All Forum Posts by: Scott P.

No.  I've been asked the same question. I only give discounts for paying add'l months in advance, at move in.  (I also charge more for a 6 month lease but no one has ever taken one of those.)

I agree with @Colleen F.  and a couple of others who noted that you could be getting a false promise.  I don't think I'd be able to get the add'l $50 per month back if the tenant left earlier than two years.  So, no. I wouldn't do it.

I would give a 2 year lease and not raise rent but I wouldn't discount it up front unless they are paying add'l months in advance on move in day.

I've been newly married and planning a house hack.   It wasn't my first house hack - but it was my first (and only) marriage.  We actually bought a new duplex in a neighborhood that was being developed.  Most folks on this forum know that you make your money on the Buy but it worked fine for us "paying retail" because it was our home as well as an investment.  In other words, we chose the duplex based on location and how nice it was for us to live in.  The cash flow, investment value, etc. was not our primary consideration on that particular deal.  

After a few years we bought/moved to a SFR. We continued then renting out both sides of duplex. Days turned into weeks and weeks into months and months into years. Then we woke up and many years of successive tenants had paid off the mortgage. The tenants we had attracted we, in many ways, just like us.

I'd do it all over again that same way.  Unless you both love renovation or trying to revitalize a rough neighborhood, etc., I'd make the value of the duplex to you as a personal residence the priority over finding a "good deal" in this particular case  You'll pay more up front but the quality of value to you personally could be worth that extra cost and it will still be paid for by others over time.

I'm being long winded but my advice would be to consider a nice neighborhood of owner occupants even if it means paying more than for a so-called investment property.  

I'd do cash for keys over an eviction any day.

Thanks for sharing that article @Chris Taylor.

Your thinking is right and it's an indicator that you have viewpoint of a future successful landlord!

Personally, I did not buy my first rental property until I had paid off all non-tax deductible debt.  That seemed best to me.

Looking at your photo reminds me that my first rental was a duplex and when a tenant moved, my wife and I moved into one side.  We brought our child home from the hospital to that duplex when she was born.  Years passed. The tenants paid off that rental - and that's not the only one tenants paid off.  That child has grown up and graduated college - with no debt.  Two years to shop and learn and pay off debt will still leave time on your side to invest for your family too.

Playing it less risky and having no non-tax deductible debt before buying that first rental worked for us.

In my experience @Julie McCoy and @Jennifer T. and @Anthony Wick are correct.  If you received $ in rent or for products you sold, that $ could be taxable even if you used all of it for principle on a property or to buy more product inventory to resell.

The Treasury doesn't want a door or window from your property or a bag of widgets that you sell.  The Treasury wants $.  If you spend all the $ you receive from renters/customers on paying principle or buying new items to sell, you won't have any $ left to pay taxes.

In my area the 15% or X% hotel tax doesn't come in to play on residential real estate rented on a 6 month or 1 year type lease.

Are you sure you made "double mortgage payments"?  I've paid off more than 1 rental early and all my extra $ went toward principle.  Even when i wanted to simply be ahead 1 payment just in case i missed one, the bank still applied all the extra to Principle.

It seems to me that you simply tried to do what is likely a wise thing:  pay down some extra on the debt.  But, you didn't think to hold back some $ to pay taxes on the income you received and used to pay down that extra on the debt.

I'm not an attorney or cpa and can't give advice.   I first got a CPA in my life about 25 years ago due to real estate complications on tax returns.

I'm sorry to hear you're in this somewhat difficult situation.

I agree with @Jay Hinrichs.  I'm not sure what I would do in your shoes though.  I don't have any strip mall commercial real estate.  I have an associate who does.  I remember he had one tenant go BK.  (I even remember the tenant's name.)

I wonder if the rental market looks good there and who the tenant(s) might be?  If possible, maybe advertise it for rental and have some time to see what applicants you get before you make your decision?

If I was 90% certain it would cash flow I would hold it and sell later.

If I knew it would not cash flow and if I needed what $ i could get back, now, then I'd probably cut my losses (and learn a lesson or two) and get away from it.

Based only on what I know from reading here, I would probably make the purchase if was me if I had enough $ to make the down payment (DP) without hard money or any other hoops to jump through.  I never bought as a student.  So it was easy for me to house hack w/my W2 job, back in the day, when i was starting out.

Being a full-time student and working part-time and not having all the DP $ in hand all adds risk.  So, I would say that the decision to buy is not a definite "Yes" and I have have to add that I did not buy my first rental under those conditions.  

If you buy and it works it will turn out to be an excellent story some day.

With all that said, personally, I would either work full time and go part time as a student, OR I would have the full DP $ before I buy.  That's how I'd eliminate one of those 2 risk factors. 

Maybe the investor would allow you to count your personal rent towards the purchase price if you manage the property and maybe that would help you buy in another year or so...

Or, if you'll be working full time in May/June 2019, it's probably a moot point as you'll have more $ coming in soon which minimizes the current risk.

@Bob Woelfel Got it.  Thanks for taking the time to give me the background.

(I think I like your market better than mine.  LOL) I agree with with everything you've said. 

In case anyone is looking at new construction and sees this post, I put in a natural gas dryer connection (always when it is available) as well an an electric connection, when I'm doing new construction.  It's a tiny cost for new construction and this way the tenant can have a gas or electric dryer.

wow. I'm sorry to hear this.  

You did well with the co-signer, etc.  

You have a good thought about Animal Control - if she really had no knowledge of the pet as she says- then surely she would not object.

My No Pet Lease says no pets, "even on a temporary basis" but we all know that Agreements mean little to some folks.

Based on what I've read here, I'd take one of 2 approaches:

1. Good guy:  If I thought her deposit might cover the damages, I'd tell her that you love dogs but some people are allergic and so she must go and If she'll "clean up really good" and can be out in 7 days (or whatever time you choose) you'll give her X dollars.  Send the letter in U.S Mail after the conversation.  Meet her that day w/the cash.

2. Strict guy:  It may result in more damage which the co-signer may not pay for but start the "cure or quit" and "here's my notice I'm not renewing" and/or eviction asap.    Even with this approach I try not to get personal of offend the tenant.  She could cause a lot more damage that you likely can't recover.

@Account Closed  Thanks for sharing the "you signed up..." comment. Ha! :-) I laughed at loud as I've heard similar to that one before too.  :-)  I've read enough "bad tenant" stories for this evening.  I'm logging off now while I'm smiling.  

I'm sorry to hear you're having these issues.

Your property mgmt company either misunderstood or is letting you down.

One of my associates had a house in which large birds (maybe cockatoos or parrots, i don't remember - but i could ask him) caused a lot of damage to woodwork, like stair railings.

I thought love birds were small.  Maybe start a new post and ask if anyone here is a bird owner or has had experience with tenants with birds.  Most of us probably only see dogs and cats.  I did have a tenant once with 2 dwarf rabbits. (To my surprise, they chewed on the baseboards when they were out of the cages which they supposedly never got out of.)

I think @Scott Mac has a good point though.  If they stay a long time because their choices are limited you might make enough $ to repair the pet damage - if there is any - and I suspect there will be a lot.

Maybe you cut your fees to management company somehow?  I suspect you'll need the $ for clean up some day...

Maybe if they are selling them you could have a cause to evict based on running a business out of the house?  

Those are the thoughts that come to my mind....