All Forum Posts by: Matthew S.

Sai, of course, this is correct. She is an attractive woman and a lonely, single man is understandably interested in her. Obviously.

The question is at what cost. She is working here illegally, lied on the tenant application form, proposed marriage after 3 weeks (and how can you get to know a person well enough to make  well-informed decision about spending the rest of your life with them after 3 weeks?) and may cost my father dearly in terms of financial and emotional damage.

As for the rest of your comment, I don't understand it.

One further note - the woman does have $40,000 in savings and is not totally destitute. Could easily get another place. Just wants to marry my dad to get the path to citizenship and to get financial support for her and her son. After three weeks...

Hi All,

My 61-year old father recently signed a lease with a 40-year-old Russian woman who had recently moved to America on a tourist visa and started working illegally ((he did not find this out at the time). She moved with her 10-year-old son in to the basement of my dad's house, which is in Northern Virginia / Fairfax County area.

That was 6 weeks ago. Immediately after she moved in, this woman started cooking for my father - who is an emotionally needy, vulnerable older man. My dad responded by caretaking the son, driving him places, buying the tenant dinner, and so on. You can see where this is going... Within 3 weeks, she incredibly had asked him if he would marry her. Not kidding. Now, after 6 weeks, I just found out that for the last 3 weeks she has been badgering him to marry her and getting upset that he was resistant to this idea (as if she has any right...)

Obviously, the tenant screening process was totally flawed. We cannot change that now though. The question is how to deal with the situation - I need to help protect my dad emotionally and financially.

I am not sure exactly what we can do. At this point I have spoken at length to my dad, who does not want to marry her thank goodness. He has said that he will not do anything right away. But he is in a difficult situation with this person in his house most every day putting pressure on him.

Further considerations:

- My dad is a green card holder, not a citizen of the US. Even if he did marry this woman, it would not provide her with immediate path to citizenship. She would have to return to Russia and be on a waiting list to get a green card (as a married partner of a green card holder) for 2 years. Despite knowing this she still keeps pressuring my dad to marry. The timeframe involved (after knowing someone for 3 weeks) is just ridiculous.

- The woman tenant had already been here 3 months on a 6-month tourist Visa, working illegally, when she applied for and got the lease with my dad. As of today she has a bit less than 2 months left on this tourist Visa. My father is a Republican and against this type of thing.

- My dad feels he has an obligation to help this woman and her son, which I have told him is ridiculous considering how she is trying to use him. He does listen to me and puts a lot of weight in what I say.

- My dad now feels he has to help the woman get a 1-year student Visa, which might be the only way for her to stay here legally. However I have warned my dad that this would involve her needing to come up with an additional $2000-3000 a month to go to college, among other issues, being less able to work illegally and afford the rent, etc. I have told my dad that absolutely under no circumstances should he provide her with money to go to school. It would make no sense to have someone rent the basement for $700/mo but be giving them more than that per month in free money. This whole conflation of business and personal makes no sense. He agrees.

I am really angry about this whole situation. It shows how important proper screening is. I knew about this pending tenant at first, but didn't know all the details. Notably the tenant lies about their Visa status during the application process, and also withheld employment details (as a cover up of the illegal nature of the work). My dad went along with this probably being affected by the woman's attractiveness. I wish I had known more earlier about this but can't change it now.

I am wondering what other readers would do in this situation. In my opinion, the best outcome would be to evict this tenant. The issue is my father feels guilt and responsibility for these people that he only met a few weeks ago. He needs to see this is a business relationship and they started it by lying to get in, and that he owes them nothing, and that the risks to his emotional and financial wellbeing are real. I have already been speaking to him about this.

I am also wondering if lying on the tenant application about Visa status etc is a reason to evict. In any case, the first 3 months of the lease are structured month-to-month (then the last 9 months act like a full year lease). So my dad could still terminate the lease within about a month at this point. 

I am meeting him tomorrow to discuss. Please give me any thoughts you have. Sorry for long post.

Matt

Wow... awesome Chad, thank you. Did not even know about some of this stuff at all.

Am glad that this site and people like you are here.

I will do more research based on your leads and apply this thinking to the deals. You are also quite right that we want to make the best use of the 2 years or so that my dad has left of regular income to get loans.

Chad, thank you so much for taking time to write this. I read it through once and am going to come back read it through again later. A lot to absorb. I am unfamiliar with some of the terminology you use so am going to read up on some of the things you mention.

Right now, I'll say that I have been using the BP rental property calculator to look the numbers for the deals on BP. I didn't do this for the first couple of deals, but should have. Now going forward we will.

I think your idea about holding back living and emergency expenses is excellent. He has no reason to take too much risk, and does want to start getting more refinance loans. Thank you.

Yes, he will usually be buying all cash and then refinancing. We can get better deals and have access to more properties buying in cash, and refinancing later. Unless there are strategies I'm not aware of, it's a lot easier to buy in cash and get loans later... we have been finding this out with multiple turnkey companies we've been working with. It may take a bit longer, but keeping 25% in for a refinance is not so bad or different compared to putting only 20% down for an initially leveraged buy, I don't think.

I am not sure what you mean when you say, "make sure that the finance around the property works for you and not against you"? When you use the term "loan constant", I assume this means "loan rate"? In other words, speaking simply, you would want a property, say for a cash buy, where the cap rate of the property is 9% and the loan rate is at 5%... not where the cap rate of the property is 6-7% and the loan percentage rate is the same%? Maybe I am misunderstanding what the loan constant refers to.

The property being sold is actually in a foreign country without inheritance taxes, and where the realtors charge very little on the transaction compared to the USA. So we cannot do a 1031 I don't think. But we can bring the money over here, and won't be taxed on it, as far as I know. But that is something else to look into as well.

Thank you again for taking your time to explain these concepts to me!

Ok thanks for the advice Steve, I didn't know about the risks of duplex/quads.

We had been considering a duplex in Chicago (south side, older part of city, some of them in section 8 areas). I presume this is something you'd consider risky.

Also Jay, want to thank you for your site Turnkey Reviews. It was what got my dad and I started on the path of visiting these cities and buying the houses he has so far.

Hi Jay,

Thanks for your thoughts. I will have a look around the forums to see what is meant by institutional grade, since I'm not sure. I guess you may mean A/B properties or well-run multifamily. If you can refer me to any more information on that I'd appreciate it.

My dad prefers real estate over notes/lending due to the tangibility of owning real estate, even out of state, if that makes sense.

So far, he's only bought nicer properties in B neighborhoods in Memphis/Dallas/Philly... and I think that will continue. We visited C properties, including duplexes with attractive return potential, in Chicago and Philadelphia, but he didn't feel comfortable with those neighborhoods or the risk of lower quality tenants. I told him he should incorporate a few C properties for diversity and because the risk of them is not that great, but he doesn't agree yet, and maybe it's not for him.

Thank you, Clayton, for this information and encouragement.

I will take a look at your company, and at the Birmingham market, which I hadn't considered before.

Hi Marcus, in my area of Northern Virginia near Washington DC we have very few 2-4 unit properties. So instead I bought a 4 bedroom, 4 bath townhouse. I live in the master bedroom, and I rent out the other 3 rooms to roommates. It's a good situation... I put 20% down on a property costing about $425,000 (there are hardly any cheaper 4 bedroom properties in our expensive area, unfortunately).

At the time, I didn't make enough to get the loan myself, so my dad kindly took a risk and cosigned, with me committing that I would be renting out 3 rooms. And it worked... the PITI is $2,050 per month, but I rent out the 3 rooms for $2,150 total. I have rented out the 3 rooms to 8 different roommates over the last 4 years with not one day of vacancy. I rent the rooms for about $700-750 per month including utilities... this is very attractive to young people given that studio apartments in our area start at $1200-1300 not including utilities.

So I just pay some utility and repair costs, a few hundred per month, and basically live close to for free. This allows me to save money from my job to invest in other opportunities. I suggest you try something similar.

The one thing is, when sharing the common areas with roommates as I do, you have to have a lot of patience for other people's weird habits and not get easily bothered, plus carefully vet prospective tenants. Luckily I'm ok with that, but for some people a duplex/triplex/quad would be better due to privacy reasons.