All Forum Posts by: Ross Miller

I would love to see Berks and Schuylkill. Great post - thanks for sharing!!!

Thanks for the responses. I have not consulted a lawyer yet, but it sounds like it would be a good idea. 

If I really have to, I will eat the costs of the security deposits. It wouldn't be a deal breaker. I just wanted to make sure I was correct with my thinking before I try to fix this.

I'm a fairly new investor in the process of buying a 5 unit. This is my first multi-unit property, and it is also the first time I'm inheriting tenants. We are expecting to close in mid to late October. I am working with an agent that I've used before for SFRs, but I don't think she's done many multi-units. The seller is not really an experienced landlord. She never intended to own this property but actually bought it to bail out a struggling family member. 

As part of the seller's lease, if the tenants violate the lease, she keeps their security deposit. Two of her tenants do not yet know that they are losing their security deposits. She says that at closing, she will write me a check for the security deposits that will be in full, and I can ask the others to pay a security deposit at the start of my lease. Apparently my agent also advised that this was acceptable. 

Am I off base thinking that this is wrong? And I feel like my agent may have overstepped by claiming that this is okay. My thoughts are that if the tenants violated her lease, they should be paying her their fines, and the security deposits should remain in tact. I feel like I should receive the full security deposits at the time of closing. What if the tenants get mad when they find out they're losing their deposits and decide the trash the place and move out 2 hours after closing. Now I have no deposits to cover any damage. Even if they don't do that, now I have to chase tenants around to get security deposits. What if they don't have that much cash siting around - now I'm sending pay or quit notices already?

Just wanted to check with the more experienced folks before I call my agent.

My friend has been wanting to invest in real estate, and recently a good deal on a SFH has appeared that we are interested in. I am in the process of buying a different property and can't put any cash towards this deal right now. He has cash and good credit, but he has no experience or knowledge at all. I have some experience and knowledge, though I'm far from an expert. He wants to partner so that he can be part of a deal and learn from me as we go.

We're looking at conventional financing or possibly paying cash (he has enough cash to buy the property outright) and then refinance.

What would you do in this situation? Equal split? Unequal? How would you handle the fact that he will have at least $10k invested and I will have $0?

And Kurt is correct, you probably won't find a bank around our area that will do any kind of conventional mortgage on anything larger than a 4 unit. I'm actually getting seller financing, so it's working out a little better for me.

Sure thing! I'll send you a private message with some of the numbers, and I'll give you my contact info.

I have 2 single family rentals in Haven, and I'm working on purchasing a 5 unit building. Make sure to screen your tenants and if possible, try to fill your vacancies from May to August to get the biggest selection of tenants. Single family homes will often rent to families who don't want to move during the school year. I imagine apartments are a little more flexible. With my first property, I tried to rent it in late September, and I got so frustrated that I tried to sell it over winter. That didn't work out either. Finally in spring I tried to rent it again and got tons of interest with much better tenant applications.

We have a lot of terrible tenants in our area, but you will find decent ones if you screen properly. I probably end up disqualifying about 90% of my applicants. Our home prices are low enough that anyone with decent credit is buying instead of renting. You will probably have to compromise there. I look over the credit report and use my gut instinct.

Jered, 

Thanks for the reply. I understand what ARV is. My question was probably too vague.

Let's use your example. The house is worth 480k with mid-grade finishes and 500k with high end finishes.

You are analyzing the deal, running the numbers to determine your purchase price, etc. If you're trying to stick with the 70% rule, you need to know which ARV to use in the calculations. If you are planning to use mid-grade finishes for a buy and hold, do you ALWAYS use the 480k value in your calculations, or do you perform some calculations with the 500k value since the house has the potential to be worth that much? I would think you would only do calculations based on what you plan to do to the house, but I am curious what others think

I haven't had to worry about this yet, because my properties thus far are relatively low end homes. Adding things like granite or hardwood won't add much value in these neighborhoods. This is just hypothetical.

If you were looking at a SFH that could be a good candidate for either a flip or buy and hold, how would you determine the ARV?

You would likely rehab to a higher finish level for a flip than a buy and hold, which would result in a higher ARV.

Let's say you decide that plan A is to buy and hold with mid-grade finishes. Do you base your ARV on the actual finish level you plan to use or the full potential of the house with upgraded finishes?

Mike, I heard about the PSU thing. I wonder why they did that? I've heard there have been a lot of drug and gang issues from the city kids that PSU brings in by the bus load. I wonder if that had anything to do with it.

Did you have any trouble with your units getting damaged? 

The father in law of a friend makes his living with buy and hold houses in Pottsville. I think he mostly does low income housing. When I get more free time, I'm planning on maybe taking him to lunch or something and picking his brain a bit.