All Forum Posts by: Victor N.

@Nat Tagle If they leave, Im guessing that you will lose at least one month of rent because it will take some time to repaint/ update an 18 year old apt if you are to get full market rent.

So before giving then a notice of rent increase, I would sit down with them and discuss the rent issue. I suggest arming yourself with reasons why the expenses of owning the property have gone up and you need to increase the rent to keep up with those expenses and plan for upgrades. For example, Im sure taxes, water/sewer, insurance, maintenance etc have increased in 18 years. You can also show them the current market rent of their apartment then maybe offer in increase of $500 instead of $1000. You can then slowly inch up to full market rent the following years.

You can certainly get them out and go for a new tenant paying full market rent but keep in mind that you are in San Francisco and you might have a hard time evicting a potential bad tenant.

I've dealt with listings were the listing broker also wanted to be the selling broker so that he could keep the full commission. I've even seen a HUD listing broker mark a house as "under deposit" on Realtor dot com, but the HUD website showed the property as active. in that case, my agent called the HUD office since he had a good relationship with them and within 2 hours Realtor dot com showed the house as active again. The HUD office must have called the listing agent to find out what was going on.

Bottom line, some agents or brokers play this game often. I've been successful going directly to the listing broker.

 Be careful! Equity is good, very good but also very tricky... ask investors who owned properties  in the recent boom and bust and they will tell you that equity is not worth much until you sell. I would be very careful if I were you trying to invest  just for equity specially when you mentioned that the market is about to peak in sale prices.

If turn key rental properties are too expensive, is it possible for you to find a cheaper property that needs work? that might be your best bet since you can force the appreciation with some improvements. OR you should consider investing outside of HI, in a state where properties have decent appreciation. For example Boston where I used to live is expensive but prices keep going up and rents are also very high. Or you can find another market where prices are not so outrageous and you can make a decent return on your investment.

My point is, if HI is too expensive, make some connections here on BP and start investing out of state/long distance in other places.

@Andrey Y. , others have provided great insight about what you should do or look for so my take on your question will be a little bit different ( but not new). 

WHAT "RETURN" DO YOU EXPECT FROM YOUR  BUY AND HOLD INVESTMENTS?what's your financial goal?

what ( IRR , cash on cash) rate of return or cash flow do you want? Are you looking for say 8%, 10%, or 12% etc IRR return or 10%, 15%, 20% etc cash on cash return? or are you more interested in a set minimum amount of cash flow such as $3000, $5,000, $10,000 etc per month. or maybe you just want equity since prices increase very rapidly in HI ( $500k, 1M, etc in equity?).

Setting up your financial goal [ maybe in a business plan] is the key to answering your question. For example, I was having a discussion with my wife the other day about what kind of return I wanted. For me the goal/target was a certain dollar amount per month ( cash flow) after taking into account the usual CapEx, repairs, management, vacancies, etc. So after running the numbers, I realized that I need say 3 more properties ( with a specific cash flow).

Since you mentioned that HI rents are not that high compared to property prices, maybe it's not the best area for cash flow ( I dont know) so maybe you could invest for equity. if doing so leaves you with a small negative cash flow for example then you need to make sure you have enough money saved up to your target date when you can "cash in on the appreciation". in this case if you have 100k, you can put 20% down ( assuming all other closing costs are included) on 4 properties ( not 5) and keep 20k for emergencies or helping with the small negative cash flow.

it's really all speculation until you set your target, then you can ask how do I reach my goal with say 100k on hand... ( or how many properties do I need to reach this specific goal?)

Based on your numbers alone, it's worth keeping her at the reduced rent. It's also worth keeping her for the non-financial reasons that others have already mentioned.

Now the question is how can you recoup the lost rent if possible? 

First, you can raise the rent a bit every year. Second, section 8 calculates the rent reasonableness based on # of rooms not just # of bedrooms so be present when section 8 does the initial inspection and point out to the inspector if you have let's say a small room that can be an office. Front porches and rear porches also count for extra rent as well as new appliances or having a OTR microwave or dishwasher which are more than the basic required appliances. They also give credit for a walk-in closet an extra full or half bath etc

@Alex Silang  your brother doesnt understand how section 8 works specially the annual mandatory inspection. The apt needs to be in good working condition which does not apply to slumlords. 

You should take him on a ride and show him your property. That will settle everything. 

@Jonathan Cubeta if you have difficulty finding an attorney, I would suggest taking a couple of hours and going down to the court that handles the evictions in your jurisdiction. There are usually several attorneys there handling evictions for their clients. You should be able to watch them and hire one on the spot ( the court calendar will also list their names/ firm names). For landlord/tenant issues there are mediators that both parties must discuss their issues with before seeing a judge. The hope is that the issues can be amicably resolved. Not certain but you might be able to obtain an atty referral from a mediator ( some eviction attorneys are regular faces).

In my case, I learned quite a bit about the eviction process in CT and handle all of them myself. PM me if you want to talk.

@Marcia Maynard  gave you great advice that you should follow. Looks like you have identified the issues you are facing, now you need to make a plan  as she suggested to address them. It wont be easy and do not try to cut corners for a quick solution regarding the repairs. Being a landlord can be stressful specially for a newbie, so take a deep breath, work with a plan and things will fall back in place.

You said that both units of the duplex have section 8 tenants. Do you only have repairs issues with 1 apartment or both?

I believe that your biggest mistake was to renew the lease of the tenant with all the issues ( by the way, why would you expect the tenant to renew her lease when there are so many issues with her apt that have not been fixed for a very long time?). I know its hard and maybe a little bit scary to lose a tenant when you are new to the business but in your case this would be the best thing. I would go back to section 8 and work something out with them so the tenant can move out. Make them your partner. Give them something like 30 days. If the tenant stays past the 30 days, they must pay use and occupancy ( not rent).

Once the tenant is out, you can quickly and easily address all the repairs and roach problem. MAKE SURE YOU DO NOT STOP AT THE LIST OF REPAIRS THAT THE SECTION 8 INSPECTOR GAVE YOU. One particular inspection might miss something that a different inspector will catch ( and you will miss more rent, and aggravate the tenant even more). Inspect the property from top to bottom and address all the issues at once. Then make sure the place is properly cleaned and repainted. The unit will look fresh and will attract new tenants and more importantly, the unit will past inspection for the next section 8 tenant if you chose to go back to the program. Going this route, you are guaranteed to stop the bleeding of rent loss.

It's your property, it's your investment, it's your responsibility! At the end of the day, your PM is not losing sleep over this and your current tenant will be given a new voucher to move out if you cant complete the repairs ( in my area they would have asked the tenant to move out a long time ago, so maybe they are "enjoying" not having to pay you rent. The point is, the buck stops with you!

@Jassem A. , the owner on record is a different person than the one you have.

@Account Closed , they didnt respond. I only called because I wanted to play detective!

I plan on informing the listing agent tomorrow.

Earlier today, I was checking the Craigslist appliances section for my area and found a rental ad which caught my eye.

A 1235 Sqft , 3 BR 1 and 1/2 BA house for rent in New Haven, CT. Nothing wrong there until you see the price: $600.00!!! I thought, that's way too cheap, almost impossible ( at least for New Haven, CT) unless it is a completely run down house. When you see the pictures, the house is actually in fantastic shape! So, I decided to dig in a little more. It took me less than 5 minutes to find out the owner's name and that the house was actually listed for sale on 9/13/14 for $179,900.

The Craigslist ad listed a phone number which I called out of curiosity. It was a google phone number out of Houston, TX. I was able to find the name attached to that phone # which didnt match the name of the property owner. I left a message showing strong interest in the rental. Maybe I will get a call back. Below are the Craigslist link and Trulia listing link. What do you guys think? Scam or not?

http://newlondon.craigslist.org/app/4671706200.htm...

http://www.trulia.com/property/3148590261-45-Brook...