Debt (by Smokowna [MD]) Sep 20, 2017 9:56 AM
Debt (by David [MI]) Sep 20, 2017 9:58 AM
Debt (by Smokowna [MD]) Sep 20, 2017 10:10 AM
Debt (by S i d [MO]) Sep 20, 2017 10:11 AM
Debt (by Smokowna [MD]) Sep 20, 2017 10:21 AM
Debt (by Landlord ofthe Flies [TX]) Sep 20, 2017 10:33 AM
Debt (by NC INVESTOR [NC]) Sep 20, 2017 1:35 PM
Debt (by David [MI]) Sep 20, 2017 1:51 PM
Debt (by NC INVESTOR [NC]) Sep 20, 2017 2:20 PM
Debt (by Smokowna [MD]) Posted on: Sep 20, 2017 9:56 AM Message:
Hello all, I ask this question so to draw attention to what both borrowed money costs, as well as how much is lost with poor screening etc.
(Yes, the solution is to go to Mr LL conventions but short of that)
What seems like an unrelated question;
If you sell brown office desks and you have a customer who did not pay the invoice, you begin to count interest on the debt.
5,000 dollars and you add 100 dollars every month (interest).
After many months the balance is 7,000. You then recover the desks.
Do you apply a credit of 5,000 at that time, or do you continue to add interest monthly until you have sold all the desks?
(Thanks. I pose this question because if you do the math in a spread sheet it is amazing how much you lose. In the case of the desks you get back something that is not current and you have a tougher time selling them.
In the case of Cash for Keys, (Many landlords would be insulted at the mere notion) a non producing property is a tremendous loss.
If you have a tenant that sits an additional two months and you miss out on 1,500 dollars - the hit isn't just $1,500 dollars. Because you also have loans and had that 1,500 been applied to principal you would get much more value)
My answer was to not apply the credit for the desks when they return to inventory but rather when they are sold. I'm not certain that is correct logic.
Thanks all --74.96.xxx.xxx |
Debt (by David [MI]) Posted on: Sep 20, 2017 9:58 AM Message:
You should include late fees --166.137.xx.xx |
Debt (by Smokowna [MD]) Posted on: Sep 20, 2017 10:10 AM Message:
Thanks but I'm interested in knowing when the credit for the desks would be applied.
anyone following along with a spreadsheet will see the dramatic difference in the bottom line if you apply the credit when the desks return, vs if you apply the credit as the desks are sold. --74.96.xxx.xxx |
Debt (by S i d [MO]) Posted on: Sep 20, 2017 10:11 AM Message:
Smoke, I think logic would dictate you ONLY consider the delta (change) between the two sceanarios. In this case, we have cash-for-keys (quick property recovery) vs. eviction (could take awhile).
If you have debt or any other financial obligations against the property (i.e. insurance, taxes, etc), those do not increase or decrease as the result of a resident failing to pay.
Yes, they affect your CASH FLOW, but that is true in both scenarios.
So in my view the only difference is if the non-payer owed $600/month in rent and I pay then $500 cash to leave a unit broom clean and undamaged vs. waiting 2 months for the eviction to recover the property the calculation is:
Unpaid rent: $600 rent x 2 months = $1200.
$1200 - $500 cash for keys = $700 potential rent I can now get.
By requiring broom clean and undamaged, I save down time and repair costs of a PO'd tenant being kicked out.
Btw, "Cash for Keys" is charged against their Security Deposit...so in effect that almost cancels it out that as a separate line-item cost to me, leaving with just the amount of time of unpaid rent and thorough cleaning, which I then submit to collectors. --173.19.xx.xxx |
Debt (by Smokowna [MD]) Posted on: Sep 20, 2017 10:21 AM Message:
Many thanks.
I've sent the question to an actuary in Hartford.
--74.96.xxx.xxx |
Debt (by Landlord ofthe Flies [TX]) Posted on: Sep 20, 2017 10:33 AM Message:
What interest on the loan? While it's a per unit cost, you would pay that interest whether the desk is sold or not.
You should take that desk out of inventory, and assign it to recovered/returned/damaged inventory at its cost. Then sell it at a discount. The loss would be attributed to bad debt expense, and written off at year end. --108.69.xxx.xxx |
Debt (by NC INVESTOR [NC]) Posted on: Sep 20, 2017 1:35 PM Message:
At this risk of sounding stupid - what is cash for keys? I know in a foreclosure a bank will pay the occupant to vacate. Is that actually done with rentals? --75.181.xxx.xx |
Debt (by David [MI]) Posted on: Sep 20, 2017 1:51 PM Message:
Yes. You pay the tenant to gtfo and leave the place undamaged. It is alternative to eviction process. --166.137.xx.xx |
Debt (by NC INVESTOR [NC]) Posted on: Sep 20, 2017 2:20 PM Message:
How long do evictions take in your area to make paying a deadbeat tenant worthwhile? --75.181.xxx.xx |
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