Welcome to an insightful discussion on real estate investments, where Tony J Robinson and Ashley Kehr address questions from aspiring investors in the BiggerPockets community. This episode highlights the multifaceted challenges that come with real estate, whether you’re purchasing your first property or managing multiple rental units.
Today, we delve into three significant inquiries from beginners at various stages in their real estate journey. Topics include the implications of purchasing a property with a partner, handling situations when one tenant wants to vacate while another wishes to stay, and feedback from a recent Airbnb guest regarding their experience.
Table of Contents:
Should you partner up for your first investment?
The first question comes from Jason, a potential investor residing in Los Angeles. He currently pays a hefty $2,750 monthly rent and has managed to save $80,000. Jason’s goal is to buy a fourplex and live in one of the units, allowing him to transition from renting. He also possesses a VA home loan, which adds to his financial options. Jason is contemplating a partnership with a friend, where he would own 75% and his friend 25%, with plans to contribute 5% down on properties valued between $1 million and $1.5 million.
The pros and cons of partnerships
While partnerships can offer shared responsibility, we question whether Jason genuinely needs a partner at this stage. With a solid income exceeding $200,000 annually and access to a VA loan, he might be able to pursue a property independently. By doing so, Jason could retain full control over the investment and potentially opt for a triplex instead of a fourplex, which might require similar initial cash outlay without the need to share ownership.
Ashley notes that with a VA loan, Jason might not even need to put down 5% and could consider a 0% down payment instead. This could significantly enhance the attractiveness of his investment. Instead of partnering, both he and his friend could utilize their own VA loans, enabling them to house hack and later consolidate their investments into a limited liability company (LLC) once they move out.
Managing tenant transitions effectively
Next, we turn to Kevin, a landlord managing a few rental properties. He’s facing a dilemma with a family renting one of his units. After the original lease expired, they transitioned to a month-to-month agreement. The husband signed the renewal, but the wife did not, leading to a complex situation concerning their lease.
Understanding lease agreements and tenant rights
Kevin must navigate California’s tenant-friendly laws. The husband’s request to remove the wife from the lease adds another layer of complexity. To do so, Kevin will need a formal agreement or an addendum signed by both parties. It’s crucial to ensure that all legal formalities are observed to avoid future disputes.
Another consideration for Kevin is whether the husband should requalify for the lease. Although he is the primary income earner, the impact of the divorce on his finances may need to be addressed. It’s advisable for Kevin to request updated proof of income, especially if the husband may be required to pay child support, which could affect his ability to meet rent obligations.
Guest experiences shape hosting practices
Our final question comes from Jules, an investor who recently booked an Airbnb for an event. He had specific expectations based on the listing, which included two parking spaces. However, upon arrival, he discovered that the second parking spot was shared, contrary to the initial listing information.
Best practices for hosts and guests
This scenario brings to light the critical need for clarity in property listings. Hosts must be diligent about updating their listings to reflect any changes accurately. In Jules’s case, the host failed to communicate updates effectively, which could lead to negative guest experiences.
As a proactive measure, hosts should maintain transparency and offer compensation for discrepancies. Jules’s case highlights the importance of ensuring that guests’ expectations are met, or at least managed, to foster a positive rental experience. A well-communicated listing can prevent misunderstandings and build trust between hosts and guests.
In conclusion, navigating the world of real estate investment and management requires understanding and adaptability. Whether contemplating a partnership or managing tenant dynamics, being informed can significantly enhance your investment journey.
