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No. of Recommendations: 1
The inspection went great. We found a few problems with the units, but they were obvious things that the handyman was supposedly aware of and working on. The appraisal came in about 15-20 % above the purchase price, and the guy said he could have gone higher if need be. So far, so good.

I forgot to mention that the seller only had the apartments for a few months. His job transferred him away from this part of town (he said), so he was ready to sell.

For some reason, it took me about 40 days to close the loan, and by that time things were taking a turn for the worse. Two of the tenants had left. Hardly any of the repairs had been made. Those that were complete were not very professional, to say the least. After I closed, I found out that he had filed an eviction notice on a third tenant and failed to mention this to me. At closing, I was expecting to get deposits and prorated rents from 4 rented units. My check was much smaller then expected.

It was obvious, in retrospect, that the seller did whatever it took to fill the units. I figured that, with better screening, I could keep them filled.

To make a long story short, I have had to make more then a few repairs to the property. Excluding a new central heating system, nothing has been major. Just a lot of little things. On top of that, I have had the same trouble keeping them filled. Summer arrived and the units lack air conditioning. Getting good tenants was very difficult. I lowered my standards and demanded a larger deposit. I could rent them, but couldn't keep them filled.

I have since turned to Section 8 (government subsidized) housing. This program pays $620 a month ($70 above fair market) and the government guarantees the money. The check arrives every month. So far, I have gotten better Section 8 candidates then I had been getting before. They require the apartment to be inspected, but the repairs I've had to make have been very reasonable.

It's too early to tell, but I have been happy with the program so far. Anything to stop the bleeding.

The good news is that the area is still improving. I get 2-4 cold calls a month from investors wanting to buy them. Once I get them all rented with Section 8 tenants, I might consider selling. With $2480 gross rents each month, I should come out OK if I sell.

If I can keep them filled, I will probably hold for now. I should be able to refinance in a year and get back all the cash I've put in and then some. Depending on the interest rate situation, my payments might not go up too much. Even if they do, if the turnover rate improves, I wouldn't mind the risk.
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