All Forum Posts by: Jon Holdman

I would start with a rent survey.  Look online for properties in the same area and go drive around the area.  Then start making calls and find out about your competition.  Could be your price is high, which would be my guess.  But could be your deposit or what the tenant has to pay or something else.

Have you been getting showings?  If not, why not?  Here again, price can be a killer.  Best to be right at or just below your competition.  Being even a little higher can mean you get ignored, or end up with a crummy tenant.

Have a friend call the PM and inquire about the property.  Is the PM easy for a tenant to get in touch with?  Are they responsive?  Friendly on the phone?

If you have been getting showings, what has the feedback been?

Is there some defect with this property, like being next to a busy street, that might affect the rent more than you think?

Does it have a yard sign?  This is my preferred way to find a tenant.  If they're out driving around I know they're really looking.  If they call off a sign I know they've seen it and the neighborhood.

I've been told that judges here will disallow any deduction for carpets older than three years.  The IRS allows a five year depreciation schedule for flooring in general.  In my experience it is completely unrealistic to expect 7-10 years for carpet in a rental.  In a similar situation, I've used the five year schedule and the original cost of the flooring to determine the deduction.   If the carpet was older than five years I would not deduct anything.  If that's the case for you, I would speak with your landlord/tenant attorney and take their advice.

When I sign the lease, the tenant hands me the deposit and rent (in cash or equivalent) and I hand them the keys.

I might hold a place for a week or so.  If so, we sign a "hold agreement" that has a non refundable deposit that will become the deposit if they sign the lease. It says "non refundable" in big letters, multiple times.

I would not hold a place for a month.  Perhaps your market is really slow.  But I'm confident I would get a tenant that would move in by the first of August, probably sooner.  Why would I give up two weeks or a month of rent?  I would offer this tenant the right of first refusal.  If I find someone else who will move in sooner, I'd offer this tenant the option of moving in sooner (and paying rent).  If not, the second person gets it. 

You know your market.  If you're convinced this is your best option, do the hold agreement instead of a lease.

You want landlord insurance, not homeowners.

My advice is to sell. The first quoted sentence is key.  Counting on tenants to pay their rent in order to make your payments is not a good plan. 

Earlier I think you say the property is paid off.  And above you say "It has done very well for me over many years; this year, however, has been a nightmare."  Yeah, you've had a bunch of stuff go wrong at once, but sounds like its been hanging in there for a while.  Cash reserves are key to surviving this business.  I've had years where I collected rent and had nothing but taxes and insurance for expenses.  I've had other years where a sewer line had to be replaced for $6000.  I had a tenant move out and the estimate was $7000 in make ready costs.  But that was after seven years with no vacancy so its $83 a month.  You knew the AC was old, so replacing it should have been a planned expense.  The plumbing issue and flooring was unexpected, but that sort of thing happens, too, and you did have insurance coverage.

Honestly I think you're out of luck on the landscaping.  They're going to insist the PM told them it was OK.  A judge might side with them.  Focus on getting them to do something so you don't have a yard full of mud.

Motorcycle insurance doesn't usually cover the rider or passenger's medical.  Liability for other people, yes.  But not the rider.  So, wouldn't have made any difference.  An injury while riding would be covered by your regular medical insurance.  If he has some sort of medical insurance, either through his job, an exchange, or some other route, he should make a claim on that policy, as far as coverage for the injury.

This would be covered by some sort of short term disability policy or an AFLAC type policy.  But I'd guess he has neither of those.

This is one of those cases where you do a "go fund me" and try to get your friends to help you out.  I have quite a few young friends who've done this in similar situations.

Don't get too wrapped up in this.  You're not his mom or friend.  You're just a vendor selling him something.

GC = general contractor.  A contractor who takes on a larger project and supervises the various individual trades like plumbers and electricians.

Hard money is a short term loan. Interest is high, typically 15% +/-. But based on the "after repaired value" of the property. And may fund rehab. So, the BRRR strategy - buy, rehab, rent, refi - is to buy a junky property with a hard money loan, fix it up, get it rented, then refinance into a long term, usually conventional, loan. Now, you will still need cash of your own. But if you can find the right property, you may be able to get into it with less cash than buying straight up with a conventional loan and 20% down. It may also let you buy a property that's too junky for conventional financing. And you can often get some of your cash back on the refi. Search for BRRR and you'll find lots of discussion about that here.

@Margaret Bean you don't give a location, so its hard to say what an eviction might take.  Around here its under $500, not $5000.  But some states are more tenant friendly.  And some tenants know how to work the system and can really drag it out.  You're always going to have some lost rent with an eviction.  This is one of those very intermittent but very real expenses with rentals.  Never keep a bad tenant to avoid the losses of an eviction.  It can get much worse. 

Never count on the tenant paying the rent to make your mortgage payment.  Cash reserves are essential for surviving as a landlord.

Seems like you need a better lease, too.  Mine does address yard maintenance as well as any fines from the city.  That can be an issues around here, too.  If the city fines me, the tenant pays.  If they pay the rent, but refuse to pay the fines, I apply money received to the fines and the rent is still due.

I still don't see any response from the tenant.  Have you discussed the landscaping with them?

I would do the minimal rehab required to get the expected rent, then do a flip level rehab before selling.  Tenants can be tough on properties.  So its inevitable that you will need to do rehab before selling.