All Forum Posts by: Troy P.

Quote from @Mikielle Elum:

I want to thank everyone for their input. I really appreciate it.

If I decide to do market rate I will go month to month, revise my lease and get a better handle on my screening process.

I’ve learned that you can’t predict or control people’s behavior. The best bet is to be prepared, have a team, savings and be super ultra picky. And don’t lead with your heart.

But my question is, with all that preparedness and doing everything slightly right (because it is ever really right); are evictions just apart of the process?

And I don’t just mean going to court. I mean having someone sit and take possession of your property, refuse to pay or leave and then trash your house.

Is there a better way? Because there has to be.

As a landlord all that has happened and a tenant just has an eviction on their record and possibly a judgment.

Post Covid there is an air of “I don’t have to pay my rent”. And I’m not alone. Philly’s diversion program was implemented to help tenants and landlords but it’s flawed. To those who use it, it’s another month of sitting.

It’s a business. But there has to be better way.

Just my thoughts.

Or am i failing as a landlord.

 This is why I don't directly invest in low income areas when self-managing.  The numbers may be great and the tenant may appear to be a perfect match, but like you've experienced, you never know.  A tenant who can afford to live in a B class area is more likely to treat the home as their own and understand their actions have consequences.  Pairing that with a landlord-friendly state has been a good combination in my experience.

I agree with @Bernard Joseph S. that looking out of state may be a better option.  If you're hiring a PMC anyway, might as well run the numbers for doing this is a better market...

Quote from @Mikielle Elum:

@David Ramirez

The process is the same. If you have a lease: 30 day diversion and court date. And if you have no lease 30 day diversion and court date. So why not take back some of that power.

But I understand. I may consider month to month.

But the process would be the same!!!!! Lol

It doesn't matter if you have no lease, month-to-month, or a 2 year lease and you're in the second month, the process to legally remove someone from your own property is going to be extremely inconvenient.  This all comes down to tenant screening.  You say you screened, but what did you look at?  Employment?  Income?  Evictions?  Credit score?  Referrals?  If you're lenient on one of those, the probability of having to evict goes way up.  A lot of landlords have a bad habit of renting to the first person that passes a couple of their screening requirements because all they see is dollar signs.  There are lots of people out there just waiting to take advantage of someone who will give them a chance.  Get a detailed lease, go month-to-month, and utilize a more detailed screening process.  There are plenty of free web-based services that can assist with most or all of that.

If $5,000 is the only cash you have in your posession, I would keep saving (or borrow from friends/family) until you have at least $10,000. You say you prefer a townhouse so it sounds like you've been shopping around. What are the prices like in your area? How much would 3.5% be on an FHA loan? Are you working with an agent or looking off market? Have you talked to a mortgage broker, gotten prequalified, and looked at all of numbers and costs involved? Spoiler alert, it's a lot. You can try asking the seller to pay for your portion of the closing costs, saving you thousands but ultimately putting most or all of that back into the loan via purchase price. If not, you should be able to add those costs to the loan regardless of seller acceptance. Most townhome communities also have an HOA involved so be sure to consider that cost when running the numbers. I've seen those typically cost between 100-300 per month.

Be sure to run your numbers through mortgage calculators and include taxes, insurance, PMI, and any HOA dues. If the costs are less than 33% of your gross monthly income, you may be on the right track. Good luck!

Also, just because you plan to rent out a room, don't rely on that as a requirement for paying your mortgage or other obligations.  Your plan could change and you don't want to be stuck needing a roommate just to pay your bills.  If you can't afford the home on your own, then you need to look at other optons.

Thanks for the advice, everyone.  I already got it replaced!  It was actually a 40 gallon and I threw in a 50 gallon.  We'll see how it goes...

Quote from @Rosa Regier:

A couple of points:

1: The tenant was not given keys to all doors with locks.

2: The tenant was instructed to call a locksmith. No additional statement was made that it would be at their expense. It's easy for the tenant to think you'd pay.

Clear communication is paramount in all cases. I'd pay it & chalk it up to lesson learned. For the future, remove other door knobs that don't need to be keyed unless you have the keys and strengthen the lease to address lock outs. 

I agree with this.  If there is a lock the tenant is allowed and able to use, then a key should be provided.  It needs to be replaced with a typical bedroom doorknob/lock so a locksmith would not be needed in the future.  Add it to your expenses, call it a day, and keep a satisfied tenant.

Quote from @Nicholas L.:

@Troy P.

you said "After dealing with some of your typical "active" REI issues"

just curious - what issues?

Tenant complaining the water heater is not large enough, violating the lease by installing supplemental air conditioning, removing interior doors, of which none have been resolved.  That is just at my most recent walkthrough.  I know, it could be much worse, but I hope to not get that far or be put in that position..

Quote from @Yun Han:

Quote from @Troy P.:

Cash flow should be calculated after estimated vacancy, repairs, and capex reserves. If you are already negative, you are actually probably doing worse than your estimates. If you got rid of PMI, I'm guessing you got an appraisal or refinanced? Did you roll those costs into the loan? Is this your only property? Can you manage yourself and remove the PMC fees? Have you searched for a cheaper insurance carrier? There are lots of ways to cut costs, but being that far in the negative is going to be difficult to make sense, in my opinion. It may also be difficult to sell in the current market. Do you have the current comps? Is the area known to appreciate?

What is the current market rent?  If you are well below market, you may need to increase more than 4% (check state laws).  Numbers don't lie, and if the numbers don't work, then it's not worth holding, in my opinion.  If you can't get at least back to even with accurate and conservative estimates, I would consider going a different route.  Cash flow is king, appreciation is a bonus.  Just remember, rates are not your friend right now, so if you're looking for a killer deal, you'll have to put in some work and be very creative.

Just noticed you said you can't manage yourself, being remote.  If you have a great rate, it's in a great area, and you can get close to breaking even, it may be worth it to hold.  Other than that, 1031 into another property may be more ideal, imo.

It is in a good area imo and the area definitely tends to appreciate. I agree that cashflow is king and I do want to make numbers look right and keep it.

Is there a way to decrease the monthly mortgage? What did you mean by "did you roll those costs into the loan"? I did get an appraisal after improvements and submitted it to the lender which changed LTV from 95% to 71%. The loan amount did not change.

This is one of 2 properties I own so far, and the other one is my primary residence. I will check if I can find cheaper insurance. Do you see any other ways to cut the costs?

If a refinance was required, you would've had the option to roll those costs into the loan, driving up the LTV and therefore your cashflow, but that is not the case.

After seeing the value of the property in question, I have heard it is very difficult to rent a property of this value long-term and make the numbers work.  If it's a SFH with plenty of bedrooms, renting per room may be a more profitable route.  Another thought is to look at the latest tax assessment.  Remember, if an exemption was in place and was removed since this is now an investment, that may have been something overlooked when running the original numbers.  Check your assessed value and make sure it is equal or less than the recent appraised value.

Hi all,

I'm considering looking at a property that's been on MLS in my area for a few months now, I'm assuming because my agent told me the current tenants are making all showings as difficult as possible. I'm curious if you've been through this experience and if you have any advice or pointers for making this a success for everyone involved. A few facts:

-property is listed at retail but I believe seller will contribute to closing costs and accept at least 5% off market price (only way I'd do the deal)
-current rent is below market and will need to be increased 15-20%
-tenants are making showings "as miserable as possible" so I'm thinking they know what's coming their way
-currently month-to-month

The pics of the property don't show any obvious signs of damage or abuse but I'm not sure I'm willing to risk this happening once I become owner.  The last thing I want is to end up in court over a property I've owned for 30 days.

Side question: if current landlord has used all or a portion of the security deposit on repairs, are they obligated to disclose that?  I wouldn't want to walk into this deal with no deposit being handed over.  Any other thoughts?  TIA

Cash flow should be calculated after estimated vacancy, repairs, and capex reserves. If you are already negative, you are actually probably doing worse than your estimates. If you got rid of PMI, I'm guessing you got an appraisal or refinanced? Did you roll those costs into the loan? Is this your only property? Can you manage yourself and remove the PMC fees? Have you searched for a cheaper insurance carrier? There are lots of ways to cut costs, but being that far in the negative is going to be difficult to make sense, in my opinion. It may also be difficult to sell in the current market. Do you have the current comps? Is the area known to appreciate?

What is the current market rent?  If you are well below market, you may need to increase more than 4% (check state laws).  Numbers don't lie, and if the numbers don't work, then it's not worth holding, in my opinion.  If you can't get at least back to even with accurate and conservative estimates, I would consider going a different route.  Cash flow is king, appreciation is a bonus.  Just remember, rates are not your friend right now, so if you're looking for a killer deal, you'll have to put in some work and be very creative.

Just noticed you said you can't manage yourself, being remote.  If you have a great rate, it's in a great area, and you can get close to breaking even, it may be worth it to hold.  Other than that, 1031 into another property may be more ideal, imo.

Hypothetically, if one was planning an exit strategy from LTRs into more passive investments, what are the options?  I understand you can exchange into a syndication, but are there any other options?  Is it possible to exchange into a private lending fund or does it have to be real property?  I believe I answered my own question but I can't seem to find cut and dry answers to point me in the right direction.  Is there a resource with a comprehensive list of possibilities?  TIA