All Forum Posts by: Jennifer T.

Not the same situation, but it's a story that's always amused me.  I bought a foreclosure duplex about four years ago.  The previous tenants were already gone.  But some of the windows were busted out.

I found out from the neighbors that the previous tenants had been living there rent-free, after the bank had foreclosed on the property.  The bank did it's usual bankie stuff.  Posting notices after notices (I assume in regards to possession).  Tenants ignored all of that because, hey!, rent-free.  Then the day came when the bank put their big ole' lockbox on the door.

Not a problem for these intrepid prior tenants.  They broke the windows so they could climb inside.  Got their stuff out.  And all moved out that same day, lol. 
 

I include basic necessities on the kitchen counter that I seem to, myself, always be scrambling for after a move!  One roll of paper towels.  Two rolls of toilet paper.  One liquid hand soap.  One sponge.  A couple trash bags.  A pack of bottled water in the fridge.  

I usually get shot down on the forums when I suggest this, I think especially because it's not common in other areas of the country, but I do what you're talking about all the time and it works great.

My properties are in New Orleans.  Very similar weather to you.  Houses aren't worth much (relatively speaking).  Rents are on the okay side, but nothing amazing.  Nor do they go up much or at all if a house has central vs. windows/portables.  And windows/portables are super common anyway.

I very much get it.  It's not worth it to spend $10K on a new system with new duct work...and, yes, that's exactly how much it is here.  That's the CHEAPEST quote I got from many quotes, just last year.  I know it's a lot cheaper in other parts of the country.  I don't know why it's so much more expensive here, even in the off season.  But it is.

I digress.  Here's what I do.  For rooms with two egresses, I put in a window unit that has both heat and a/c.  Just make sure it's an adequate size for the square footage of the room.  When in doubt, spend a little more to go bigger.  Used ones are a great way to save money because those window guys last forever, but it can be tough to find used that also include the heat.

For rooms with only one egress, I use a portable a/c where the vent can be pulled out of the window easily and an electric wall heater.  I've never used an electric baseboard heater, but those seem like they would work fine also.

And the results?  Rarely a complaint.  As long as you make sure you're not going too small of an equipment for the room you are trying to heat/cool.  The complaints I do occasionally get are the a/c in the summer.  But I get those for my houses with an HVAC also.  Because when the "feels like" outside temperature is in the triple digits, there is only so much that can be done.

Every once in awhile you'll run into a property insurance company that doesn't like window units.  But that hasn't been an issue for me.  And this is coming from someone in Hurricane Alley, where insurance options are already few and far between.  

However you slice it, you're required to mitigate your damages, but also don't have a "break lease" fee in your lease for your time/hassle to re-rent (assuming you don't use a PM).  I would see that as, if you get it rented to a qualified renter on/before Sept. 1st, you need to return all of the money.  Less any actual expenses you might have to re-rent.  Though he would need to wait and see what happens before he gets any money.

I'd offer him a deal just to make a clean break for everyone.  Where you keep the SD and return the 1st month's rent.  And you both sign an addendum releasing each other from the lease.  Something like that.

Of course, always follow your local jurisdiction's landlord/tenant law, which could differ from general forum advice.

The absolute best advice I can give you is WAIT!  Be patient.  You do not want to own your own home, much less a house hack that will have a renter, with no income and too little savings.  And, you're right.  No lender would consider you at this point.  Possibly your g/f, but only if she was buying the house and obtaining the loan also.  Most seller's financing wouldn't either because they will usually also check your credit and verify you have the ability to pay the note.

There are other real estate investing avenues that are substantially less to get involved in.  Look up info on birddogging and/or wholesaling.  BP is a good place to search.

Save money as much as you can (sounds like you're good at that). Finish school. Get a good job and sock away even more money. Protect your credit score/report like your life depends on it. Use this time to research real estate investing, especially buy-n-hold REI since that is your interest. Heck, research lending, mortgages, and what banks want to see in your application and financial/credit picture.

Once you're ready, house-hacking is a fantastic idea.  And if you're up for the hassle and have the financial security to do it, house-hacking every 1-2 years is an even more amazing idea because the "cheapest" money you'll ever find is on an owner-occupied home loan.  But the "owner-occupied" requirement is typically only the first year.

Anything keeping you in CA once you graduate?  SoCA has usually been a great appreciation play, but it's one of the most expensive areas in the country and you're unlikely to cash-flow or even come close to it. 

I'd strongly consider moving after college if that is at all possible.  Your money will go SO much farther elsewhere.  Oh wait, I did do that, lol.

Grew up in Orange county. Went to college in San Diego county. Graduated. Left friends and family and moved to New Orleans. Nothing specifically brought me here. I didn't have a job or anything like that. But I wasn't going to stay in a HCOL area, especially when I was young, carefree, and the world was my oyster. That was years before I was even thinking about REI. But I did want to rent an apartment without a roommate, lol. And I did want to buy my own home someday.

I've had renter's insurance before that covered stolen items.  Whether the items were stolen from my person, my car, or my home.  Someone broke into my car while I had renter's insurance and it covered everything that was stolen.  Though, unlike a truck bed, everything was in the interior or trunk.  Maybe that would have been different, but it wasn't my impression.  They had few exclusions in regards to stolen items and those exclusions were primarily associated with the max. amount you could get for particular categories.  Like jewelry.  Though all insurance policies are different.

While not impossible, exceedingly few banks/lenders will give a HELOC on a rented property. That would be your first challenge.

Here's a little tid-bit that most loan officers don't even know. Underwriting looks at your debt to income as what the payment on the HELOC would be if it were maxed out. Even if it isn't. I kid you not, I spent YEARS having to get higher interest private money loans because brick-and-mortar banks kept telling me my DTI was just a little too off. It was maddening because it made absolutely no sense. I would question it every time and the loan person didn't understand it either, but that's what their program (or whatever) kept spitting back out at them. Until I finally spoke to a loan officer that understood what was happening.

The other problem with using a HELOC as a portion or all of your down payment is lenders don't like it. Many of them require it to be in a demand deposit account (ie checking or savings) for X number of days or even months. For the money to be "seasoned".

With all that said, I use the HELOC attached to my personal home extensively in my REI. I find it to be a very useful tool, primarily because of its flexibility, to pay the HELOC balance down with my profits. Until I have about enough for a down payment on my next rental. And then I start looking again. It's an especially great resource if you're doing a fix'nflip or rent'nrehab. You can use funds seasoned in a demand deposit account for the down payment to buy the property. And then use the funds out of your HELOC for the rehab/repairs. It's usually an easier and cheaper process than getting a bridge/HML loan.

I don't currently have a tenant on S8, but I have in the past.  You sign your own lease with the tenant.  But you and the tenant also have to sign a contract with S8.  I think it's called a HAP.  You could turn the number of times that contract mentions/highlights/capitalizes something about "not being related" into a drinking game, lol.  Apparently it is a big "no, no" to have a S8 tenant you are related to.  But that contract also states something about there cannot be any "side" agreements, including the tenant paying or providing services for more rent than what is outlined in the contract.

A landlord who gets caught doing anything that violates the HAP could potentially lose their ability to rent to S8 tenants.
   

Another thing to be careful of if you decide to accept S8 tenants is the potential tenant needs to already HAVE their voucher.

I had a potential tenant that wanted to rent a 2bd/1ba from me, including giving me the deposit for it to "hold" it.  According to her, she just needed to give her case worker a copy of her son's birth certificate and she'd get her voucher.  That this would all happen over the next week.  I even called her case worker and verified that was true.  BUT, thankfully, I told her I could not accept her deposit until her voucher was completed and would continue to show the unit in the meantime.  I don't know what happened with all of that, but she didn't get her actual voucher until about TWO MONTHS later!

In addition, make sure the number of bedrooms on the voucher matches the number of bedrooms on your unit.  If your unit has three bedrooms, but the tenant's voucher is only two bedrooms, S8 will base their rental offer on the market rent for a 2-bedroom.  Which might still be an acceptable amount to you, but now you're skirting with a decent chance it won't be.  Especially considering you won't know the rent S8 will offer until you are far into the process and the inspection is done and passed.  At least that is how all of that works where I live.

And I run into this ALL the time!  I even put it in my ads that I accept S8 for vouchers that have at least X bedrooms.  But still.  About half the S8 people who contact me have a voucher that's is for less bedrooms than in my ad.

I have 6 doors.  All in New Orleans.  I don't currently have any outstanding rent.  I've only had one "almost" problem with rent.  One tenant for May's rent apparently decided in her own head that I should just forgive her rent because "the virus".  Supposedly she had lost her job.

I started scratching the surface just a little, primarily to help her out with a payment plan.  But all she would say is she didn't have any money for May's rent and lost her job.  Yet, hadn't applied for unemployment.  Red flag there.  Because she didn't know "how" or "where to go" for that.  It's all online right now.  So after I did the same 30-second Google search she could have done, I sent her the link.

I told her I would be posting a Pay or Quit notice the next day, but would also give her until May 18th (that was when courts were supposed to open, but later got delayed to June 5th).  That this would give her time to apply for unemployment.  I also told her that I was still open to being more flexible than all of it by May 18th, but she needed to present me with a doable payment plan and show me a good faith effort.  Like applying for UE, smh.

She texted back that "since I wasn't being considerate of the pandemic" (eyeroll), she would get the rent to me on Monday (two days later).  And she did.  Don't get me wrong.  Obviously I was glad to get the rent.  But I was wholly unimpressed that one minute she didn't have ANY of May's rent.  Then two days later she had all of it.  She also paid June's rent without any issue and made sure to mention she was back to work.  I don't think she ever lost her job.  I think that's why she didn't apply for UE.

At any rate, their lease is up at the end of August and my husband and I are considering not renewing it.  It automatically reverts to a month-to-month, either way.  We've had some other problems with their tenancy and the lying to me about her ability to pay May's rent was another notch in the "bad" column.