Next time you buy a property make the owner gets rid of the tenants. He/she will lie to you about how they always paid on time and how clean the are. This is a big batch of BS. When you get new people make sure you do a background check, at least for domestic stuff. Check the court files to make sure they have not been evicted before. This is a matter of public record. Get 1st, last and security deposit. If they do not pay the second month on time start eviction immediatly. Do not wait 'cause they will pay next week, on the next payday, etc. Get rid of them NOW. Yes, sec/ 8 is a good deal. the govn’t. (read us taxpayers) will suppliment them. Most will be o.k. but there are some who will play the game to the fullest. So long as you get the deposits you “should” be o.k.
off to rough start - need encouragement/experience - Posted by Dean in NC
Posted by Dean in NC on March 22, 2006 at 17:55:48:
I have a few RE investments but just purchased 5 really low end rental houses together for good cashflow - they are all together on a dead end street so management and travel time is easier
-this was really going to jump start my investing - -problem is --When we signed the contracts, all 5 houses were rented and allowing cashflow - -Just before closing 2 people moved out, and just last week - -after owning them only a week -someone else moved out (without paying back rent)
On top of that, the houses are really in need of a lot more work than I’d planned on (isn’t that always the case) - -the previous owner really was a slum lord and did barely anything to the houses - just what they needed to get by. - -the family that just left - left the house with the largest cockroach infestation I’ve ever seen
I’m slowly getting the houses up to par – all I can do is one at a time and on weekends - -I know I’ll do a better job than the previous owner, and give a better housing option than is available in the market in this price point – he didn’t even screen tenants!!
Am I fooling myself thinking that fixing them up a little will get better tenants and those willing to stay?
– The good thing is that I have the income to cover all the vacancies- -but it still hurts to have them - -
some other investors have said getting rid of past tenants and starting from scratch is the best thing
-I’m just a little discouraged right now, a bit overwhelmed and wanting to hear some feedback/experience - - I’m wondering if I’ve bitten off more than I can chew - -but I keep reminding myself of how little I paid for them, and that it’s a temporary setback
sorry this is long - -all comments appreciated
Dean
Posted by Dean in NC on March 25, 2006 at 09:36:19:
thanks for all the encouragement and good advice - -I’ve actually gotten rent on time from one tennant every week, and early rent from a long term tennant, who also referred another tenant to me that may move in this weekend if it works out.
Sounds like the previous pulled a fast one on you. Maybe he planted some relatives or friends in there before resale to give the impression that the properties were cash-flowing.
At this point, try to make the best of it. If you have to fix, then first figure out what you can realistically rent it for after it is fixed. Be very realistic about what the rent would be, not what you hope it will be. From there you can figure out the costs of rehabbing and determine if a decent ROI can be had.
If the surrounding neighborhood is decent, but your house is an eyesore, you stand a better chance of making a decent ROI than if the whole neighborhood is a roach motel.
Need encouragement/experience - Posted by Joe Kaiser
Posted by Joe Kaiser on March 23, 2006 at 22:27:24:
You need more than encouragement.
This is a deal you either move forward with full speed, or you ditch
entirely. What you cannot do is “slowly get them up to par, one house
at a time, on weekends.”
That’s a formula for disaster.
That time those units are empty is costing you money. The key is to
quickly get them up to speed and you do that by carefully deciding
what needs to happen and getting a contractor involved. Sure, it costs
money today, but units that sit vacant and in need of work for months
at a time cost much more.
Break it down, put it up for bid, check references and get it done.
Joe
PS. Don’t do a signficantly better job than the previous owner or give
them a better house for this price point. You don’t know enough at the
moment to do this efectively. Just get them rentable!
Hang in there, you can do it! You are right, better rental, better tenants (to a point, I don’t like high dollar tenants, they are a pain)
Don’t get anxious, maintain your screening process!
You are doing the right thing!
Vacancies have a tendency to come in spurts, you can rest later.
First off- you got rid of deadbeats without having to evict them. Take the place that needs the least work and go a-holes and elbows on that one, except that you’ll want to get those cockroaches dead and gone first before they migrate to the other props. You can now upgrade the vacant props (don’t go overboard) and make them presentable, for increased rent. Every time, though thankfully rare, a tenant has left a mess, I’ve been able to get a significant increase in rent.
Good luck with your rental adventure! And I mean that…
This is what my husband and I have done in the past… when there was an empty rental… we would work late at night after work, and weekends to get them repaired and re-rented. It’s a discipline! Empty rental… hard work quick turn around. I don’t know what they all need, but you certainly want to make sure you have no water leaks, go to janitorial supply stores and they can give you some time saving cleaning chemicals. Painting with latex goes quite quickly,(we like to use oil on trim) we use luan for underlayment for vinyl floors, and rent carpet stretching tools from a rental company. We repair them… and rent them. Over time we make more upgrades when we don’t have so many vacancies. Also… the way we get rid of roaches is this: we use combat gel and then we also use raid spray, we put the gel out then spray all the cracks around the baseboards, cabinets, doorways, floors, around water areas etc. and do that everyevening for 3 or 4 days. that usually gets them knocked out quickly. When we have a rental empty, we usually clean mostly (for alot of reason), repair items, and have it re-rented with-in the same month. If you use such discipline in your rentals you’ll have more success that if you allow them to remain unrented for extended periods of time. set a goal reach it… move on. it also frees you from being tied down to the empty rental but not getting the work done…
you can also rent a little cheaper since you know they need work, clean for the deposit… but I’d really screen the tenant for that… we’ve never done it. Also we learned how to evict ourselves… and with our lower end rentals if they do not pay on the first… we give them a 3-day on the 3rd. it’s a little harsh… but they either pay you on time or move on! (if they want to pay a few days later & keep their word then we work with that… but otherwise they’ve already been served the 3-day)
My husband and I have a joke…
what’s worse than an empty rental… a full rental with an unpaying tenant!!!
Good luck Jody. I hope my ramblings help a little!
Rental properties are almost organic beings- I’ve discovered that any time I buy one or put in a new tenant, all heck breaks lose and I have to do all kinds of stuff, but once the tenant is in there and you’ve trained them, they settle down. It’s like the house and the tenant need some ‘get acquainted’ time and so weird things like the plumbing and appliances will act up.
It does sound like you’ve bought some lower-quality properties (since the previous owner was a slumlord)- which have a higher turnover rate anyway. Since you’ve got them all together, improvements you make on one will affect the quality of all of them, and you might be able to get better quality tenants over time. You also might consider bringing them up to Section 8 standards and then you should have no problem getting them filled and getting your money.
If you have money to cover the repairs and vacancies, then don’t be too discouraged. You’ll get tenants in there, and with improvements you can raise the rents.