Source:

http://www.avvo.com/legal-guides/ugc/how-to-go-about-evicting-a-non-paying-tenant-in-massachusetts

How to go about evicting a non-paying Tenant in Massachusetts.

Written by John Keramaris

Landlord / Tenant Lawyer - Woburn, MA

Contributor Level 11

Posted over 4 years ago. Applies to Massachusetts, 28 helpful votes

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1

Gather All Paperwork Regarding Tenancy

It is critical that, before doing anything, you collect any and all documentation pertaining to your tenant's payment or failure to pay rent. Such documents include checks, rental receipts and returned (bounced checks). Also find the original document creating the landlord-tenant relationship (the written lease or tenancy-at-will agreement). After finding these documents, place everything in one file.

2

Determine the exact amount the tenant is behind.

Though this may sound simple enough, sometimes the tenants have fallen so far behind that extra efforts need to be made to determine the exact amount the tenant is in arrears. Determining the exact amount owed is critical in maintaining an upcoming Court action.

3

Draft a 14-Day Notice to Quit for Non-Payment of Rent (Part 1)

Draft a 14-Day Notice to Quit for Nonpayment of Rent. Here is a form I have created: I have split it over steps 3 and 4: To: Mr. Bad Tenant- 123 Fake Street Anytown MA You are hereby notified to quit and deliver up the premises you now rent as a tenant, namely, 123 Fake Street, Anytown MA and all appurtenant uses thereto. You have 14 days from receipt of this notice to leave or I will go to court and get permission to evict you. By law, a court is the final authority in every eviction and if you believe you are entitled to remain as a tenant, you or your lawyer may present your case in court. The reason your tenancy is being terminated is that you have failed to pay the rent due as follows: January 2010: $1,200.00, February 2010: $1,200.00 Total : $2,400.00 (The remainder of this form is on Section 4)

4

Draft a 14-Day Notice to Quit for Non-Payment of Rent (Part 2)

If you have not received a notice to quit for nonpayment of rent within the last 12 months, you have a right to prevent termination of your tenancy by paying or tendering to your landlord, your landlord's attorney or the person to whom you customarily pay your rent the full amount of rent due within 10 days after your receipt of this notice. If your tender of rent payments does not comply with the requirements noted above or otherwise cure or excuse the breach as provided by law, any funds paid by you after the date of this notice shall be accepted for use and occupancy only and not for rent, shall not waive this notice or any subsequent eviction proceedings, nor shall it create or reinstate any tenancy. You are hereby notified to produce the original of this notice at any trial for possession of the premises. Very Truly Yours, Good Landlord

5

Have a Constable Serve the 14-Day Notice To Quit

After drafting the notice to quit, serve it upon the non-paying tenant by means of a local constable. Though a constable may charge you anywhere from $25-$40 for service, it is money well spent as many tenants will deny that they ever received a Notice To Quit. I have provided the link to a Constable that effectuates service all over the Commonwealth below. Though some Landlords prefer to send the Notice to Quit via certified mail return receipt requested as to save on the expense of a constable, they run the risk of the tenant never signing the return and again claiming that they never received the 14-Day Notice.

6

Wait two weeks, then obtain and fill out summary process summons and complaint.

If the Tenant does not contact you regarding payment or pending move within a week after service, obtain a summary process summons and complaint from your Local District Court or Housing Court Clerk's Office. It may be a good idea to get this form well before the 2-week period expires if you have an idea that the tenant won't pay or move. This form will cost you $5.00 and you will have to fill it out by hand (neatly) or by using a typewriter. Be sure to consult a local attorney on where to file as it may be advisable to file in one Court or the other based on the local jurisdiction of the Housing Court. Take extra-special care to fill out the summons and complaint correctly according to the dating instructions on it. As for reasons for eviction simply state: "The tenant has failed to pay rent as follows...." Also, make sure to ask for your court costs associated with bringing the action which will be your filing fee ($195.00) and Constable Fee.

7

Serve the Summary Process Summons and Complaint Upon Tenant

Serve the Summary Process Summons and Complaint on the Tenant by means of Constable.

8

Obtain Return of Summons and Notice to Quit and file both on the entry date noted on the complaint

After receiving the return from the Constable on the Summary Process Summons and Complaint, file it along with the Returned Notice to Quit with the Clerk's office in the Courthouse you originally obtained the form from. Take special care to file the Complaint on the "entry date" you specified on the complaint when you first filled it out. Filing the complaint will cost you $195.00 payable by cash or check. If at any point in time during this process the Tenant retains an attorney to represent him/her it is highly advisable that you retain counsel.

9

Go to Court on the Hearing Date

Go to the Court on the Date of the Hearing. Bring all documentation described of in Step 1 with you. Explain to the clerk after they call your case that you want to attempt mediation. This gives you an opportunity to work something out with the tenant short of going in front of a Judge. As you may already know, the laws in Massachusetts are very favorable to tenants. It may be preferable to come to an agreement before going in front of the Judge. A mediator may be available on the day you go to Court. Explain to the mediator that you are evicting only for non-payment. Though it is hard to do so, keep your cool during mediation. Possible agreements you may enter into include agreed-upon move out dates, payment plans, or a combination of both. If you go in front of the Judge, explain that you are evicting for non-payment of rent and this reason only. (If other reasons exist for eviction, consult with an attorney prior to beginning this process.)

10

Obtain Execution, Levy by means of Constable

If judgment is granted in your favor you can not do anything to get your apartment back until you received a document from the Court called "Execution for Possession." Courts usually issue the Execution 10-days following entry of Judgment. Some busier District Courts do not issue this automatically and requests need to be made to the clerks for prompt issuance. After receiving the execution, deliver it to a Constable. The Constable will give your tenant a time period to move out. If they fail to do so, they are authorized by law to physically remove your tenant and their belongings. Hopefully, for your wallet's sake, your tenant will have abandoned the premises by this point because you will have to pay the Constable for this process which is very expensive (moving trucks, movers, and storage involved). After they have been moved out, change the locks, repair, and attempt to re-rent your unit.

11

If you lost

Don't despair. Seek out the aid of a local attorney familiar with Landlord-Tenant Law. If there is one thing you should take away from this guide, it is this: Do not attempt to go this alone if the Tenant retains an attorney. Also, do not be afraid to contact an attorney to discuss the matter prior to starting this process. Many are willing to help you over the phone with brief free consultations. Also, do yourself a big favor and join a local chapter of the Massachusetts Rental Housing Association. The dues are minimal ($50 a year) and the wealth of knowledge you'll gain by being a member will become apparent at the first meeting you attend. www.massrha.com

Additional Resources

Massachusetts Rental Housing Association, An integral network of Landlords helping Landlords all over Massachusetts providing support groups, monthly meetings, speakers, and newsletters. (Several local chapters for your own City or Town). http://www.massrha.com/

New IRS regulations impact owners of rental, investment properties - 2012

New IRS regulations impact owners of rental, investment properties

Real Estate Tax Talk By Stephen Fishman
Inman News®

If you own rental property, or any other business or investment property, the Internal Revenue Service has bad news for you.

It has issued a massive new set of regulations (256 pages in all) with complex rules that, starting in 2012, all owners of business and investment property are supposed to follow to determine what constitutes a currently deductible repair versus an improvement that must be depreciated over several years.
Eight years in the making, the new regulations cover all types of tangible business and investment property, whether real or personal property, but they are particularly significant for owners of business and rental buildings.
Among many other things, the regulations will likely make it more difficult to classify fix-ups and other building expenses as currently deductible repairs. Instead, they will have to be treated as "improvements."
This is not good if you're a building owner because, when it comes to taxes, repairs are far more valuable than improvements. There are two big reasons why:

• repairs are currently deductible in a single year, while improvements must be depreciated over many years (39 years for nonresidential buildings, 27.5 years for residential buildings); and
• if you sell a building at a gain, you must pay a recapture tax of up to 25 percent on the depreciation you claimed in prior years.

For example, if you spend $10,000 to replace a roof for an apartment building, the cost will have to be deducted a little at a time over 27.5 years. On the other hand, if it's a repair, you can deduct the entire cost in one year.
As a result, a fix-up you can label as a repair can be up to 271 percent more valuable than an improvement.
So what's the difference between a repair and an improvement? An improvement is a major change or alteration to property. According to the new regulations, there are three types of improvements:

• betterments -- improving property or repairing defects;
• restorations -- making older property like new; and
• adaptations -- adapting property to a new use.

In contrast, a repair doesn't make property better, restore it, or adapt it to a new use. A repair is a much more minor change that just keeps property in good running order.
Until now, due to a lack of clear IRS guidelines, some building owners were able to claim repair deductions for installing new roofs, replacing heating and air conditioning systems, and making major structural changes to building interiors.
When compared to the building and its structural components as a whole, these projects could be plausibly portrayed as relatively minor and therefore treated as deductible repairs.
This is no longer possible. In effect, the new regulations require that buildings be divided up into as many as nine separate properties for tax purposes: the entire structure and up to eight separate building systems.
A significant change to any of these must be treated as an improvement and depreciated over several years. As a result, more costs will have to be classified as improvements rather than repairs.
Under the regulations, an improvement to any one of eight separate building systems constitutes an improvement to the whole building and must be depreciated:

• Heating, ventilation and air conditioning ("HVAC") systems: This includes motors, compressors, boilers, furnace, chillers, pipes, ducts and radiators.
• Plumbing systems: This includes pipes, drains, valves, sinks, bathtubs, toilets, water and sanitary sewer collection equipment, and site utility equipment used to distribute water and waste.
• Electrical systems: This includes wiring, outlets, junction boxes, lighting fixtures and connectors, and site utility equipment used to distribute electricity.
• All escalators.
• All elevators.
• Fire-protection and alarm systems: These includes sensing devices, computer controls, sprinkler heads, sprinkler mains, associated piping or plumbing, pumps, visual and audible alarms, alarm control panels, heat and smoke detectors, fire escapes, fire doors, emergency exit lighting and signage, and firefighting equipment such as extinguishers and hoses.
• Security systems: These include window and door locks, security cameras, recorders, monitors, motion detectors, security lighting, alarm systems, entry and access systems, related junction boxes, associated wiring and conduit.
• Gas distribution system: This includes pipes and equipment used to distribute gas to and from the property line and between buildings.

For example, if a building's HVAC system is upgraded, it must be classified an improvement to the whole building and depreciated. This is so even though the upgrade might not be extensive enough to constitute an improvement to the building as a whole.

Tenant selection HOWTO

[From online forum]

Have seen many posts asking about tenant selection.  Here are my rules to share.

standard rule:
0) this is business, so treat it as business.  Money talks.
1) ok credit history.
2) good rental hisotry
3) stable/verifiable income after debts is 3x of rent.
4) a couple with young kids is preferred.

here are the reasons:

0) do not get emotion involved in business.  Or you will loss money.

1) bad credit indicates applicants are financially irresponsible.  On the other hand, applicants with perfect credit and good income would buy house within few years.

2) rental hostory is more important than credit sometime.  Anyone had bad rental history will do it again.  I have not seen anyone did not repeat it.

3) Income after debts are important.  Check income and also check debt payment.  3x rent indicates no problem to pay rent.

4) good business is stable and predictable.  For rental, a couple with young kids is a very stable family for years comparing to singles, or live with parents/roommates.  with exact 3x rent and young kids, the family has less chance to save and buy house.  And with young kids, the family would intent to stay in same school for many years.  Therefore, this type of tenants has good chance to be good long term tenants.

Of course, there is time to relax the rule.

When the proeprty is on the market for weeks and no other alternatives, I would consider someone with questionable credit/rental history or drop the income to 2.5x of rent.  To do so, we need to reduce the risk and minimize the loss in case bad thing happens.  A common way is to increase the deposit to 2x or 3x rent.  Some states do not allow that.  You might be able to ask for last month rent upfront.  the key is to collect more money upfront so that you have enough reserve to deal with eviction and vacancy.

Does Home Warranty worth the money?

Home buyer faces the question of home warranty all the time. Does Home Warranty worth the money?

Some people have some good experiences but most don't. The three most famous home warranty company are:  American Home Shield, Old Republic, and First American Home.

Here are some real life experiences (from online forum):

Person S: "Bought all three before but none of them is good. Won't buy any more."

Person I: "Old Repulic is waste of money. Paid the co-pay for a problem and then told me that it won't cover it."

Person B: "Old Repubic is a scam:
The plumber went there, check, and then say insurance denied coverage because it is a missing washer or something on the faucet that is hard to find. Then the plumber charged $150 for replacing the kitchen faucet, and I still have to pay copay.

I suspect the previous plumber did that a few months ago for the same leak..."

Person S1: "First American = Waste of money"

9 Rental Property Tax Deductions For Landlords

http://www.candofinance.com/taxes/landlord-tax-deductions/

9 Rental Property Tax Deductions For Landlords

By Michael Diaz


Landlords must take on a significant amount of responsibility if they hope to make a profitable return on their real estate investment. In addition to finding and keeping a sufficient number of tenants, landlords are also responsible for making sure rent is paid and for the continual upkeep of their rental property.

As a result, many landlords do not take the time to learn about the numerous tax benefits associated with rental income. This is a mistake. According to the IRS, a landlord can deduct almost all of the expenses associated with renting her property. However, without a thorough understanding of the tax deductions available to landlords, you could end up missing some of these deductions and overpaying on your taxes. Therefore, if you are landlord, there are several important tax deductions that can save you a lot of money when tax time rolls around.

   
Here are nine important tax deductions that landlords can take advantage of during tax season.

Repairs

You can deduct the cost of all repairs made to your rental property. Common repairs that are eligible for the deduction include repainting, fixing the floors or gutters, fixing leaks, fixing broken windows, fixing the roof and plastering.
Keep in mind that the costs of improvements or repairs that increase the value of your rental property are not tax deductible. Repairs maintain the current value and condition of your property while improvements increase the value. See the IRS website for examples of improvements that do not qualify.

Depreciation

The depreciation deduction is a way for landlords to get a tax break on the actual cost of the rental property. The IRS has a depreciation formula which reduces the tax value of your rental property each year. The annual depreciation amount is fully deductible.
For example, if you paid $900,000 for an apartment complex, the IRS would make an annual calculation to determine the tax value of the property. If they determined that the tax value was $895,000, then you would be able to deduct $5,000 from your taxable income as a depreciation expense. Keep in mind that the depreciation expense will change each year.

Interest

You can deduct the mortgage interest on your rental property. Keep in mind that you are often able to deduct the costs of securing a mortgage as well (i.e. the closing costs). You can also deduct the interest on a loan used to fund renovations and improvements. You may also be able to deduct interest from credit cards that you used to fund rental property expenses.

Cleaning And Maintenance

Your regular maintenance and repair fees are tax deductible. These fees can include landscaping, plumbing, cleaning, pest control, trash removal and equipment rental. The cost of your monthly utilities is also tax deductible.

Employee Wages

If you hire employees to work at your rental property, you can deduct the cost of their wages. The same deduction also applies to independent contractors who work for you.

Insurance

You can deduct the insurance premiums you pay for insurance pertaining to your rental property. This includes fire, flood, hurricane, landlord liability and theft insurance. If you have employees that work at your rental property, you can also deduct the cost of their health and workers’ compensation insurance.

Legal And Professional Fees

If you pay a tax professional to do tax work related to your rental property, the costs of that work is tax deductible. Legal fees pertaining to your rental property are also deductible. Finally, expenses used for advertising your rental property are tax deductible.

Travel

If you travel for purposes related to your rental activity, you can deduct your travel expenses. For example, if you drive to your property to speak with a tenant about a complaint, you can deduct your gas expense. Long distance travel expenses including airfare and lodging are also deductible. Make sure to hold onto all of your receipts.

Damage

If your building is damaged by a natural disaster or a fire, you might be able to deduct a portion of the damage costs. The exact amount will depend on the amount of damage and the amount of insurance you have for the property.

Keep In Mind

Almost all of the expenses associated with your rental property may be tax deductible. Consult a tax adviser if you are not sure if a particular expense is eligible.
The tax deductions discussed in this article are only applicable to landlords who have no personal use of their rental properties. There are different tax rules that apply to rental income from property that is used partially for personal use.
Generally, your deductions for rental expenses must be made in the same year in which you pay them.
Keep track of your receipts, checks, and bank statements that show your deductible transactions. The IRS might want to see them at tax time.
Being a landlord is a difficult job. Don’t make it harder on yourself by missing out on important tax breaks. Getting educated on landlord tax deductions could save you thousands of dollars at tax time.

Tax Season again! Tax for Rental Income and Expenses

Tax Season again! Tax for

Rental Income and Expenses - 2013

Improvement vs. Repair

http://www.irs.gov/publications/p527/ch01.html#en_US_2013_publink1000218983

How to do Tax for closing cost (HUD-1)

How to do Tax for closing cost (HUD-1)

[From Online Forum]

Closing cost is such a vague term. Different people have different definitions.  Some people confuse closing cost with prepay items like escrow reserve.  So make sure when you say closing cost, you know what you are referring to.

But in general, the closing costs are deductible but they have to be amortized over the life of the loan. 

Turbo Tax should guide you through.

Closing costs on an investment property may fall into one of three tax categories:

• Deductible as a current expense – These amounts are deducible in full as a rental expense in the year the property is purchased
• Amortized over the life of the loan – These amounts must be deducted evenly over the total number of loan payments required at the beginning of the loan
• Added to the cost basis of the property – These amounts must be added to the cost basis (i.e. the purchase price) of the property and must be depreciated

Note: The tax treatment of the items below relate to a purchase of an investment property. The tax treatment of these items when paid in connection with the purchase of a principal residence is much different.

HUD-1 Statement Line-by-Line – Page 1

100. Gross Amount Due From Borrower

• 101. Contract sales price – This is the purchase price of the property and must be depreciated.
  
  TIP: Even if you are buying a condo, you must allocate part of this purchase price to the land that the house, building or condo sits on. The cost allocated to the land may not be deducted, depreciated or amortized. The amount that should be allocated to the land will vary based on the size and location of the property, but it is common practice to allocate 10% to 25% of the purchase price to the land.
  
   
• 102. Personal property – This is the purchase price of any personal property included with the property and must be depreciated.
• 103. Settlement charges to borrower (line 1400) – These are the total of the costs that appear on page two and are discussed below.

Adjustments for items paid by seller in advance

• 106. City/town taxes – These are allowed as a current rental deduction but must be reduced by any amount on Line 210
• 107. County taxes – These are allowed as a current rental deduction but must be reduced by any amount on Line 211
• 108. Assessments – These are allowed as a current rental deduction but must be reduced by any amount on Line 212. However, if the assessments are specifically labeled as local improvement district (LID) assessments, they are not currently deductible and must be amortized over the life of the loan.
  

200. Amounts Paid By Or In Behalf Of Borrower

• 201. Deposit or earnest money
• 202. Principal amount of new loan(s)
• 203. Existing loan(s) taken subject to

These amounts are all included in the purchase price on lines 101 and 102 above. The amounts on line 201, 202 and 203 do not get separately deducted or amortized, but the interest paid over the life of the mortgage is deductible when paid.

Adjustments for items unpaid by seller

• 210. City/town taxes
• 211. County taxes
• 212. Assessments
  

These amounts reduce any deductible amounts on lines 106, 107 and 108 above.

HUD-1 Statement Line-by-Line – Page 2

700. Total Sales/Broker’s Commission – This is paid by the seller and has no tax effect on the buyer.

800. Items Payable In Connection With Loan

• 801. Loan origination fee
• 802. Loan discount These items must be amortized over the life of the loan.
  TIP: Many people think that these amounts (usually referred to as points) are a current tax deduction. However, the only time that points are allowed as a current deduction is if the points are paid in connection with the purchase of a primary residence. Points paid in connection with the purchase of an investment property or paid on a refinancing of a personal residence or an investment property must be amortized over the life of the loan.
  
• 803. Appraisal fee
• 804. Credit report
• 805. Lender’s inspection fee
• 806. Mortgage insurance application fee
• 807. Assumption fee These items must be amortized over the life of the loan.
  

900. Items Required By Lender To Be Paid In Advance

• 901. Prorated interest – Deductible as a current rental expense.
  
  TIP: This amount will usually appear on Form 1098 that you will receive at the end of the year showing how much interest you paid during the year. However, not all lenders include this amount on the form so be sure to check with your lender to find out.
• 902. Mortgage insurance – Amortized over the period the payment covers, which is usually one year
• 903. Hazard insurance – Amortized over the period the payment covers, which is usually one year

1000. Reserves Deposited With Lender

• 1001. Hazard insurance.
• 1002. Mortgage insurance.
• 1003. City property taxes.
• 1004. County property taxes.
• 1005. Annual assessments These amounts are deposited (escrowed) with the lender and are deductible when they are disbursed from escrow by the lender. These amounts paid from escrow should be reported on your Form 1098 at the end of the year.
  

1100. Title Charges

• 1101. Settlement or closing fee
• 1102. Abstract or title search
• 1103. Title examination
• 1104. Title insurance binder.
• 1105. Document preparation
• 1106. Notary fees
• 1107. Attorney’s fees
• 1108. Title insurance
• 1109. Lender’s coverage
• 1110. Owner’s coverage
  All of these amounts are added to the cost basis of the property (line 101) and must be depreciated.
  

1200. Government Recording and Transfer Charges

• 1201. Recording fees
• 1202. City/county tax/stamps
• 1203. State tax/stamps
  These amounts are added to the cost basis of the property (line 101) and must be depreciated.
  

1300. Additional Settlement Charges

• 1301. Survey
• 1302. Pest inspection
  These amounts are added to the cost basis of the property (line 101) and must be depreciated.
  

There may be other miscellaneous closing costs that you may pay in connection with buying an investment property. While the tax treatment of these amounts may vary, the general rules of thumb are that the costs associated with operating the property (such as real estate taxes and insurance) are deductible as current expenses, the costs associated with obtaining the mortgage (such as lender fees and mortgage application fees) must be amortized over the life of the loan and the costs associated with purchasing the property (such as title charges and recording fees) must be added to the cost basis of the property and depreciated.

Disclaimer:  Any tax advice contained in this article is not intended or written to be used, and cannot be used, to avoid penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

Co investment Howto?

[from online forum]

My relative in china has $50K cash. I do not have any cash, but I can get a loan.
We want to co-investment a house something like $220K.
How can we divide our owner percentage ?  The total cost is based on $220k or including the interest?

One good answer:

1. if this is your first investment house, think twice, because there is no easy way back.
2. if you insist to do it. check the numbers three times.
3. if you still think you can make a killing, form a LLC.
4. you should treat 50k as 2nd note, paying interest to your friend.
5. you pay yourself a reasonable management fee for your time.
6. when you sell, split the profit as to article of incorporation. its all about negotiation.

Success Story: Can you get rich by Real State? - yearend update of an old post..

[From online forum]

haha, can one get super rich by investing RE? the answer is NO, there is only one Donal Trump, but can an average person be financially free by investing RE? the answer is difinitely yes.
compare to most people, I am not a smart person, I don't have an post graduate degree, just a average guy can easily get lost in mountain people mountain sea.  but I can happily say, I am near the point of financial freedom, and for that, I think I am way better off than 95% of the people, will I get to 1%? maybe not, my goal is only 10 mil.
there is no secrets in RE investments, time consistency and scale. I believe scale is very important, it can further reduce per unit overhead, lower average management cost, increase occupancy rate, and achieve better cash flow.
today, I hold a porfolio of 9+ mil, own and manage 134 units, with 50% leverage rate, 3 full time workers, life so far, is beautiful.

2008-07-17 19:25:30

I had been involve with RE since I got out of college, it is by far the best tool to accumulate wealth that I know.

My profession by trade is ex-day trader(10 years, did make some and did lose a lot, thanks to Amzon, Lu, Exds and some others), now Fulltime Super DAD( don't pay alot but the fun is priceless ), small business owner(pays good but getting up at 9 is hardest part), part time bill collector(goto court once a week minimum go after deadbeat tenants), and the rest of my spare time, RE.

I involve with many phase of RE, from land development to construction to we all know what - LandLord, Landlording is not the easiest task, most Landlord give up after a few units, because the time and money they had to spend on it, what they don't know is there is light at the end of the tunnel, the more unit you have, less headache you have because you can then hire out, basically yes, economic of scales.

Leverage is the a important tool, but it is also the biggest barrier, Fanny Mae used to limited 10 mortgage per SS#, and now I think they lower that to 4 mortgage, so we have to do some creative financing, there got to be 100s of book on this subject, you just have to learn it and convince people and make it work for you. I am not talking about unlimited leverage, I am talking about controlled leverage, a leverage you must comfortable with, off my 7.4 mil portfolio, I personally invested less than 100k in it, the rest of money are from refi, rehab, land sale and flipping.

1. my avg per unit value at apartments 50k, duplex to 4plex at 75k, SFH range from 80k to 200k. My cost are much less than that, because more than half of them are once bank own REO, I buy them less than 50% on market value, rehab then refi at 75% and I pocket the cash. (I know, this is sub-sub-prime, and this is how the banks lose all the money)

2. my avg mortgage is less than 40k per unit, but I carry a higher interest rate ( mostly at 6.75 but some are as high as 7.875 ), to me, even 10% is cheap money if there is money to be make.

3. Property tax rate is 1.6% (120/7400), yes

4. Monthly rent avg $550 - close, some 1 bedroom unit low as $375, some SFH is high is $1750.

5. my area has a few world class orthopedic company around, so the avg appreciation is better than other area in Indiana, house under $150k still appreciated 10% last year, while overall market here is 3% to 5%. so cheaper houses has its own advantages.

6. my avg net profit per unit is about $100 per month.

thanks everyone for reading

RE online auctions are waste of time.

[from online forum]
if you want to learn something, go to few sheriff auctions...

Investment RE must cash flow, cash flow and cash flow!!!

[From online RE forum]
Lately, I notice many posts begin to ask questions on "Cash Flow" vs. "Appreciation", that reminded me, these were same questions raised 3 years back, when this forum first form.
This forum was separated from Home forum in 07, RE was so hot, RE investors begin to chase ultra high appreciation.  Many forum members share their stories on how to make 25-50k by just signing a construction contract, and value RE investing was put aside.
There were only few members argue that high appreciation, also translate into high risk. in 08, I wrote these.

investment RE must cash flow, cash flow and cash flow

2008-07-17 19:16:19

while traditional RE is more focus at location, location and location, I think investment RE must focus on cash flow, cash flow and cash flow.

many ppl here more interest in ultra high appreciation in RE and sacrifice with negative cash flow, they need to relearn the truth of RE investing in a long term market.

RE investors need to look at how to minimize upfront cash investment, and maximize positive cash flow, providing a consistent cash income and appreciation over time, nothing beats $0 investment but with 150k cash income and 300k appreciation each year.

3 years later today, not many old forum members left, most of them came and gone, the ones the still here, are these sticking to the basics.
I know RE market is recovering in most areas, even in Indiana, my area is almost back to its all time high, but only eying on appreciation instead of true positive cash flow, can be dangerous.
I am not saying high appreciation is bad, but as an investor, market will always going up and down, one should always prepare for the worst...

Few of the Pros and Cons of Multi Family Units

[From online]
MFU complex has its goods and bads, I usually don't recommend beginner jump in a big complex without any prior experiences, one should start with SFH in decent condition, I personally did not own any MFUs till I had over 20+ SFHs, but to reach a greater scale, eventually you have to look into commercial MFUs..
here are few of the pros and cons I can think of..
Pros
1. cash flow can be very good compare to SFH, due to lower per unit cost.
2. per door maintenance is much less since they all in one location.
3. centralized office means less traveling for you or handy man.
4. Insurance cost also cheaper compare to SFH.
5. similar floor plan, similar setup, easier to manage.
Cons.
1. Higher vacancy rate due to centralized location, aka, neighbors.
2. higher cost of leverage, shorter term loan.
3. commercial loan is harder to get, or maybe near almost impossible.
4. lower quality tenants, more younger generations.
5. owner usually has to pay basic utilities as water, sewer, and trash pickup.

How to invest on RE with retirement money

Answer:

• Self-directed IRA (Wiki)

• Entrust has been recommended