect rent.

• I’d grab lease templates from the BiggerPockets Pro section (free with membership) and have a local attorney review and customize them as needed.

This is just my personal strategy and opinion — whatever you decide to do, make sure you enjoy the process and build something you're proud of!

Let me know if you'd like help running numbers on different properties or markets.

@Audrey Sommer

****I am not an attorney and always suggest consulting with one for legal mattes***** Below is what we use, I believe they are actually from the Bigger Pockets State specific leases that are available to pro members for free.

L) The Premises has been equipped with ___ hard wired / ___ battery powered smoke detectors and carbon monoxide detectors. Tenant agrees these detectors are in working order and agrees to periodically test and maintain the smoke detectors and keep them in working order. It is the responsibility of the Tenant to test and check the smoke alarm frequently. If the smoke alarm is battery operated, Tenant agrees to replace batteries when necessary. Tenant shall immediately report any malfunctions or failures of the smoke alarm to Landlord.

23. Lead-Based Paint. Housing built before 1978 may contain lead-based paint. Lead from paint, paint chips, and dust can pose health hazards if not managed properly. Lead exposure is especially harmful to young children and pregnant women. Tenant hereby acknowledges receipt of a Lead-Based Paint disclosure form and EPA Lead-Based Paint Advisory Pamphlet if home was built prior to 1978.

(E) It is generally understood that mold spores are present essentially everywhere and that mold can grow in most any moist location. Landlord has informed Tenant of the need for prevention of moisture in the Premises and on good housekeeping and ventilation practices. Tenant acknowledges the necessity of housekeeping, ventilation, and moisture control (especially in kitchens, bathrooms, and around outside walls) for mold prevention. In signing this Lease, Tenant has examined the Premises and certifies that Tenant has not observed mold, mildew or moisture within the Premises. Tenant agrees to immediately notify Landlord if it observes mold/mildew and/or moisture conditions (from any source, including leaks), and allow Landlord to evaluate and make recommendations and/or take appropriate corrective action. Tenant relieves Landlord from any liability for any bodily injury or damages to property caused by or associated with moisture or the growth of or occurrence of mold or mildew on the Premises. In addition, execution of this Lease constitutes acknowledgement by Tenant that control of moisture and mold prevention are an important part of Tenant’s Lease obligations.

Welcome to BiggerPockets and the exciting world of real estate investing!
You’re in the right place — and the best thing you can do early on is read, read, read. There are tons of great books out there, and a fantastic place to start is with David Greene’s books in the BiggerPockets library.

Another excellent resource is Nate Barger, who runs the BRRRR Academy and an active Facebook group. Even if you don't follow the BRRRR strategy, the community alone is incredibly supportive and knowledgeable.

Get plugged in locally — attend real estate meetups, go to conferences, and surround yourself with others who are doing what you want to do. You’ll learn more from real conversations and real deals than anything else.

Finally, the most important advice: Take action.
It’s easy to get stuck in analysis paralysis, always waiting for the perfect deal. But real success comes from getting on base consistently. If you treat each deal like a base hit rather than swinging for a home run every time, you’ll look back in 10 years and be amazed at what you’ve built.

Don’t wait for perfect. Get in the game.

✅ Pros of the BRRRR Method

1. Build Equity Fast

By buying distressed or undervalued properties, improving them, and refinancing based on the new value, you can rapidly grow your equity position.

2. Recycle Capital

The key advantage: you can pull most or all of your initial investment back out during the refinance. This allows you to reinvest the same money into new deals — effectively “recycling” your capital.

3. Cash Flow Potential

If done right, the property can still cash flow after refinance. You own a rehabbed asset, with tenants covering the mortgage and expenses.

4. Long-Term Wealth Creation

You end up with appreciating assets, growing rent income, and tax advantages (depreciation, mortgage interest deductions, etc.).

5. Tax Benefits

Cost segregation, depreciation, and mortgage interest deductions can all improve your annual tax situation.

❌ Cons of the BRRRR Method

1. Financing Can Be Tricky

You'll likely need two types of loans:

• Short-term/hard money or cash for the purchase and rehab
• A long-term loan for the refinance (seasoning period may apply)

2. Risk of Overestimating ARV

If your after-repair value (ARV) comes in lower than expected, you may not be able to pull out as much capital — or any — during the refi.

3. Vacancy & Rent Risk

You need to find reliable tenants quickly post-rehab. If you can’t rent it at the price you expected, your cash flow suffers.

4. Rehab Challenges

Construction often runs over budget and over time. If you’re not experienced or managing contractors well, costs can spiral.

5. Refi Restrictions

Lenders may impose a seasoning period or require a certain level of occupancy or cash reserves.

6. Market Sensitivity

If the market shifts during your rehab or refinance window (e.g., rates go up further, values drop), your numbers may no longer work.