Here in Wichita you can buy smaller older homes for a reasonable price.
You can buy them in decent area for $35 to $45,000. These are 2 or even 3 bedroom 900 to 1000 sq feet built in the 1940’s and 50’s etc.
I helped a woman buy one of these yesterday and she now owns about 15 and wants to buy more.
Her goal is to own enough of these and have enough cash flow that the rentals her her full time job and her sole source of income.
She would like to have 20 or so with each one cash flowing $150 or even more per month and thus she can then quit her job.
There are many many of these houses to buy. They are easy to find. People don’t want them – they’re not in demand. So there’s an endless supply.
Is anyone doing this? Do you have enough of these low end rental properties that you have quit your regular job?
Hows it working for you?
Replies
some questions first:
how much experience has she had renting the others out, or has she just started?
are the houses in good shape?
does she have a list of good, dependable and prompt repair services?
does she have a partner(s) to help manage things?
how does she find and screen applicants?
unless she has experience in poroperty managemant, she might be concentrating too much on the attractive buying price and not on the work and responsibilies and headache involved.
Edited 12/28/2007 12:46 pm ET by msm-s
The houses are renting for $550 (two bedroom) to $650 (three bedroom)Although, she gets even more money if it's a Section 8 renter.My understanding is the three bedroom she bought yesterday is going to be rented to a section 8 renter for $700 per month.No, she does not do her own maintenance work herself.But there are many many handymen who will work for $6 to $7 per hour so she goes that route.She's been doing this for 5-6 years so she's not new at this. She's been around the block once or twice.
i didn't expect that she was actually doing her own maintenance, just making sure she had enough dependable people to call to keep that many houses well maintained.A house in good shape does not ensure good tenants, but in bad shape, it does ensure bad tenants.sounds like she can handle an empire.
I worry about her not being able to do the maintenance herself. Other people are doing this as a husband and wife team where one or the other does the maintenance and the other does the phone calls, showings, paperwork, filing, collections, etc.It's hard enough in this business when you do most all the work yourself and you only pay for materials.She's making this work by hiring low paid laborers to do only the bare minimum in repairs and maintenance. But hey it's working for her.
i agree that a partner is a very good idea for many reasons, sounds like she doesn't want to part with a penny though (which is the best reason to have a spouse for business partner)i also agree that she personally should inspect the properties occasionally instead of just letting her handymen report back to her. doing some repairs is a casual way to come look at the place. i would not be doing this without a trusted partner/assistant to share the load.
Edited 12/28/2007 1:35 pm ET by msm-s
I'd be buying all that I could get my hands on. Bob's next test date: 12/10/07
At the conclusion of the closing yesterday, the buyer asked the seller
"can I ask why you're selling the house"The seller said "I don't like these low end rentals"The seller said "in a low end rental, the tenants call me nearly every day wanting something fixed"She said the higher end tenants rarely ever call and ask for anything.Anyway That was her experience.
"But there are many many handymen who will work for $6 to $7 per hour so she goes that route."
Do they still have their Boeing Union card?
rotflmao, lot of guys got a reality check when boeing hit the road. what i'm not worth 30.00 a hour +bennies poping rivets????larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
I guess I am jaded, when I was running the shop at Jabara and I was looking for help and the big "B" was in layoff these guys would show up and expect $30/hr (with no license) to work on a Cessna 150. My customers felt they should pay $25/hr while taking their Mercedes in at $60/hr.
I lived just north of you and the market was the same for old houses. They are fine for rentals.
I know a guy that does the same thing. One thing to watch for is the insurance on these properties. If you have over a certain number of these your insurance on them goes into a different category. He had over ten and the house burnt down. He wasn't covered. Total loss.
The people that rent these houses need some place to live. If you are willing to put up with them and they want to rent the house it's a good fit. Why judge them?
I don't mean to be judgemental.But have you ever talked to a landlord about the headaches they've had over the years?One guy had problems with people leaving non running cars at his rental houses when they moved out. They just left the car in the yard or driveway.I asked him what he did to get rid of the junk cars and he said at night he would fill the car with trash and debris and them just push it out on the street. The city would eventually come tow it.I said "why don't you just have it towed away"He said because then I would have to pay for it.
I didn't mean that you personally were judgmental. But sitting around talking about all the bad things renters do isn't helping. I take that back. It gives people a chance to blow off steam. But unless you personally were effected you're not blowing off steam.
I worked as a maintenance man in section 8 low income housing for about a year. I had to turn around apartments after people had trashed them. I had no help at all. I cleaned the toilets of mentally handicapped people who were off their meds after they left.
The owner of the apartments owned many units across the southern US.
But I chose to take the job. So I really can't complain. These people need to live somewhere. I'd like for them to get better care though.
We had to get one woman out of the apartments because she was out of control.
When I started on her apartment she had scotch tape all over the place. She had it stuck in holes and cracks because she thought we were spying on her. In her front hall closet she had taped the door closed from the inside. That's just sad that this woman was doing this. Sitting in a dark closet in fear.
Last I heard she was getting help but who knows how long it will last. With her it is pretty clear she needs help and it's not her fault but for many others it isn't so clear. But they still need help.
Sounds like she is trying to sell them to you . I dont believe her.
Ill leave at that.
Tim
Thanks for you input Tim - you and most of the others have been around this a lot longer than I have.I got interested in the low end houses three years ago when I bought this one (see the pictures)I bought it for $23 and fixed it up and thought I'd found a goal mine.I though I could buy any and all of these cause there are so many of them. Most are run down and need work.I thought "this will work" because they are small and easy to work on. I thought to myself "stay away from big houses that will be expensive" and stay away from two story houses that are hard to work on.Plus these are cheaper houses and I'm competing in a market where other investors buy nicer homes to flip or for a rental for $100 K and they pay CASH.I can't do that so I'm at a disadvantage.I would love to come up with some way to do something with these cheap, 1940 and 1950's ranch style houses. I like the ranch style floor plan and these are better houses than the older ones.It may be a total flop but I'm going to keep trying to see if I can do something and make some coin.
Here are the pictures
Here is the back of the house
If I remember correctly, you are an agent.
These properties should be valued by the rental prperty apoach shouldnt they??
800 per month is 80,0000.
No, they're valued according to comparable sales
Is Ar working on a different set of rules?
Any building that has been used for rental property over 12 mos and has a current lease that is beig enforced is elgible for comercial apraisel .
My properties are a commecial set of residential units. They are insured on one policy.
Ive had to demand some things be done this way, but I was entitled.
My apraisels reflect comercial value as well.
Tim
tim,i cut my teeth on that 1% of rent to value deal,heck in the mid 80's it was running 1.5 to sometimes 2. around here in wichita if it is a decent house 70k plus that 1% looks like fantasy land. i've got a house that would sell in 10 days for 135k,was rented for 1050,came vacant in nov,so tough time to rent, finally got what seems like a good renter at 995.00 after 45 days on the market.if you ask 1350 a month cobwebs would grow on the front door.
does that work,well to tell you the truth not really,but if i sell base is zero [bought in a 1031] so gov. gets about 45k,plus closing. i walk with maybe 80,then what?put it in the bank at 4.5
but it sure makes buying a tough deal to do.
let me ask this,when you say 1% return on investment,do you figure at what you bought it for or what it's value is today. i always have a hard time with that,if i look at what i gave,i'm knocking them dead [owned some as long as 30 yrs] but if i look at todays value well things don't look so good.larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
The investment property must not fall below 1 percent per month to VALUE. Its not considered a good investment if it does.
During the low interrest times weve had mine have fallen below 1 percent also. I should have sold if I was a good business man but I guess Im not .
Im gaining value though when yall say your not .
My banker told me one time that I could hold a property if I was beaking even on a 15 yr note. I disagree. But as he said , where are you going to get that kind of return?
They sell in so many years so tey arent in it for the long haul. Theres a difference .
I , like you have held mine and Ive became rooted as they say. I own a greater portion than the bank owns and I think you own yours out right . As thr years go by things always change . My properties are worth a lot more than I paid for them. BUT what would a broken down carp do if he sold them? They were bought for retirement . In my case it was health by incident . I never thought I would rely on themmthis early. I cant sell them now.
tim i can pick up your situation has change,don't need to go into details,but i found my self down from thanksgiving to a little before xmas and not sure what was going to happen,still not sure .
so i'm laying there thinking man what have i got myself and my wife into if this doesn't straighten out. i've got to say it's the first time this has hit me.i'm not sure how i or my wife would handle them ,we are 100% hands on, i probably spend less than a 1000.00 a year in outside help,everything else i do for better or worse. do you think in this market that if a guy was unable to work on them you could actually make a argument that they are a good investment? i have a hard time valuing my time,hell i'm slow and inefficent. but i think with ours i could easily spend 15 to 20 percent of the income in repairs and up keep. no that's not right let me revise that30-35% of gross rents,when you start thinking roofs,siding, hvac,the big thingsthat happen ,heck they get around 700 for a hot water heater!anyway when you have nothing to do but look at the ceiling and watch the judge shows on tv these things start going on in your head.
i talked to my wife and told her,if she finds herself looking down that barrel,call the auctioneer and sell them if they become a burden at all. i just couldn't see how they would float themselves at that point.
i have always pictured at about 65 to start selling these things and eating off of them.but maybe things will change.who knows larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
TIve been there hats why when I hear people start talking bout what they dont know wen Im in the ditch. I dadgum sure do know because Im doing it . I dont want to hear some lady has a job at the bank and hires people for 7 bucks an hour. I pay a cleaning lady 10 when I have to have her and no one hires good labor cheapertan I do on tis board. She can get it . 7 would buy someone thatwouldnt show up and spend alf the time outside on her cell phone smoking. been there and bought the T shirt.
We should make these folks a list of what we do.
Buying rentals in my mind is a working investment . A guy that bought a dump truck said he gave 60 grand for a job.
Bein a cowboy aint all ridin and shootin, but you cant tell the greenhorn that till he swings into the broncs saddle.
Ive told DW and daughter , if somthin happens to me , sell um fast. They dont have any business holding them. They know more than this lady . They have
ped me all along. They cant do it though. DW thought she would try it and I let her try as I posted a short time ago. She gave it back to me . Shes selling insurance now. She thought she wanted to flip so I took her out on a bad repo and Im working alone on it right now. Shes the one that wanted it not me . Didnt take her long to get out of the ditch.
I sprayed KILZ all day long today closed up in that house with cold temps . She fixed supper but said she could not stand me at the table smelling like that.
rotflmao,,,,i did the kilz thing new years day,used oil base,man that was a nice buzzzz. i swear food didn't taste right till the next day. but painted today so were done with that deal.
heres something i've run across,our county gov.runs a haz waste drop off and they take all the latex they get,ext,int what ever and mix it together and come up with 3 colors,gray,beige ,white. i bought 5 gals of beige today 20.00. best covering paint i ever used,kicks s.w but.i'm going back and buy some more. check if you have something like that down there.larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Larry;
I noticed a couple times that you referred to the potential taxes that the government would take on a resale, and you feel it is a high number.
For what it's worth, my understanding is that right now the federal taxes would be at 15%of the profit for long term capital gains. I haven't checked with the accountant recently, but I also have not read or seen anything that would lead me to believe otherwise. I know that you are dealing with no basis properties, but it's still only 15% federal + state, which may be same, higher or lower.
If the Bush tax cuts go thru sunset provisions next year (Or this year?), that might change. If the Democrats take over, that number is likely to go up.
I'm looking to sell a couple of my higher properties this year. Waiting for a check on part of one this week.
Don K.
EJG Homes Renovations - New Construction - Rentals
Thats the figure I was told as well but havent researched it , thanks .
you are right on the fed. tax,i think it was 20 but lowered to 15. then i have the state tax which will snag about 12 i believe. something that i'm never sure about is then does that figure into my gross income and raise the tax bracket that i'm in? if so it could really bite. i see guys cash there 401's thinking oh i'll pay tax and penalties only to find that it moved them from a 20% tax bracket to a 35 at the end of year.
i will say i got into this game back when capitol gains were taxed only on 40% of profit,then that went away with regan,then for the next 15 years you couldn't afford to sell no matter what,but now this is as good as it will ever get i think. i would expect the next president,no matter which side of the fence to raise this some,how much??????? larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
i forgot to say even at these low rates that anyone that is still in the accumalative stage of their life should be working with 1031's ,it is really the only practical tax shelter i have ever found to really be a benifit. they are going to get their money someday,but i might as well use it as long as i can.larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
That is true.But it is only for CAPITAL GAINS.You still have to pay recapture taxes on the depreciation first.That is either 25 or 28%.If you bought a property in the last 5 years are so just before the run up in prices then you will have a lot of capital gains and little depreciation.But if you have had a property for 20-30 years have a big slug of recaptured depreciation..
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A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
Paying depreciation recapture can hurt.
But IIRC, the scale varies with the time period that the property is owned. (Going from memory, if the property has been owned for around 7 years, there is no recapture.) My accountant didn't seem to worry about mine.
If you are talking about residential rental property, its over a 30 year depreciation schedule (plus). The recapture provisions were really developed to get the people that use accelerated depreciation for stuff like 3, 5 or 7 year equipment. Say, buying a car at 25K, then depreciating the car all off first year and selling the car in year 2. Uncle Sam doesn't like it when you play that game. He gets his - and some of your's too.
Don K.
EJG Homes Renovations - New Construction - Rentals
I am not 100% sure of this.But I think that the recapture is only on that part depreciated in "recent" years. Or it might only cover those under the "new" depreciation scheuldes.I believe that the change was in 97 with the same laws that changed the way that capital gains on personal residences was handled..
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A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
I think it's more complicated than that. It might have different tax rates for parts of the recapture. Bob's next test date: 12/10/07
What are the rents going for?
Bob's next test date: 12/10/07
I also wanted to mention that my buyer has "OK" credit. She has some dings in her credit. I need to find out what her credit score is.But anyway, she is paying 20% down and then borrowing money at 7% interest which I think is a good interest rate for investment properties.The bank requires that her loans be 20 years or less.Yesterday she borrowed about $36 K. Her monthly payment is $370
this is one key item that is all but never touched on...
Meet your renters... know their name.... make sure you know a little about them... make sure they know your name...
have a good phone number for them... call them when they move in... make sure everything is ok... make this call again in a week... or stop by...
if they think you care... most will also care.... if they like you they are less likely to screw you or screw up your stuff...
I don't always do this but in hindsight the tenants i had a slight relationship with pretty much took care of my stuff... the ones i never met didn't...
simple things you learn everyday
p
I agree Ponytl. Most of the thoughts I've been referring to have been along those lines but the discussion hasn't been about the positive things that can make a big difference, rather about the negative things that make the business a PIA. Obviously, if a landlord business grows to several hundred single family homes, it will be very hard to keep it personal. Instead the author creates a variety of positive motivation programs to entice the high quality tenants that he did attract to stay in the home and pay the rents on time. Ideas like yours: discount for paying on time, discounts for leaving without an eviction process, referral fees if the tenants refer someone who can pass credit check, etc. If memory serves me correctly, the author basically restructured his business to reward good behavior while bending over backwards to keep his properties in tip top shape and give "gifts" to those tenants that were loyal and payed on time. The gifts were in the form of "luxury" items such as new carpets, new bedroom fans, etc. On the surface, they really were capital improvements but the tenants looked at it from their point of view: they were receiving new improvements that made their lives more pleasant. I'd venture to say that most landlords wait till their clients move out before they put in new carpet. Maybe those clients would have stayed if they got new carpet "for nothing". The author was very big on putting back into the deal the proper amount for maintenance. He also was big on enforcing the agreements such as keeping the lawn maintained, reporting problems etc. He all about pro active landlording. It just sounded like basically good business to me. In the words of a famous fellow: "whadda I know?" Bob's next test date: 12/10/07
Have you heard of a franchise called "Homevestors"http://www.homevestors.com/modules/sell_a_house/sell_house.php?refid=1&keyword=homevestorsI think they are nationwide and so there is national advertising.You buy the franchise for your area and I think you get a lot of activity with people calling you. Their motto is "We Buy Ugly Houses"There's a guy here and I think he does pretty well.
Editing note: I goofed. I thought I had addressed this to 'all,' I see that did not take. my apologies to Don.
One of my customers is a soft spoken little guy ..... one would never guess that he never finished high school, or that he is quite weathy. You would never imagine a poor youth, with drunkard parents ... or the teenage waif left to fend for himself on the streets.
Early on, he mastered the art of dealing with people. I can't imagine anyone getting mad at him. His next foray was into property management. Today, he buys run-down slums, remodels them, and continues to rent them to the bottom of the economic ladder. After a few years, having 'turned the place around,' he sells.
He does a lot of the repair work himself. Or, he'll dredge up helpers from 'skid row.' Serious work he hires out.
He has tried hi hand at other ventures ... such as contracting .... and has lost lots of money each time. Now about 50, he's learned to stick at what he's good at.
Learn from this man!!! Don't assume, however talented you are at your trade, that you can master his.
On the flip side .... I lnow another man. He's lived his life right, never set a foot wrong. Married high school sweetheart, got the union job right out of school. Today, he's way up the ladder, earns excellent pay, has all the benefits. So, he decided to get greedy, and bought some 'income properties' at the top of the bubble.
He's still learning that property management is a full time job. He's making every classic mistake - and could very well lose it all.
learn from him as well.
Edited 12/31/2007 8:32 pm ET by renosteinke
I'm confused by the last post.
Were you aiming it at me?
Don K.
EJG Homes Renovations - New Construction - Rentals
No. I addressed it to 'all' because the advice, I thought, ought to be a caution to anyone considering a new line of work.
OOPS ... the address was not to 'all.' I've added a note there. My apologies.
Edited 12/31/2007 8:33 pm ET by renosteinke
Those are the rental homes I get to work on mostly.
The renters beat them up and then I get to get beatup by the slumlord owners 'cause they never want to pay anything and think all a house ever needs is a quick kilz paint job between tenants.
I'm thinking of putting an ad on the side of the truck that reads:
Rental Renovations: Making Sinking Turds Float
ITA; decent tenants make all the difference. that's why i'm curious about how much experience she has before she continues buying up this property.
of course, if the properties are all adjacent and the rental business all goes south, she'd be sitting on a nice chunk of property to sell to a developer.
I thought they said you can't really polish up a turd
Spray it with a clear coat and the gloss will sell anything to a renter.
Rental Renovations: Making Sinking Turds Float
I talked to a landlord and he said he had a renter one time who turned a garage into bedroom WITHOUT PERMISSION. I mean major work like closing in the garage entrance, making the garage into a finished room, etc.
lol- and probably expected to get rent discounted for his "improvements".
Sounds like she is going head first into a tunnel of no returns.
She is likely to get into a lot of these places and although she paid small sums for them individually she has a lot tied up in them collectively, maybe even some debt.
Then the rents decline because there are so many that the inventory exceeds demand and .......
She also winds up competing with nicer properties.........which may rent for very competitive amounts depending on the economy at any given point in time.
"What's an Arkansas flush?......It's a small revolver and any five cards."
The old adage of not putting all your eggs in one basket or in this case, one type of basket is probably a good one, too.
Just like in stocks you need diversity to spread risk.
"What's an Arkansas flush?......It's a small revolver and any five cards."
Thats what I do. I started about a year ago and have three rented so far. Were just finishing up a duplex and I have another duplex to start in about a month.
I'm not really crazy about the duplexes though. The product I deliver gets really expensive when you're doing two at once.
My goal is financial freedom also and so far i'm averaging about $100/ unit.
It's none of my business but I'll ask anyway.How many do you plan to buy?Are the houses easy to find?Are you financing the homes? Does the bank require you to put at least 20% down payment?Thanks
For some reason I have the number twenty stuck in my head.
Right now in Michigan you can't throw a rock without hitting a foreclosed house, so yes relatively easy to find.
I do have loans on the houses and due to the economical climate in Mi yes i've been needing 20% to get in.
We buy them cheap, fix them, reappraise them and then refi.
So far its working well but as I said in my earlier post this duplex is kicking my butt.
Its a great location and I got it at a great price but I knew it would cost alot to fix. I just hate being this far in. Waiting to refi can drive you nuts.
Before DF and I got together, that was her plan, almost to the letter. Went well for her and ex-hubby until the economy went belly-up in Niagra Falls. They filed, gave properties back to the bank, and liquidated as best they could. Place is a ghost town now.
Fast-forward 5 years. Hubby is ex, DF is in NC. Soon as her divorce was final, she went to the closing table on her first income property in NC. First time around she was wrong place, wrong time. Coulda happened to anyone. Did she get scared? Sure, but more scared of eating Alpo 3 days a week in her "golden years".
Personally, I think there's great opportunity for people like your friend/client in that arena. We/she have 2 properties currently; 1 section 8, 1 private rental. Both are in less-than-desirable parts of town, but oh well. The purchase price was right.
We hope to acquire about 20 or so of these in the next 10-20 years to supplement "retirement". Let the animals tear 'em up, I'll just fix 'em back. Sure its frustrating, but you need to know that going in.
Just my 2 cents.
David
Thanks for your info - I think I could make more money if I bought three low end houses for $35 apiece rather than buying ONE nice home to use as a rental property and paying $100 K for it.Do you agree
i'm friends with a lady (40yo) that has about 100 units... all low income stuff... her best duplex might be worth 40k... but she has 12unit apt buildings she paid less than 50k for... she does about everything herself with one helper... rents average 350mo
alot of property around here can be had for 3-5k per unit... in buildings of 8-12 units... most built in the 60's
single family... lots of it around for under 10k....
p
Around here the low priced houses $25 to $30,000 do not seem to appreciate while bigger nice homes do appreciate.So you would just plan on buying these low end houses, put the monthly cash flow in you pocket, and then get out at some time in the future when you're tired of dealing with the people, and probably sell the houses for what you paid for them when you bought them.I'm wondering if it's hard to sell them and get out down the road in that probably nobody will want these POS houses?Agree?
most of what i see....
are elderly people who have had these rentals for many years... worked their butts off and did ok with them... they educated their kids.... so now that they are 80years old... their kids don't want them... and the parents don't want them to have the BS that goes with em... so... they sell... very hard areas... but the lady i know screens her tenants well... tried to rent to older people... and tried to get all older people in one building... but it usually ends up with several family member in one building... she likes older because 1 they stay put... they get a "check" and usually don't have cars... since most of these 12 unit buildings only have 5-6 off street parking spots...
I can't see them going up in value except if you can value them on ROI and sell them to someone who... just doesn't know what goes with being a slum lord... :) one guy i know... tries to sell them to the tenant and carries the note... usually @ 10x what he paid for the property... then if need be... it's easier to sell a note than would be to sell the property
like others have said it can be done... and is everyday...
Yesterday the Buyer walked into closing with a check for $10,300.She bought the house yesterday for $42,000. The house is "move in" ready.$10,300 is what she paid for her 20 percent down and her closing costs.In return, she will receive rents of $700 per month ($8,400 per year) and the renter is section 8.That's a pretty nice arrangement.If I figure correctly she's making a 20% return on investment.Not too shabby
Isn't section 8 running $500/month, or is this based on region/state? If the landlord is taking additional money from the tenant on top of the section 8, then be careful. It is illegal.
I've had low and medium rentals, and vacation properties. I've suffered when I've had low end tenants in the properties. Lost rents, court costs, repairs, cleanups and empty places while you rebuild and try to find somebody worth putting in there. Most recently have been dealing with exterminating, roach problems. I've never been, and will not become a slumlord, so I do care about the properties. But in the low income arena, there's no appreciation for the eventual sale and no justification for putting a lot of money into a house.
As far as her 20% return, I'd be real skeptical about that. Look at what she really pays to keep the places going, and what she really makes at the end of the year. Then calculate actual return. Little stuff, like a couple months lost rent between tenants or a new appliance or whatever all hurt the bottom line. Maybe the numbers in your area work. In most places, they don't.
When everything's rented, it's easier to like the job. But I've gotten to the point that I'd like to start selling and finding another way to make money.
Don K.
EJG Homes Renovations - New Construction - Rentals
Isn't section 8 running $500/month, or is this based on region/state? If the landlord is taking additional money from the tenant on top of the section 8, then be careful. It is illegal.
Totally legal where we are in NC. Sec. 8 subsidizes or pays in full. We've got one who was paying about 85.00 out of pocket and sec. 8 was sending us a check for 650.00 or so. Get a letter last month from housing auth. stating that now they'll be footing the whole bill.
One happy tenant.Live in the solution, not the problem.
If the landlord is taking additional money from the tenant on top of the section 8, then be careful. It is illegal.
I don't believe that is true... they receive a voucher for X $$ they can add as much as they want... as i have always understood it...
p
If the landlord is taking additional money from the tenant on top of the section 8, then be careful. It is illegal.
I don't believe that is true... they receive a voucher for X $$ they can add as much as they want... as i have always understood it...
Back when I had some rental property I could charge X amount of dollars for a house and section 8 would pay Y, the difference was to be paid by the tenant, perfectly legal!
I think that the tenant was only allowed to go so high on a place though, ie; if the sec 8 person was going to get $550 a month towards a three bedroom place they couldn't be looking at a place renting for $900, there was some percentage, don't recall but maybe on a deal where they got $550 they couldn't look at anything above $700, really don't remember the amounts but you get the drift.
I managed a few places that the renter paid as low as $55 and some as high as $175-$200.
Doug
98755.41 in reply to 98755.35
If the landlord is taking additional money from the tenant on top of the section 8, then be careful. It is illegal.
I don't believe that is true... they receive a voucher for X $$ they can add as much as they want... as i have always understood it...
No! This comes from the renters trying to get properties rented . Ask the lady doing their inspection and you will put the deal on its heels . This is a crime.
Ive never rented a section 8 because I tell the truth and this comes up every single time . They call and ask if I accept section 8 and I just say , No I Dont !
Heres what I see wrong with the deal for me ; They want to pay 500 which is usually what it is for 3 bedroom. My houses rent for 600 plus . I would have to sign a years lease with the goverment for a year that I was accepting 500 per month for all considered. Anything you do past that the gov is tied to it every time . The word governed comes to mind. The renter knows all the time you lied . Its not a good crime when someone else knows it .
It takes a week to 14 days to get the first check issued and Ive got cash withn three days doing it my way. I get people who work and can pay bills and thats a big difference in the type renter. I could go on and on so Ill quit.
Tim
bout time you chimed in... this topic though made for you... is... just not generic to all areas...
at least we have a clue what you deal with in this area... and it just ain't the same...
peace
p
What do you mean its not the same ?
From what I understand ( not much) there is a sliding scale with section 8. They start out with a high rent and then start taking out of that for this and that. If they have a lot of things taken out it can be very little rent they have to pay.
The problem we had was there were elderly mixed in with mentally handicapped people. The elderly really didn't want to live next door to someone who was mentally handicapped. According to the manager she was supposed to have a certain percentage of each by law or it would look discriminatory.
You are correct.
Section 8 is running 500 per month and its illegal to take more money.
This lady is in big trouble.
"Section 8 is running 500 per month and its illegal to take more money."Wrong on both accounts."Summary:
The Section 8 Rental Voucher Program increases affordable housing choices for very low-income households by allowing families to choose privately owned rental housing. The public housing authority (PHA) generally pays the landlord the difference between 30 percent of household income and the PHA-determined payment standard-about 80 to 100 percent of the fair market rent (FMR). The rent must be reasonable. The household may choose a unit with a higher rent than the FMR and pay the landlord the difference or choose a lower cost unit and keep the difference.Purpose:
Several assistance programs exist under Section 8. Together, the voucher and certificate programs help more than 1.4 million households in the United States. The administering PHA or governmental agency inspects the housing units to make sure they comply with HUD quality standards. The voucher program is similar to the Section 8 certificate program but gives households more choices, especially in high-demand markets where landlords may be reluctant to accept HUD's FMR level.Type of Assistance:
Through the Section 8 Rental Voucher Program, the administering housing authority issues a voucher to an income-qualified household, which then finds a unit to rent. If the unit meets the Section 8 quality standards, the PHA then pays the landlord the amount equal to the difference between 30 percent of the tenant's adjusted income (or 10 percent of the gross income or the portion of welfare assistance designated for housing) and the PHA-determined payment standard for the area. The rent must be reasonable compared with similar unassisted units."http://www.hud.gov/progdesc/voucher.cfmHowever, I did read another source that indicates that the landlord can't charge more the FMR. But they can collect more than the volcher amount..
.
A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
Edited 1/4/2008 9:42 pm by BillHartmann
Sounds good doesnt it ?
I figgure the 30 percent is already in there .
Ive been to the section 8 office three times asking this same question over the years.
Every section 8 renter will tell me they can pay me the extra money.
Ive asked 3 times.
I cannot reciew any mones from the renter . What ever hud agrees to pay me is it. Its 500 and somtimes is less. Never has been more. This is not up to me . If it was Id ask 1000. Getting 525 would be like asking 1000.
It is ilegal to recieve monies from the renter. The way it was explained to me , if ty can pay more money, its not on their facts sheet. They are reciewing gov assistence which is federal monies. If they could pay more , they would give them less. The section 8 renters here
i had a sec 8 renter for about 2 years. She would pay like 350 and guvmint would pay about 1000/mo.
Both years I wouls get a rate sheet saying how much she had to pay and how much the Uncle was going to pay. Depended on her income, number of kids, etc. She took in a foster baby for a bit. I suspect it was to lower her rent
So yes I did get money from a Sec 8 renter
It might be time to ask again. I just did it a year ago. When was this ?
This was a bit over a year ago. We sold that rental in Oct of 06.
I just thought that was the way it worked. Renter kicked in some to give them some investment in the rental.
Somthing else to note in tisdiscussion
Ive got high end rentals
This lady has low end rentals 2 bath
Shes getting 800 from a hud renter
all they will offer me is 500
Ive got 75 to 100 thouand dollar rentals compared to her 35, 45?
I get 600 pr month out of a les than 10 year old house . There bed
2 bath w garage.Hud will not pay it .
I think whoever told you that you could only accept the voucher value for rent is mistaken...
the main thing the section 8 voucher program did here was to get the local gov out of the housing business... which they did very poorly and was full of fraud & waste...
what they do here... is inspect the property before the voucher holder moves in... make you fix a few things if needed... and inspect it when they move out... they will pay for any damage the voucher holder does... they will also pay you for lost rental during repairs... there is a limit to this...
I would guess well over 50% of the voucher holders pay something to the landlord... many here only get/qualify for less than a $300 voucher
p
"I would guess well over 50% of the voucher holders pay something to the landlord... many here only get/qualify for less than a $300 voucher"
I agree with that . Id guess more than that.
I'm not sure if a tenant can kick in more than section 8 is willing to pay.
What I do know is it is illegal to have a different rate structure for a section 8 tenant and a none section 8 tenant. In other words if a you have a multi-unit building with several identical (open to challenge I guess) units you can't charge more for the unit rented to a section 8 tenant.
I don't know how this would work for say similar single family homes in the same area.
Dan
Hmm. Never considered it .
Its not a deal to me since I dont do section 8, but I have increased and decreased the rent per party. Since I only take private monies I dont see an issue.
Tim
Tim
So the misses found out your job is harder then she thought huh! Back working solo?
I wouldn't try to tell you anything about the rental business but I do know for a fact that here in Iowa it WAS (don't know if the rules have changed) legal to take money from the tenant on Sec. 8 rentals.
I dealt with several properties for my FIL after I got run out of the rental business and I handled all the sec. 8's that he had. Everyone of them paid above the money that the gov was providing. Some as low as $35 and I believe one as high as $$150 but they were all legal.
The tenant was not allowed to rent anything that was way above their means, eg, they were given $500 for a house, they couldn't rent one for $1000 and pay the diff, they had a percent to work with, maybe if they were given $500 to use they could look at something up to $650, not real sure on the percentages now, been a while and that may be the crux of my experiences, long ago and rules have changed, don't really know because the two properties that I have as rentals/investments are not sec 8's and never will be!
Doug
Yall are gonna talk me into going back down there and asking . <G>
If ya ask me their kinda stupid.
If I had a low end house that would pass inspection then I guess I would target them for what they pay. But I dont really care for a section 8 renter. In this area , they have nothing invested . They dont normally work full time if at all. I know there are people that really need but as a GROUP they are the bottom of the barrel as tenants. Trashy yards going uncut and the carpet is worse in a lot of cases . The fact is you just dont know what you are getting like you do with qualifying tennants and references. Most of the people I get since I have houses are the need for 3 or 4 bedrooms because of kids. Lots of kids! I love kids like everyone else but not in my houses if I can keep from it . I would rather have a couple with a small child or no children at all. Simply from wear and tear. I like them to drive a nice car , not one that leaks oil all over the driveway. Sometimes they end up with a couple of spare cars that dont run and those are hard to get rid of . I want people that get up in the morning trying to make a difference in the world and are proud of the things they have done and take pride in their material things. . Those renters will move on to home ownership but they are a joy to a landlord.
This is where the hud people are stupid;
They will rent a house trailer for the same money as they offer me .
Tim
Yall are gonna talk me into going back down there and asking . <G>
Just don't go quoting me on it!
Like I said, it was a few years ago so who knows.
Tim if I'd of known you 20 years ago I'd probably still own the rental property that I had, sitting a little better right now for it.
Some people are meant to do this, you being one of them and me, I'm not good at it.
I agree with you completely on the section 8 deal, better if you can go without them.
Your analogy to owning and renting only good properties is similar to those that I learned in the antique business, buy and sell the better stuff, more fun, less gamble usually its financially more rewarding!
Thanks Tim
Doug
Dw had been watching those flip and fix it shows. She was fired up for a while until she got in the ditch with the dirt and grime . She lasted about a week wearing rubber gloves the whole time . I never said a word abouot the gloves . She went through two boxes of disposable but she cant stand anything about it when it gets nasty. Shes the reason that when I get behind and a house needs to rent , I hire a cleaning lady to help me .
Shes over it now and has moved on. Shes no different than a bunch of people who have tried it . I knew I had to let her try. She would not listen to me . Im back to working alone .
Tim
Anyone considering investing into any type of rental property should give it serious consideration. I have done just this and have, at this point, backed out of many of deals because the buys just did not seem profitable.
I read several books on the subject, talked to many people who own rentals of all degrees. I researched the at the auditors office for comps, etc. What I can tell you is don't jump into it feet first without weighing all of the options very carefully. If you overbuy in a bad neighborhood, you will not make that money in the immediate or in the late future. Neither by rent or sale.
I read one book which I greatly attribute to not making some horrible mistakes. It is called:
The Complete Guide to Investing in Rental Properties - Steve Berges
I strongly suggest reading this book. Also, I have attached an Excel spread sheet that I created for my personal use, and somewhat reflects the information covered in the book. Feel free to look it over and use it carefully. Just fill in any grey boxes and let the spreadsheet do the work.
i don't do residental... i have one duplex that rents so easy that we have had for so long... i just... keep it...
but commercial property feeds me... I've had rental property since i was 18 so not like i'm just show'n up for the rodeo...
i understand the numbers it takes to make something work... but when you are dealing with a place where people live... it gets way too personal for my tastes...
in my commercial spaces for the most part... if it breaks you fix it... if taxes insurance go up... you pay for the increase... if i repave the parking lot... you pay your percentage... I could (but don't) charge a management fee and bill the tenants for it...
whats not to like?
p
i don't want to hijack this,but a quick question on commercial, i have a tennant thats going to do probably 45-60k in improvements for his bussiness. as the owner do i need to worry about that if he doesn't pay the bill,can they put a lien on the property even though i didn't authorize the work? how do i avoid that happening? thanks larry
now back to our regularlly scheldued programif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Larry, you mentioned earlier that you had two houses for sale (or maybe it was a duplex, I can't remember) but she would be interested and would like to take a lookseeShe works as a nurse at a hospital and her day off is monday and tuesday.I could show her the houses whenever it's convenient for you and your tenants. Monday or tuesday is best for her.
If I understand correctly, with commercial rentals, your value of the property goes up as the rents go up. It seems much more lucrative to do commercial. Residential seems to be more of a starting point to get in the game.
I don't see low income rentals being my taste. I know people that do it, and they claim to make good money. But they are missing a key point. The real estate portion of the rental. The value of a house depreciates, the land is what adds value over time. Location, location, location.
for the most part... you are correct.... commercial value is tied to income produced after expenses... ie... after taxes, insurance & maint.... thats why add ons or cam fees affect value...
in this market many think an 8% return is ok and will value property by that...
mobile home parks are very hot... not sure of the exact thinking but... if you think about it the value is there...
well located parking lots are always very good... I'm not in a huge parking market like a big city would be where they generate upwards of $80 per day per spot... but I know of people here who do generate $60 per day per spot... you don't get alot sweeter than that...
bottom end rentals have a place... and someone has to do it... it's a risk reward thing... if you treat the property well... you can make a really large return with not a huge hassle on a 10K property....
this is realistic.... 5k purchase price... brick unit 2br 1ba... 900sf.... 1k new 3tab roof... 1.5k mini split heat cool.... 1k all vct floor... .5k all off white gloss paint.... .5k new used stove, refrig, .5k misc.... 10k invested plus some labor... will get you $500 month section 8 or not section 8.... thats 6k yr income with next to nothing in maint for the next few years... taxes & insurance on this will be about $700yr or less here... so you could have this paid for in 2yrs...
10k loan on a 30yr amort. costs what? $40mo on the high side? you get 100 of these and you are looking at a million invested... the money will cost you 7-8k a month... and you should have 40k come'n in when you figure maint taxes insurance vacant units ect... to service that debt... so after debt service... 30k plus a month for a very full time job.... run it like a business and as a package it should have a value sold as a business of 3mil min...
p
ponytl,
those prices are shocking to me..
I mean our low end communities little one and two bedroom homes start at $160,000, I've seen a few at $140,00 in real dirtbag parts of town but the work required to bring them up to code to rent puts them right back at the $160,000 range and you are still in the wrong part of town..
What's Mooney doing just lurking on this thread like a newbie anyhow? snorK*
Bet he's just reading and thinking.
Then he'll drop a post chock full of meat worth chewin' on
then drop back into lurkerhood.
Funny how he started doing that.
Rental Renovations: Making Sinking Turds Float
looks like this thread has died so thought i'd see if i could pick your brain a little on evicting a commercial tennant. i know your in a different state so things could be different ,so i'll keep that in mind.
i can pull up pages and pages of residential laws but nothing to give me any direction on commercial.
here's a quick rundown on what i've got. tennant has been in building 7 months,on a5 year lease. no rent in dec or jan. i have served a notice to cure that gave him 7 days as per the lease agreement.nothing. now in the lease if it's not cured in 7 days i can notify him with another 7 day notice that i am terminating the lease and will obtain possesion in any legal means? [whatever that means.]
now on res. i would go to court ,judge rules rents not been paid,i win. then it goes to sherriff and in about 7 days or so i meet him at the house and we both enter and he says,it's yours. done deal.
i'm just lost on this one because i believe this guys going to get a lawyer and fight it. i really don't understand how,judge says rents not paid,but you can stay anyhow......
i had one guy tell me it's commercial as soon as the 7 days are up, bust the door down and move his stuff,he doesn't even come close to having the same rights as residental.
any thoughts appreciated larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
I'd be checking with your local police department about that break the door down stuff. Granted, it's commercial, but I've never seen that done. Careful with the info you get here, it needs to be state specific, maybe even county specific. Ex. In NYC, the rules are totally different than what they are in Nassau County, only miles away.
My inclination is to do it the right way, go to court and get your judgment.
Don K.
EJG Homes Renovations - New Construction - Rentals
thats not my style at all. yea i might be in the building but when i get through paying lawyers i'd have to sell the building to pay their bill. i understand the local laws vary ,but i'm just trying to get a feel of what to do next. larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
in my leases i have a lienhold on everything in the building... ie... i have an automatic lien on anything he has there...
what i have run into is ... cops think they are lawyers... and they think commercial is like res... it's not... it's all a civil matter... alot boils down to what your lease says...
most courts don't take the tenant side in commercial... like they do in res... they usually take the stand that... they are a business and should know they have to pay... it's not like putting kids out on the street...
i have never gone to court to toss someone from commercial... i change the locks and move their stuff... i do take care to protect their stuff... sometime they'll pay up to get their suff back... sometimes not... most just go on their way... i have a few times where they filed bankruptcy... i just wait it out... even if the court says..."release their stuff to them.." 99% of the people who file end up not doing what the court tells them to... so it gets kicked out of court...
on commercial... you can go to court and file an FED... pretty simple... thats about a 10 day deal...
my leases and i change them all the time to better protect ME... pretty much state... all the burdon of proof is on them... if they are in any way in default that i can basicly change the locks and keep their stuff for damages... (it says this in a legal way) This is not to say that they can't sue you later but... it says it in the lease they agreed to... so...
i've only had one go to court before i could boot em... and get an injunction that gave them time to leave... but... that was a one off deal...
good luck... it's always these 1% times that make our life suck... my leases get thicker and thicker... everytime i get screwed i add a page to protect... ME... I tell people read the lease... if you find anything in your favor in there... let me know... i'll change it... not like i can move the building overnite... but you can leave overnite...
good luck
p
Edited 1/17/2008 1:04 am ET by ponytl
Great post ponytl!If I ever lease from you, I'm going to move everything out on the 9th day. Bob's next test date: 12/10/07
i read your post while heading out the door this am. you at least made me feel a little better with the idea that the court will lean at least to the idea that ,it's in the lease ,you signed it,live by it.
what i really expect to happen here is he will put off till the last minute to pay and then we'll start again....... this is a 5 yr lease with 9 yrs of options,it could be a long 14 years as i expect this is how he will pay rent from now on.
my next long term comm. lease will have in it, after the 3rd notice to cure the lease is voided and will become a a month to month.
i'm not sure how you feel about lease's with a small bussiness,but my opinon is they are all for the tennant,i can't find one advantage to me.
thanks for the info,i may be back with more???? larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Larry I don't know all the details but this happened in the past couple of years.A friend works as a beautician. Her friend opened a hair salon here in town.The business never made it and closed after 6 - 8 mo's.She NEVER paid any rent. The business just did not take off.There was no money to pay the rent.She never got evicted. She finally just closed the doors and left.Why would the landlord just let it go without evicting her?Maybe there's more to this that I don't know, but the above is what was told to me.
as a landord before you start you have to set your line in the sand. mine is 5th day you get a notice,mooney i think pay on 1st or here it comes,it doesn't matter what the date is that your comfortable with stick to it. now if you read my post i'm 45 days out.pizes me off so bad i broke my rule and their is no one to blame but my self,but it happens.
as far as what you desribe,either the landlord had no line in the sand and wasn't worried about money,or he was getting free haircuts,or other :] .......... larry if a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Larry, did you go to the auction today?They auctioned a house on west delano - about 9000 west delano in the westlink area.It was a 3 bed, 2 car, no basement 1950's L shaped ranch in poor condition.Old roof and very dated in side. The elderly gentleman who owned the home died in the home. Died in his sleep.I talked to the auction company and they said 75 "investors" came to try to buy the house.It sold for $88 K Cash.I think they paid way too much. The home will be worth $115 fixed up.I think there are so many investors out there it's getting really tough to find a bargain.
i did go by to look at it ,i had a friend that thought he'd give 40k[yea right a lot is almost worth that!]i'm like you if you bought to resell your screwed before you start. first day it needs a 8k roof so that puts you at 96 before you unlock the door. i thought 55-62 if a guy wanted to buy a job and not get rich.was the inside trim and stuff nice and just needed updated and cleaned up?
oh,on the sale bill it said that buyer would have to pay 10% buyer fee,was that on the real estate ? never heard of that on a re.auction.that would drive the final nail into the deal.
you can never buy to cheap......larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
what i have done and still do... depending on my gut feel... and the type tenant... is i offer a discount for paying BEFORE the 1st...
ie... lease is for $850mo... but if the rent is recieved or postmarked before the 1st... they are allowed to take an "early pay discount" of $100.00 but the rent is due on the 1st... late on the 5th... late charges apply if it is postmarked after the 5th... late charge is $50.00... plus interest and collection charges if it's past 30days with a min interest of $10 per month...
so if they pay on the 31st vs the 6th... then they have saved $150.00...
pretty amazing how many pay the extra $150 every month...
p
Pony, I wanted to pick your brain on something else. I ran a search today on "Converted Houses" for sale.These are older houses that someone has installed a few walls, put a bathroom in a closet, etc They take one old house, usually a two-story, and they make it into several apartments.There are 12 of these currently for sale.Here's an example of one currently for sale:The house is for sale for $42,000. It has three units. Rents total
$900 per month.If you buy it and finance $42,000 for 20 years your Principal and Interest Payment would be $326.So, $900 minus $326 is $574.$574 X 12 months is about $7,000. From that you would pay taxes and homeowners insurance. Taxes on the property are $542 per yearInsurance would be probably be about the same.So if you could put $6,000 in your pocket per year would it be worth the leg work, headaches, associated with owning this property?Would this interest you with those numbers?
Edited 1/22/2008 2:01 pm by mrfixitusa
I would not want them. I'm thinking about tenant squabbles right now because of noise. Bob's next test date: 12/10/07
I disagree - these old homes have been around for many years. When I going to college I lived in many many houses which were "multi-family" with neighbors above, below, beside etc.If the neighbor was playing music too loud we would just knock on the wall and they would turn it down.They even wrote a song about apartment style living - it was called "knock three times" by Tony Orlando.Listen to the song lyrics and I think you'll find these charming and cozy old homes have a lot to offer young people just getting started on their own, college students, a single person wanting to live with other people close by, etc.Am I convincing anybody?
It's okay that you disagree. I'm not the greatest advocate for landlording anyways. Residential landlording doesn't appeal to me. Bob's next test date: 12/10/07
i guess you can always break it down... into... how much would this property pay me per hour of time invested...
there are many things to look at... pretty sure a 900.00 a mo income property can be put on your personal financial statement for 75- 90k... i'm say'n it's worth 90k... but... i don't think too many would argue the figure... so you have increased your personal net worth 25k + which has it's on benifits...
I know a guy very well that has rooming houses like these... where he rents rooms on a per week deal... older houses... with 6-9 rooms... he gets $100-$125 a week per room... alot of problems... mostly minor... but thats why he gets the return on investment that he does... he has 4-5 old houses like this... it's his part time job... he's a master plumber so he has other income but... he has a special needs kid... and it allows him to not have to go to work everyday...
p
If you get into those, and especially if they are weekly rentals, they will be a royal PITA. I don't like weekly rentals to start with. Tenants rarely have anything to lose, and are often at the bottom of the barrel. Judgments are meaningless, they can work the court system better than F. Lee Bailey. Chasing people for money 4x a month - is that the way you want to spend your life?
Don K.
EJG Homes Renovations - New Construction - Rentals
Don, I'm just kicking around some ideas.Here's a few things I've been thinking about. In 1975 I graduated from high school and moved out and left town and never returned.From 1975 to the year 1995 I rented a home or apartment.I bounced around going to college and then working in jobs where I never stayed longer than 5 years at anything I ever did.During that entire time I was paying rent and I NEVER missed a rent payment.I always cleaned up the place and got my deposit back and got a good reference.I think there are many people like this who would be great tenants.The first place I rented in 1975 was a home that had been split rignt down the middle and changed from single home to a duplex.Then they converted the basement of that home to apartment #3They did it for a reason. To MAKE MONEYI thought of something else.I couple of years ago I looked at an odd Victorian Home built in the early 1900's.This house was 2,200 sq feet of finished living space but was only TWO bedrooms !!!!!!No one wanted the house. It had a horrible floor plan. Lots of wasted space.This home NEEDED to be redone and made into three apartments.It has little value the way it is currently.Maybe someone can buy these odd ball old two story houses that nobody wants and be able to do something with them.I think some people are taking it a step further and selling these units as condos.Seems kind of odd calling a weird apartment in an old house a "condo" that you own but I think it's being done.I'm just kicking around some ideas.Maybe someone on this board has taken a single family home and divided it into two or three units and made some money.If so I wish they would tell us about it.
Mr. F. -
Dividing a home into two dwellings can work. I can attest to that. First house I owned was a 3 bedroom in Queens NY. It was a Dutch Colonial from the 1920's that had been converted before I bought it into a legal 2 - one on top and one on the bottom. Each was 1 bedroom. Downstairs, I swapped living room for bedroom and divided it into 2. I used it as a rental for a few years, pretty happy. Remember tho, this was in NYC where housing is hard to come by.
My old office on Long Island started it's life as a 3 bedroom home around 1910. It was changed into an office, again, before I got there in the 1980's. Location was on a main road and it worked too - pretty much. The "small" bedroom on the 2nd floor was just too small and was used as a lunch room. Both of the other berdooms upstairs were offices. The dining room downstairs was another office and the living room became a conference room. The kitchen was the reception area. When I sold it after about 10 years, it was bought for the land and the building was stripped, awaiting demolition.
The house that I just finished in NY was converted from a single family to a 2 family, each with 2 bedrooms and a study. It was a 14 room house. It's rented right now and working out fine. There are two electric meters, separate heat and separate hot water systems. There are window ac units. I changed the stairs so that when you walk in the front door, you can go into the first floor apartment or upstairs to the 2nd floor. I worked my butt off and cut no corners to do it right. (It was originally part of a school in the 1880's. I restored the wooden ornamentation where I could and did a 5 color paint job.)
One point tho - even though I have the space, I didn't want to make those units 3 bedroom, nor rent the basement. We've all seen houses like that - tenants all over. Cars all over. Noise. it looks like a rental. That doesn't help a neighborhood. I respect the neighbors. I don't want to be a bad neighbor, so they stay as 2 bedroom. Same thing as the first house. I never rented the basement (it was finsihed) because it would have been a fire hazard. Making money is a good goal, but what I'm saying is have a conscience. Don't forget to consider if it's legal too.
I have another one down here that was a one family, turned two family after WW2. It works too. So, it can be done. It's like any other rental. You still need to screen and qualify your tenants. As far as finding people like you to pay their rent on time, and fix a place up, I think it's much, much harder than it was. People's attitudes have changed since you were a tenant. There is less respect for other's property today and I think people are less concerned with paying their bills on time.
Don K.
EJG Homes Renovations - New Construction - Rentals
You also mentioned condos. That can be a whole different world. If you have condos then it's a much more regulated business. From what I've seen, it becomes a legal nightmare (in NY). Look into your regulatory scheme. It would almost certianly require building permits, inspections, upgrading and complaince with local zoning or rezoning. Parking would become a question as would many things.
Somebody down here in VA tried that. Bought an old hotel and gutted it, then ran out of money after they did the first floor. They had an ad in the newspaper for "condos". Two months later, they are back to trying to sell it for a small profit. Nobody understood what "condos" were, and people figured they would rather just go buy a small house.
You seem to be undecided on your direction. You've talked about rentals, low -end rentals, flipping, developing condos...With all due respect, you need to pick one, research it (Not here) and do it.
Don K.
EJG Homes Renovations - New Construction - Rentals
Don, I think you're right on the money about choosing the appropriate house to divide.Some houses on a corner lot would probably work better as far as parking goes.My daughter is a light sleeper and a couple of years ago she rented a one bedroom apart within walking distance of campus.She lived in a converted house with all college students and it was a nice group of kids.The problem was her apartment was next to the stairs to the upper floor.She could hear people on the stairs, day and night.They weren't being loud, it was just the nature of the house. Maybe they could have insulated under the stairs or something but it was a nightmare.She stayed one semester and moved on to something better. She ended up renting a small house with the landlord living right next door. It worked out great for her because she was quiet and they liked her and if she needed anything fixed the landlord was right there to do it.
well ponytl has answered ,now i'll give you my take.first we live in wichita,ks.real estate is not rare or hard to buy like nyc or inner citys like that,so these conversions are not real common,nor are they usally done well. no parking,no common hallways,usally 2 front doors with a back door serving a upstairs with non code complying stairs. just take your tape with you and measure the rise in the steps going upstairs.
now if you have found that property in college hill,riverside park, people will accept that to live in a desirable area and you could probably get some decent single tenants in there.
but my money is on this proprety is located in the central corrider between 21st to mt vernon on the south,seneca to hydraulic. i own some stuff in this area and finding a good tenant for a single family house in good repair is tough. now you stack 3 of them in one house and it's going to really going to get fun.can you say drugs,guns and lowlife?
heres my take on this type of property.first they are cash cows.no apperciation ever,just income .also look at parking ,everybody has to have a place to park. next if your going to do one,i would get in with both feet and buy 10 of them and this would be my job,keeping them rented and staying on top of them.they will not be easy management property.
if you decide to buy know that you are in the drivers seat,these properties are hard to sell and my first offer would be so low if the seller wasn't offended i would know i screwed up. and remember your goig to be the seller someday.if a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
MrFix
Houses like you describe in your post are very common in this area. A lot of older Victorians and big four squares make for easy conversions.
My FIL had several of them and they were just as easy to rent as your more modern 4-8-12 plex apartment, especially if they were near a college.
I would bet that I've been in well over 200 houses that have been converted to 2,3 and even 4 plexs. Seen a few that had as many as 8 units, big old houses. My ex-FIL also had some houses that were strictly flop houses, 8 sleeping rooms with two bathrooms to share amongst the winos! Those were the money makers if you were willing to deal with them.
I think on the sleeping rooms at the time that I was around them he got $45 a week or $160 if you paid by the month. Minimum of $1280 a month. Considering that these houses were bought and sold for 30k that wasn't a bad return on your money. Always full. You had to take care of them which means that you really had to monitor the riff raff that came and went from these places. My FIL didn't mind them but I would never have had anything to do with them, to much hassle for the money.
He had a few houses that had a one bedroom apartment down and 4 or 5 sleeping rooms up - with a bathroom.
For my money I would prefer to deal with single family dwellings but I know a lot of landlords that have quite a few of these multiplex houses and do well with them.
One thing you want to do before going out and buying a big house with the intent to split it up is to check to see if its OK. Here in CR Iowa they don't allow it anymore, found out it puts to many people in one area with out the parking to accommodate them. Also since these houses will usually fall in some of the lower end neighborhoods they tend to attract some of the more undesirables, nothing worse then having to many thugs in one place!
When I lived near Austin TX there was one guy that owned several converted houses near UT and he was making good money from them. Probably getting 7-800 a month on a small efficiency. Put three or four of those in one house and you have a good cash flow. Of course your not going to get that in Witchita KS but......
Doug
Interesting - especially the info about housing around a college.When I was going to college we always tried to find something cheap and within walking distance.We didn't care about the condition of the house as long as it was clean.I rented houses with several guys and I remember renting some old places with old dated kitchen and bathrooms and we didn't care as long as it was cheap and within walking distance of the campus.Thanks for the info
i'm in your market,i'm doing this to put food on the table,with no other source of income.
i like the way you word this as a bussiness,becuase alot of people think it's real estate investing and it ani't. if a guys got a good job ,wants to buy a few rentals with the idea that they will pay off someday and he can cash out ,thats investing. i'm surprised at 15 she is able to still hold a full time job. 12 was my number when i hit that i really didn't have time to tend to my bussiness and thats when ibecame a fulltime landlord,thats when investing stopped and the rental bussiness started.
here is a problem with whats she's buying. take the 3 bedroom that she bought,i take it around 45k. she rents this for ten years with min. maintance,in a hood that isn't great today and will be worse then,theonly buyers out there will be landlords [pretty much that way now] what do you think it will be worth? my thought is if things go well she will maybe sell for 55,less expense's she will get her money back.
now lets say she buys out westside ,still makes 150 a mon. ,but in 10 years it will have apperciated ,because it is desirable place for family's to live so the retail market is wide open.
i could go on and on but theres probably not enough bandwidth here on the internet,
my advice to you is keep in contact with her,i think she will be a seller in a few years. side note ,if she wants 2 more i have 2 rented 1100 income take 70 for the pair with tennants in place. i'm just like the other guy i'm ready to hit the road. larry
if a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Larry, I thought about you as the house she bought yesterday is in the same area as one (or more?) of your rentals. I don't really want to give the address but it's south of pawnee and washington.This lady owns a lot of homes in that area. One of the obstacles we had a coupleof years ago was trying to buy house number 11.Banks will let you own ten houses but that is their limit and it's my understanding this is a common practice. Have you heard of this before? We did finally get it worked out, but the problem revolves around the bank being able to sell the loan.We did get it worked out by finding a lender who will keep the loan "in house". So they have loaned her money. She bought the last few houses through a credit union.Another option is to move into commercial lending but we haven't done anything in that direction yet.
i have to say that bank financing used to be a problem,either i have been in it long enough,that my finacials speak for themselves ,or once i went full time landlording it changed the attitude. keep in mind i've got over 30 years as a landlord so that shows them i'm not hitting the road.
i can't think of the name,but 2 blks east of tyler on central is a place i had good luck at,used to be security savings.......but they will want 30% down.
great another landlord in the area...lol i'm still working on that one the shooting was at,i don't know if i'm selling or renting yet.but i'm having fun. larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
She doesnt know what she is doing its evident.
Shes paying 2o percent down per house and hires people to do work on them for 7 bucks an hour. Shes paying retail!
The more you talk , the less she knows.
People think they can do this business or flip like tv with no knowledge. I watch Boston Legal, ya think?
This is a business that requires A BOAT LOAD OF KNLOWLEDGE.
Thats why Ive mentioned to professionals on this board.
Tim
It is somewhat similar here. DW and I have stayed mostly in commercial rentals since we have several customers who buy for residential rental and we don't want to be in competition with them.
My best bud and his wife have several (8-10?) and it is certainly a regular cash flow for them, but he does construction for others, too.
One guy here owns 30+ low end homes that he rents. He doesn't have any other job (does go whitewater rafting all the time, if that's a job!). He lives as he rents: a little very low end home. He tells me that he's not the richest guy in town, but he will be in 20 years (an exaggeration, for sure).
One of our customers has residential rentals in several different cities that provide him with a good cash flow. He doesn't do anything but invest.
It can certainly be done, but it takes the right person to want to deal with all those repair jobs and all those tenants.
"Doubt is not a pleasant condition, but certainty is absurd."
~ Voltaire
Low end rentals are to much like milk cows, gotta be there every day!
It'd take an act of God to get me back in that game.
I'm of the thought that this is not investment property but income and that is why I don't like it. I know several people like the one that you mentioned and they do OK but they have to put the time in, something that takes a certain kind of person.
Myself, I'd rather put the money into something more in line with investment property but who knows, she'll probably do OK with her plan. I just don't like OK as the outcome!
Doug
t'd take an act of God to get me back in that game.-----I was just wondering if you'd elaborate a little. Were you sitting there with a lot of low end rentals and nice cash flow and cashing checks every month and watching your bank account grow?I think a lot of people would say "I'm in tall cotton" or "this is the best thing since raisin pie" to be able to sit there, play golf, cash checks, and earn "passive income" I guess maybe it's not passive income though if you're fixing roofs, replacing water heater yourself, fixing leaky faucets, etc and doing these things yourself on daily basis.I got to thinking about this and who knows maybe Donald Trump got started in real estate buying these small low end houses with floor furnace and no air conditioning, charging people a lot of rent, evicting the elderly, making enough money to buy more, and buying more small homes for 50 cents on the dollar, etc
when i went to meet a plumber to fix the frozen pipes at my folks' abandoned rental house when dad was in the hospital, i found baseboards missing (WTF?), piles of trash, and a sealed closet full of needles when pried open.that was 5 years ago and while they haven't had much better luck since then, they refuse to let me tear it down. they live in a economically depressed town and many landlords i used to know there have gotten out of the business because of this very thing.
heck, yesterday i saw 4 police cars and an ambulance outside a rental house i own. sheesh- it turned out to be ok, but a friend who came over to tend to my tenant's pets while she was out of town was severely depressed and threatening suicide so a friend called 911. beyond lots of fixing up, it's this sort of thing that gets old in low-end rentals.
I once knew some folks that lived across the street from some people that were being evicted.
She told me they had literally destroyed the house before leaving.
She said she sat on her front porch and watched those people climb on the roof of the house and randomly tear off shingles, tossing them to the ground.
Get old? snorK*
Rental Renovations: Making Sinking Turds Float
i have heard many stories, especially in my parents' town, of bad tenants who vandalize property on moving out, sometimes going to ridiculous lengths; it would have been so much smarter for them to direct a portion of that energy to keeping the property up.but the damage to my folks' rental over the years didn't seem to be purely vindictive, but from ignorance, neglect, and in the case of missing woodwork, i'm guessing it was ripped out and used for paying handyman jobs elsewhere.
Edited 12/29/2007 12:59 pm ET by msm-s
I'm guessing it was ripped out and used for paying handyman jobs elsewhere.
So that's where all the lightbulbs and toilet paper holders go then. ;o)
Be now we know
Rental Renovations: Making Sinking Turds Float
I think a great tenant would be young disabled kids who are graduating from high school.Larger cities have special education programs for kids with disabilities. I worked with these kids in the past and these are some of the nicest kids in the school. They are happy kids and pleasant to be around.These are the kids with significant mental disabilities and they remain in high school until age 21. Then they transfer to a community based program.Every year 2-3 of the kids will leave high school, move out of their parent's home, and rent a home together. They may be supervised, some are not.These are kids who don't drive. They get jobs and have transportation provided. Some of the kids work cleaning motel rooms. Others may work in a restaurant kitchen or the cafeteria at the hospital, nursing home, public school, college etc.These are good kids. They don't drink, smoke cigarettes, or tear up someone else's property.They may receive social security benefits and housing benefits.These kids would be excellent renters and a landlord would just need to go to the school each year and talk to the special education teacher and let them know you have a house available.
my parents are in a small town 2 hrs away. once i got involved a few years ago after discovering how bad the situation was, believe me, i canvassed churches, charities, the local jr college and civic organizations looking for any kind of program to help decent folks having a hard time. there was nothing.i got the house fairly fixed up, sanding the filthy floors, repairing bathroom floor, insulating, and installing all new bathroom fixtures. replaced missing trim and doors, painted, replaced lots of damage and rot.
But- my mom continued to hand the key over (usually with no deposit or rent payment- just a promise) to every stranger who knocked on the door the day after old tenants moved out (owing 3-6 months rent).
Every tenant they've had for the past 15-20 yrs is connected in a network of conmen. they know my folks are senile and a soft touch, and the outgoing tenants give new conmen a heads' up that their house is coming up empty. and they show up the next day with a sob story.
there definitely is a special karmic come-uppance for people like this.
Edited 12/29/2007 1:45 pm ET by msm-s
Donald Trump got started by using his father's skills and money. What I heard from people that knew the family was that Daddy was a real go getter - maybe in the carpet business? He was a big part of Donnie's stuff for a good while. I don't think Donnie ever did anything on a small scale residential job.
Don K.
EJG Homes Renovations - New Construction - Rentals
Mrfixit
Were you sitting there with a lot of low end rentals and nice cash flow and cashing checks every month and watching your bank account grow?
NO! I had some places that weren't top notch but nothing that I was ashamed of either.
My problem was I grew fast in the rental business. I owned or partnered in 14 properties, all accumulated inside a few years. My cash flow was minimal at best. I had a good paying job(welder) so the money wasn't necessary to live on. I was looking long term, dreaming of being 45 and not having to go to work any more! Turned out that it was just that, a dream.
The early 80's came along and everything went to shid, couldn't buy a job in this area, couldn't rent properties to save your life, everybody was getting out of Dodge! I couldn't make it and did everything I could to bail out of the mess I was in.
My ex-FIL owned 16 properties and weathered the storm fine, he had some places for 20+ years, already paid for so he could rent for cheap and still have cash flow, I didn't have that luxury, my fault but there I was.
I was able to unload everything I had and keep the shirt on my back. I continued to manage some properties for some other landlords, some sec 8's, some just plain ole' dumps, some OK places. I started to hate it and swore I'd never do it again.
It's a part of my life I'd love to have back, shid man, we cant take any of this stuff with us so what's the point? There are to many other things that I can do to make an extra buck and I don't have to marry them to do it.
I know quite a few landlords, some have done really well, some struggle, some dealt only with houses in nice neighborhoods with appreciating values, those are the ones that did well. Always easy to rent, property increases in value and 30 years later they are sitting on a pot of gold, that's the route I should have taken! Easy to say now.
I equate owning rental property to owning milk cows though because with both it seams like you can never leave town.
I'm a firm believe that it takes a special person to be a landlord and do it well, Tim Mooney is that guy to me, I know a few others and I see that I'm not that type a person.
I have a few properties that I couldn't pass up but I wont ever become a landlord in the same vain as before. The properties I have now are just plain good investment homes - still a sucker I guess.
Doug
"Were you sitting there with a lot of low end rentals and nice cash flow and cashing checks every month and watching your bank account grow?
I think a lot of people would say "I'm in tall cotton" or "this is the best thing since raisin pie" to be able to sit there, play golf, cash checks, and earn "passive income"
thats the best laugh i've had all day,maybe all week. let me give you the real picture and i'm not making one thing up.
friday 12/29/07 [yesterday] 8am phone rings,my toliet is stopped up and overflowing.call sewer guy,hell be there about 11.00 .there goes 125.00
9.30 am stop and have quite a heated disscussion with commercial tennant about rent,still due from the 1st and have started eviction.fun times
10.30 am arrive at the house that the husband shot the wife back in august.had skimmed the walls with d mix the day before so i sand the room till 2.00. i look like a snowman.
2.00 pm phone rings,the toliet is flushing but the tennant wants the carpet steam cleaned in front of bath [even though it didn't get wet,she walked in the dirty water and it may of tracked?]fine i have steam cleaner i'll come clean the hall. show up at 3 after going across town to get equipment. clean carpet and hear the toliet kicking on and off. so i do a little looking ,when he reached in to hold the valve closed so water would stop he broke off the overflow tube.oh by the way the tennant wants me to buy her 8 new towels at 10.00 each,becuase there "dirty".my azz just move.
got home around 5 unloaded equipment and ate supper.
didn't even get in a game of golf or watch the ophra show,oh the life.come to think of it i didn't even have any checks to cash.
mon.new years eve when e all my tennants are off work and sleeping in late so they can go party till 3am. i go back and tear the toliet apart if the bolts will come off the tank,if not put in a new one. hopefully courthouse will be open so that i can get that eviction filed. will probably lose around 3900 [3months ]before i have possesion.if i have some more time i will go prime the walls.
maybe i'll at least get home in time to watch oprah.....
now i have what i call pretty good rentals,i'd live in all but a couple with no problem. 3/4 of my renters are great renters,others not perfect but ok. if you think your going to play golf with 20 rentals and just cash checks,call me i need help for a couple weeks,maybe with 2 of us we can work in a round of golf.
now i'm not even bitching this is what i do for a living,but it's like any job ,it pretty much sucks.it just doen't work like the sun. am t.v. shows,i'm still shopping for my yacht.
i'm serious keep this lady close,she will be a seller before you know it. larry
i'll private email you on the house for sale.
if a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Edited 12/29/2007 10:52 pm by alwaysoverbudget
You need some programs.Go to MrLandlord.com Bob's next test date: 12/10/07
i need somethig.lol but in seriousness "what cha mean willis" this is how rentals go as far as i know if you can help me ,lets talk. larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
I'm not the landlord type but I can tell from your post, you need help.First, I wouldn't be vacuuming anyone carpet. They would be cleaning their own carpet. I also don't think I would be plunging their toilets. If they plug them, they plunge them. If something is stuck down there, that shouldn't be down there, they'd get the bill. If it's poop and toilet paper, the plunger would loosen it just fine.Mr Landlord is a guy that decided to run his landlording business like a business. If I was going to go into that business, I'd pull out his stuff and use 75% of what he does. You can see some of his stuff at his website. I saw him when he did a seminar for a Real Estate Club that I used to belong to. He made a lot of sense and if more landlords used more of his "programs", they'd all be bitchin less. Bob's next test date: 12/10/07
jim, guys can talk about buying right,buying in a good hood,etc. but the number one thing that will make or break you in the rental business is real simply,the tenant. if you have good ones it's going to work,if you have bad ones well hang on it's going to be a bumpy ride.
i have over the years read probably 20 books on the subject,and as far as i'm concerned you could tear out 3/4 the pages and then they would be a pretty good read.
when i have a house come vacant a guy has to determine what's important to you. money,or a good tennant.i can rent to the first yahoo that says i want it,then i can post on here a month later about tenants and how they are all just the scum of the earth,but to tell you the truth it would be 1/2 my fault for letting them in. my pirioty when vacant is trying to find someone that is exciting about the house and wants to live there,and i feel they will take care of it and pay there rent.thats where i start.sometimes this might take 2 months,i'm fine with that.
now you read that post on my fri and you think this guys nuts,let me give you a little more background.
the house with the sewer. 2 mid 20's couple ,just had a baby. house is really nice ,carpet 13 months old.been there 13 months never late on rent ,house is immaculate. now this is a main sewer stoppage,nothing they can fix with a plunger.i don't know what stopped it,maybe a diaper,maybe a tampon,maybe tree roots. my policy is if it's not obvious that they did something stupid,it's on me.[now if the house looks bad,rent 10 days late every month,it might take me 2 days to get to you.]so she wants the carpet cleaned,i think it's stupid to do,but if i don't do it she will go down rent rent some plastic steam cleaner at the store and soak the carpet with soap and water and basically shorten the life of the carpet.remember it's new. this is just protecting my investment,hopefully keep her happy[even though she's pretty upset at me not paying for her towels,i think there is a 50/50 chance they will move over this,she is that upset about it.] so i'm not sure what i could do different in this whole deal other than let them pay for the sewer,and i know that some guys have in there lease that's how it is.
next commercial building,no rent. guy rented this back in may started a new bussiness,put lots of his own money in it.good credit,good back ground. sign a 14 year lease. guess what, not going as planned. this happens in business ,he's run out of money and i'm going to end up screwed for probably 3 months,if not now ,down the road sometime.the writing is pretty clear.in hindsight i wouldn't go with this guy again,but it looked good,felt fair ,so took the chance.this is what landlording is all about risk and i missed.
house with the shooting.not in the ghetto.husband,wife 2 kids. he works manf.,shes a teacher.been in the house 3.5 years,pays rent well,not taking as good of care as i would like ,but i've sure had a lot worse. one night they get into a argument,he goes stupid and shoots and kills her. this is the worst thing i ever had happen in a rental,[how or what could be worse]i tried selling the house for 1/2 of it's market value and no one was interested.so i'm redoing it from top to bottom and to tell you the truth i still don't know what i'm going to do with it when done. if you see a book that tells me how to avoid this deal let me know,i'm reading it.
now it goes without a doubt i don't know everything about landlording,but tell me how i could of made last friday better,i don't play golf ,but i'd like to learn if i had my days free.
i got to tell you i've been doing this 30 years now,i'm tired,i'm sick of the ####,but that's how every job after 30 years feels.if i look back at how much i have actually invested versus market value it amazes me.i don't know of another venue that has 1031 exchanges,that lets you retain 100% of the profit tax free to reinvest and make more money on that.and i have complete control of.that said you can't eat off assets till you sell.
well that took up enough band width didn't it. larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
"the number one thing that will make or break you in the rental business is real simply,the tenant."Go see Mr Landlord. He has a program for that."my pirioty when vacant is trying to find someone that is exciting about the house and wants to live there,and i feel they will take care of it and pay there rent"Go see Mr Landlord. He has a program for that."but tell me how i could of made last friday better"Go see Mr Landlord. He has a program for that."you can't eat off assets till you sell."Yes you can: it's called a mortgage. Put a mortgage on it and put the cash in your pocket taxfree.My personal observation: you probably are in good enough financial shape to hire a property manager. That will cost you a percentage of your business but it also will free you up for those golf lessons. I suspect that you refuse to research the possibility of using a property manager because you don't want to give up control. If you choose to keep control of ALL the details of the landlording business, you should at least implement the basic programs that make it operate like a business. For instance, could you please tell me what your business hours are? Are you taking calls all day and night or properly limiting them to 9 to 5, Monday thru Friday? You choose to enslave yourself to your business, but that is a decision that you can change in an instant. You are a prime candidate to get hold of Mr Landlords programs and learn how to treat your business, like a busines. Yes, it has unique elements to it, just like all businesses do and that is why I suggest looking into some of Mr Landlord's programs and ideas. His focus is geared to moving your business from the haphazard, seat of the pants, mom and pop operation to a professional property management system.You can even get your credit checks run there for a very low fee (maybe $15 or so). Me? I'd run those credit checks, then structure the rental rates based on the credit score. If they wanted the advertised best rate, they'd have to get someone with a great credit score to co-sign. When they did the inevitable damage that you are suggesting, I'd at least have some deep pockets to go after.
Bob's next test date: 12/10/07
you absolutely hit the nail on the head. if my money is running the show,i'm not turning over control to someone that has not one red cent invested,no one is going to pay attention to my money more than i am.
my thought is,and i can back this up with people that have used management co. in small single family rentals,is if you hire a management co. you better sell and sell now. they get the first months rent ,then 10% a month to collect rent. now what do they care if they rent to a guy who moves in,pays rent for 3 months and stops.they don't! why? well because now they can charge you for the eviction [150.00 up] and all they are losing during this time is maybe 75.00 [10%] and when the tenant is finally evicted,there crew will get it ready for the next one [at a charge of whatever they can dream up]and guess what ,they get that first month rent again.
i had a guy i liked pretty well want to do mine,so i made him this offer,bring me a good tenant,when he has made it through 11 months the 12th month is his,24th month is his etc.i offered him almost 10% of the gross yearly rent for as long as the tenant stayed,this was in addition to the 10% a month. you know what he did? he laughed and said he wasn't interested because they probably wouldn't be there a year,case closed ,were done.i average about a 36 month turnover,cause i do care. shortest 1 day,longest 14 years
do i take calls after 5 ,you bet if i got a guy that is bringing me rent and i don't answer the phone,he blows it at the bar over the weekend and guess what ,now it's my problem. if i had a 600 unit complex i would run it different, 8 to 7 6 days a week and go home,i wouldn't worry about one more unit because i probably have 25 vacant at all times.
credit checks,if your in this you better be running checks,i do. now this is where this whole market changes. 10 years ago i would only rent to good credit people. but guess what happened? interest went to 5 and the lenders thought anyone that only had 2 auto repo's,one house e foreclosure,and 40 k in credit card bills was a good credit risk and lent them money with nothing down,on a house that was to much for them to pay for.more of that story is coming down the road. so anyone with any credit has bought a house,so now when you run a credit check you just hold your breath,if it's all medical and no bad checks,one or two cars and 10k on mastercharge,they look pretty good. if you want to hold out for someone with a 750 score that is out renting ,grab a chair because they are few and far between.
your going after someone that is renting a house from you that has no real assets? there are no deep pockets,that's why they are renting. go ahead go to court ,get the judgement, garnish their wages, when it's all said and done you will make about 5.oo a hour for your effort.
it's a business,but you do what you have to do to make it work,just like any other sole proprietor business,and sometimes it not fun.
where is mooney? must be out playing golf and relaxing by his yacht ,like all the landlords do.. larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Larry, I think you understand this business very well! You might be able to show Mrlandlord a few things.
Your experience is exactly why I got out of it and it also parallels those of the ones that I know that are still in it.
BTW, its winter, Mooneys probably out downhill skiing!
Doug
I think Mr Landlord was running 250 or more single familys in the 60 to 100k range in Atlanta back when I met him. Bob's next test date: 12/10/07
I think Mr Landlord was running 250 or more single familys in the 60 to 100k range in Atlanta back when I met him.
And?
Carlton Sheets can help you buy houses and find wealth in all the right places to!
I've been where Larry is and I know a lot of landlords up close and in person and their experiences parallel his. You can cast your conjecture on how he is wrong but you haven't been there to know!
Doug
I've read Carlton sheets materials and I found them to be a very excellent source of basic information. He includes all the fundamentals from basic real esatate terms to complex information regarding syndications. In fact, the ideas of creating the investor groups that I'm currently working with on the 700k project in Travis Heights came from seeds planted by listening to Carlton Sheets. Incidently, the Travis Heights project is a zero down deal for me. Sheets gives the potential investors the ideas and also tells them exactly the same stuff I've read here by guys like Mooney, DanT, you and many others. He explains all the basics: buy at wholesale, sell at retail, look at 100 properties, make offers on 10, buy one, etc. The good thing about his information is that it's comprehensive. You get all the information about property in one package. Is it overpriced? Yes, but so is any college educational materials. If you tried to purchase that same stuff for an associates degree at the local community college, you'd probably pay the same and get the same information."'ve been where Larry is and I know a lot of landlords up close and in person and their experiences parallel his. You can cast your conjecture on how he is wrong but you haven't been there to know!"I've only had good experiences as a landlord but I didn't do lowend properties and I didn't do it year after year. You seem to be judging the programs as foolish by Mr Landlord but I'm going to take a wild guess that you've never explored any of his ideas....which are best described as being very intelligent businesslike programs that adds a level of professionalism in an industry typically run as a mom and pop operation. A parallel discussion would be the way most small time contractors run their single shop operations as compared to someone like DanT who seems to take a comprehensive approach to the difficult business of remodeling. These two discussion both seem to imply that there are those who find a way to take their businesses to a new level while operating in the same market as their competitors. Both ways work but one group seems to have a system or program that seems to ensure many more years of solid and sane progress in the business of their choice. I'd love to listen to your opinion about some of the programs that Mr Landlord has implemented in his business. You might not be able to use everything but I KNOW FOR SURE that you would find some tidbits in there that made great sense unless you already know everything that there is about landlording. You never struck me as a knowitall so I'm pretty confident that you'd find some good info in his business practices. Bob's next test date: 12/10/07
Here are some actual numbers on a different house. My investor bought this house in Nov 2007.It's a 1400 sq ft, 3 bed, 2 bath, 1 car garage (detached). No basement.
Built in the 1940's.I'm guessing it was originally 800 ft with a single attached garage.
They turned the garage into a bedroom and they added 600 ? feet to the back of the ranch style home.The addition was nicely done and it is a large family room with the second bathroom and a utility room with washer dryer funace and water heater.She paid $45,000 for this home. She put 20% down and financed $36 K at about 7 % interest.P & I payment is $280.She cleaned up the house and is renting it on Jan 1 for $650 per month.She knows the renters. She works with this woman. This is a large house for them to rent for only $650 and they are happy.It's a poor neighborhood but this is a win win for both the landlord and tenant.
At those numbers, she could easily afford a professional property management team to handle her properties. There might not be one in the area. If not, you have an opportunity. Bob's next test date: 12/10/07
i made a reply to you earlier,but hit the wrong poster.
anyway,where to buy? that's the million dollar question.if it was 1985 they were every where,but now everyone's watching tv and going to get rich,so it's a little tougher. i would love to say i bought all mine dirt cheap,but i haven't . probably 60% of mine the day i bought if i walked in the front door and decided i didn't like it,if i sold with a agent i would of made a couple bucks to losing a couple. did buy one 2 years ago that that happened,turned out it had water in a crawlspace that i didn't like and sold. lost 15k at auction,but that way it was as is,ouch.
my experience is about once every 5 years i steal a property,i'm talking 30-40% of value. how ?it's usually a word of mouth and somebody wants out now. i will make a cash offer that says to them "this is what you walk at closing with,i will pay all cost".that's what they want.
i had a little old lady call me 3 years ago,i want to sell and a guy offered me 20k can you tell me if that's enough? went ,looked 4bdrm,1 car,1 bath1970's. 60k house with carpet and paint. i go back to her and say ,no not even close,why don't you spend 3k and then sell for 50. she don't want to mess with it and tells me she's going to sell for 20! wait,i'll give 25 and close next week and pay everything.done deal.thats how my bargains happen word of mouth,fluke deals.
i have very little luck with mls for a great buy,everybody knows about it before i do,and they got lots more money too.
for rentals i really go after a good solid estate house,with green and gold shag. most of these houses are mechaniclly sound,the wood work is perfect,when i get done i have a really nice house to rent.if you want to flip i'm not sure these would work,sometimes i might buy 25% under market but that's it.
you have to position yourself to buy long before you find the property if your looking to buy cheap.the greatest tool i ever had was a home equity line of credit. bought a house to live in,fixed it up,reappraise it and got the line of credit. now with a line your not paying anything till you hit it,mine was a masterchrge card! now your ready to shoot off your mouth and know you can back it up,there is no way to get a great deal with a bunch of contingencies. it's cash,as is ,no inspections,close whenever the seller wants. now when your knees knock together because your offering cash you don't have,don't worry be happy, your line of credit is there and about anyone will lend 20k on a signature anymore. you can still apply for a loan ,but if you can wait,do.
buy the house fix it up,get it leased and then finance if for it's value to 80%. pay off the line of credit,take what you have left and bank it for the next one.
if you start flipping become very familiar with the 1031 tax deferred exchange laws,greatest thing since bubble gum.
it's all about LUCK,TIMING,and SITUATION on the sellers part LTS larry
if a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Edited 12/31/2007 4:44 pm by alwaysoverbudget
"if you start flipping become very familiar with the 1031 tax deferred exchange laws,greatest thing since bubble gum."I think you mispoke or meant something else because flips don't qualify for 1031 treatment. Bob's next test date: 12/10/07
Jim,
Where can I find the best, most accurate info on the 1031's you keep mentioning? I Googled, but there's so much and I'm not sure where to begin.
Have heard of the 1031 x-change before, but don't have a clue what it actually is.
ThanksLive in the solution, not the problem.
get a irs publication,1031's are covered for about 3 pages. if i remember right the publication is named something like "disposal of bussiness assets and capitol gains. it really is not all that complicated, but there are a few i's to dot in the right order. if you do one usally the title company is your intermedeatery[? second time i've typed that word]and the willwalk you thru it pretty well.
larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
how do flips not qualify for 1031? i have held property for 45 days and rolled them into 1031's.now if you want to declare that re is your bussiness ,then it's inventory that you are selling,and you will pay tax and ss,thats nuts on a small guy to declare it's your ocupation. you buy a house and sell it the next day,is that a flip? to tell you the truth i would answer no [i have never used that term in anything i've sold because i personally don't like the term,seems to imply i took advantage of someone]. i bought a investment property,sold it made money. good investment,give the money to my intermedater[?],was back at the table in the right amount of time and bought another one all tax defered.[and that is understood,its not tax free its just defered]
i will say that there is probably some limit to how many properties you could flip in a year without it becoming a business. but if you see that printed somewhere i would like to know the number. sitting here thinking i know i did 7 in one year and they all qaulified for 1031 status,no questions ask and i don't see why there would be.i never touched one dollar in that whole deal.larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Larry, I have never done a 1031 exchange but I listed a condo about three years ago and the woman who bought it did so as part of a 1031 exchange.She is using the condo as a rental property.After you sell your property you have 6 months to close on the "replacement" property.You are supposed to "identify" your replacement property within 45 days of selling the "relinquished" property.The replacement property has to be of equal or greater value.This is the IRS form used to report the 1031 exchange:http://www.irs.gov/pub/irs-pdf/f8824.pdfHere's a website with a lot of info:http://www.spectrusgroup.com/PPC-1031-Exchange.aspx
thats pretty much the program,has to be declared on the contract that they are 1031's,have to have someone hold the money,and you can never touch the money. you never know how fast 45 days go by till you do a 1031.i try to be lined up when i sell ,but not always possible.replacement does not have to be more,but what ever is left is taxable.
they do have a reverse 1031,you buy the replacement before you sell,but it's pretty tough to get all lined out and not many title co. know how to do it.i've never talked to anyone who has done one,but if it was mega dollars it would be worth checking into.larry
if a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Edited 1/1/2008 10:27 am by alwaysoverbudget
I talked to a lender today about financing. I would like to buy some of these low end houses and use them as rentals.Prior to meeting with him I put my plan down on paper and then ran it by him.The results were as follows:1. They won't let me move into the house and stay there a few months so that I can get "owner occupied" financing prior to renting it to a tenant and using the home as an investment property.2. When you own rentals and try to buy more, the lender will NOT let you use your income from rentals as income on your loan application.3. Most banks are not interested in short term loans someone gets to "flip" a house. Also, most banks are not crazy about loaning money to someone who's going to buy rentals. They prefer to just loan the money to someone who's going to buy a house and just live there.4. Having said the above, on the other hand, there ARE at least two banks here in Wichita who actively WANT to work with investors. He gave me the names and if you ever want them let me know and I'll give them to you. I may go talk to them in the next week or so.5. Banks won't let you buy a trashed house for next to nothing and then put repairs into the house and try to finance it for the "appraised value". They will only look at what you paid for it and make a loan based upon that amount.
wow, how depressing. I hope you didn't let the banker talk you out of it
Bankers are VERY risk averse. Probably more so if they are holding the loan in thier portfolio. And I don't know if you heard but bad loans have been in the paper lately.
Realistcally i would stay away from banks.
Can you find a "good" broker to sort through some loans? I would talk with the mortgage brokers.
I know that I put down the income from property to justify the loan. If you put down owner occupied I would make darn sure it was O-O. Fraud is not good on your resume.
Doesn't sound like you are talking with the right folks yet
"5. Banks won't let you buy a trashed house for next to nothing and then put repairs into the house and try to finance it for the "appraised value". They will only look at what you paid for it and make a loan based upon that amount."I doubt that the banks that specialize in investor loans will do that either.To do that, you need to talk to a "hard money" lender. Bob's next test date: 12/10/07
#1 big no no,they can call the note due in 30 days,now if i have lived there a couple years and move i wouldn't sweat it.
#2 i really don't get that one,i show them my taxes and leases,no other income to speak of.they won't consider the rent on the one your buying and future rents. too many people dreaming about income,banks don't like dreaming.
#3 that one would be pretty tuff,thats why you need a equity line
#5 i think that your statement may shut that one down. when you say next to nothing and fix it up the will loan just a little more than nothing. to tell you the truth my mind goes to these figures. next to nothing= 10k go in paint clean,maybe a new bath and you want to refinance for 90k ,not going to happen. when i have done this i would say i was borrwing about 15-20% more than i bought it for.usally had a pic before after and reciepts that showed i had spent money. they wouls rather repo a house thats remodeled than not.
there is something to think about when appling for a loan on rentals"the loan co. is only concerned about if you will repay and if not how well can they get out" although for the last 5 years they threw that out the door.
a way to get rolling and this is what i did,you may of noticed in one of my post i said i paid more than market value because of financing [va assumable]. i don't think those loans are around anymore,but there are people that will owner carry ,sometimes with a 5 year balloon or something.and this will be more available in the low in because getting financing is tough in the 20-30 range. you may pay a little to much but at least you have something.try and stay away from contract for deed if possible though,it can bite ya in the buns.now that advice only applies to keeping and renting,if your trying to turn em quick it won't. larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Why are you worried about contract for deed? Bob's next test date: 12/10/07
lets say i buy a 100k house from you on contract for deed. 20yr note. everything going well,were 11 years into it the house is worth 150.as i buyer i feel good.
you go out on new years eve,get drunk run into a car with 4 teenagers. they all die and the lawsuits start flying.
that house is still your's,deeds in your name. they win the lawsuit and lien everything you own and start filing judgements. my understanding is they will get that house and i'm out in the cold.there are a hundred ways this can go sour,lawsuits,death, divorce,etc
now if you sold it to me and carried the first mortgage. the deed is in my name,you have a mortgage for 100k. same thing happens they will get the mortgage paper as a asset,but can't touch the house.
this is what i was told by a title co. years ago when i walked in with a contract for deed and he explained why i wanted to buy it and give the seller a first mortgage. larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
I'm no lawyer and Bob will confirm that as many time as you will listen but....The deed would indeed change hands but be subject to the terms of the contract. If done right, the deed would be signed and escrowed and the escrow agent would have the right and duty to deliver title when certain conditions were met...meaning that the payments as outlined in the contract were met. The contract would contain language that bound the heirs or assigns. Certainly, a warranty deed and first mortgage is cleaner and safer.I've used the Contract for Deed both ways: buying and selling and have not had any problems. Maybe I was lucky. I certainly will investigate your ideas before I enter into the next one. I like the contract for deed because you usually can work them out without closing cost or credit checks. You can leave an underlying mortgage in place if you need to.
Bob's next test date: 12/10/07
Jim
Like you I don't have a problem with contracts on houses. I've used them both ways, to sell and to buy, have one of each going right now.
I have a guy, very smart business man, he's carrying about 14 contracts at any given time, this is something he has been doing for the past 30 years, he's a retired policeman. My guess is he's probably worth a few mill. Never know it to see him but my money says he is.
He's told me that he has never had a contract go bad, had to foreclose a few times(I think 2 or 3 in 30 years) but nothing else. He does make sure that he is the first mortgage holder, he wont ever put himself in the position of being the second. I've learned a lot from this guy and if I come across a deal on property I don't have to waste anytime at a bank, I can go to him, he'll look it over and I can have an answer usually within the a day or two, and I can have my hands on the money just as fast, sometimes a deal maker if closing fast is important.
Doug
Found your remark about "I'm no lawyer.............real funny!
Edited 1/3/2008 7:05 am ET by DougU
well,i'm no lawyer either,can you imagine being a lawyer and landlord,talk about bottom of food chain.oh,i was a car dealer for 10 years also,how bads that ?
what you are saying makes pretty good sense , [your the seller,i'm the buyer]if someone sues you and i still owe you 50k,you have not delivered title and it's still in your name,i'm just not sure they couldn't get to it still,if nothing else they could get the escrow account as a asset and become the guy receiving the money ,but that wouldn't effect me as the buyer.
i have done 2 contract for deeds and i now know i was hanging way out,the deed was in the sellers name till last payment,then he signed a deed and it was mine. no way would i do that now,but i didn't know better then [30 yrs ago].
i still would only buy with a owner carry,if the deed was signed over to me at the time of sale,and owner takes a first mortgage on it. that way were both covered just like it was thru a bank. larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
"i have done 2 contract for deeds and i now know i was hanging way out,the deed was in the sellers name till last payment,then he signed a deed and it was mine. no way would i do that now,but i didn't know better then [30 yrs ago].i still would only buy with a owner carry,if the deed was signed over to me at the time of sale,and owner takes a first mortgage on it. that way were both covered just like it was thru a bank. larry"I made the same mistake on the first and second land contract that I bought. Luckily, everything worked out without court proceeding. That would have been an expensive lesson. The key is to put the deed in escrow and preferrably pay through that same escrow service...then the deed gets delivered automatically when the proper payments are received.You decision to accept only the owner carry makes a lot of sense, especially since you are in the position to take a deal or walk away and I do agree that there is an additional element of risk when you take on a Contract for Deed. That usually is worth something in the negotiations. If you are selling on Contract, you get a better price. If you are buying on Contract, you expect to pay a little more. Bob's next test date: 12/10/07
I agree with you. There are lots of possible Gotcha's for the buyer on a contract for deed.Otherthings like divorce and tax problems could put claims on the property.I would not go near one without finding an attorny that REPRESENTS ME and vetted 120%.There are probably somekind of ways to protect yourself. I am guessing by have the house put into some kind of escrol or trust where the seller would not own the property outright, but rather get the income and has management controls so that he can "foreclose" if needed.Whatever it was I want it recorded.Used to be a callin talk radio show, Bruce Williams, that was mostly "business" type questions, but often also "life questions". Often about realestate, both personal and investment.I remember one caller who had a CfD for years. The bank was collecting the payments for the seller. The buyer made the last payment wanted to get his deed.The bank said that they had not heard from the seller for several years and the money was all setting in his account..
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A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
Edited 1/3/2008 11:59 am by BillHartmann
I listened to Bruce Williams every night for years.Now he's on a 1 AM and I guess you can listen on the internet but I haven't figured out how to do it.http://www.businesstalkradio.net/weekday_host/bw.shtmlMaybe you pay a membership fee and then download the pod cast.About 20 years ago my brother worked as a barber in Hutchinson and Bruce Williams walked in and asked for a hair cut. Maybe he was some kind of guest speaker somewhere in Hutch.My brother said he was a pretty cool guy. Really smart. I think he started talk radio.
In the last few years I have tuned across the dial when I could not sleep and thought that I heard his voice, but never enough to identify it for sure or it to be listenable.He might have been an early network talk show, but there where a number of local ones.When I was in school (in Louisville) I would listen to late night shows out of Boston and Philly. Lot os Kennedy conspiracy talk..
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A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
why did you have bring up bruce and i find out he's still on,that was the only radio that was a must hear for me.i thought it went away about 5 years ago. shees now i'm not going to get to bed till 3 am.[if i was younger i could start my day:] ]
i did get him loaded on my comp. so maybe i can listen a little earlier.larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
C'mon, Fixit be for real.
Banks all over the country are getting hit left and right in the press and the courts for giving out bad loans. They are writing off stuff in the billions, with a "B", and now you decide to see whose going to loan you money for a dream?
5 or 10 years ago, you would have been laughed at by 70% of the banks. Today, it's 98%. But to act surprised is just silly. You are a professional - a real estate guy. You have been doing this how many years? You know as well as anybody, and better than most, that this wasn't going to fly.
Banks don't loan money because you want it to finance a spec house, unless you go to banks that do spec houses and pay the going interest for a business loan. It's not owner occupied because you stay there for a couple weeks. You know that too. You want a business loan - ask for and pay for a business loan. Don't try to pull the old "I'll live there" nonsense.
If this were your first one and you were 25 years old, it would be different, but you know better.
Don K.
EJG Homes Renovations - New Construction - Rentals
I am looking to find the best terms I can. Today I had a meeting with the loan officer in my bank where I have my savings and checking accounts. This is a guy I sit and talk with once a month and we have coffee and talk about real estate. I've been talking to this guy for 4-5 years and have given him referred clients (borrowers) to him in the past.He said right up front "we are the most conservative bank in town" and that I would do better going to a bank which welcomes and encourages investing. He gave me the names of two banks and I'll go talk to them tomorrow.Today I walked in with a piece of paper showing him what I'm interested in. I wasn't hiding anything. If I can buy a house and it's to my advantage to live there for some period of time, I'm going to do it. I'll take a look at it and figure out if it will work financially.I told the guy I'm looking at buying 10-15 low priced houses. This is nothing new. It's in books written by attorneys who tell you how to do this.Today the loan officer told me up front it would be impossible to get a loan from them and then come in at a later time and get the new loan for an additional owner occupied property. It just won't work.He asked me what my credit score was and he indicated my credit score is high enough to get investor for most of the amount anyway and so I don't need to mess with owner occupied issues.He indicated I qualify for investment financing at 95% Loan to Value which means I'll only pay 5% down which helps me. He indicated things have changed a lot in the past 6 months. He indicated the rules change "every week or two" and it's hard for a loan officer to keep up with everything.He told me an interesting story. A guy came in and wanted to borrow money to buy a house. My friend said he had a gut feeling the guy was going to flip the house, even when he said the home would be owner occupied and long term.So they loaned him the money and let's say he borrowed $100,000. Then they sold the loan like they always do. He didn't tell me the amount they sold it for but lets say they sold it for $110,000.The new lender then had the loan for only 2-3 months and the guy sold the house, so they got burned. They lost money.So the second bank come back to them and were able to recoup what they had paid for the loan ($110,00 in this example).I had never heard of this. Here in Kansas there is no prepayment penalty. So you learn something new every day.One of the things I've been asking banks for several years now has to do with loan "seasoning". No one has given me a specific answer or timeframe.This is critical to what I want to do. It involves buying a house with cash or private party financing. Then Fixing it up. And then getting a loan on the house. The bank loan is based upon the appraised value of the home (not on what I paid for it).I don't know if I can do it this way or not but I'm going to keep looking and keep trying.
this is my opinion only,take it for whats its worth,ok?
just knowing the city you live in and the market, here's where i think you should be headed. your selling your home,great hopefully you have some equity and profit will probably be tax free. now your a r.e agent tied to mls. i'd look high in low for a great solid house,maybe a estate house or one that needs serious update,they are out there i feel confident that in 45 days i could find this out west here. i have seen a few sell lately that were respectable buy's. put all your equity down and start fixing while your living there. [did you see the one in amarado 3 bdr,4 car ,base,great area.sold100k,that house could of brought 145 redecorated with no problem]
now lets say it's jan 09 and you have the house fixed up.. shop for the best deal on home equity loan'/line of credit. when they ask what for tell them you see some great buys come through your office and you need to be able to react quickly. now i'm just going to throw out the figure of 40k equity in your house being as you made a good down and have improved the property. now you got 40 to go buy with to flip. buy for 40 flipto 60.do it again buy a 40 but this time you only need to tap 20k,flip to 60 and rock and roll.
you are in a unique situation being as your a agent. i've been doing this 30 years and 1 month,and it takes a long time to get rolling .i think at 7 years i had 5 properties.and i was so dead broke from buying and fixing i couldn't buy you a free lunch,hell i'd still have to take you to mickey d's .
make a plan ,be ready to pounce when the opportunity presents itself,take it slow and it will start rolling.larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Larry I did not see the house in Amarado that you referred to that sold for $100. That sounds like a great deal.Right now there are some opportunities with homes built in the 70's and 80's which have the old lap siding which is crumbling. You know what I mean? The masonite lap siding which has gotten we. The owners probably collected some $ for the class action suit and then didn't fix the siding.Anyway, There is a house for sale right now in the area west of central and maize.This is a nice area. The lowest price house in that area is $115 and I've looked at that house.It is 1100 sq feet with two car, finished basement, three bed, and two full baths (it does have a master bathroom). There is a 4th bedroom in the finished basement.The house is probably worth $120 to $125 if you fix it up.It's been on the market over 6 mo's. It has a nice family room in the finished basement. You can't buy this house for $115 and flip it. The numbers won't work. You would need to buy this house at $75 to $80 to flip it. That's probably not going to happen.Plan B would be to buy it and keep it as a rental.If I bought this house and put some $$ into it, I would "break even".In other words the rent would barely cover the house payment. Probably no cash flow.Is that the way to go? Buy something like and let the tenant make your payment for the next 20 years?
i have only ever bought one house that didn't make something when i first bought it. thats the one that had the asummable loan. it cost me 30.00 a month for the first 2 years just for the privalge of owning it plus what i put down. man that sucked when your doing a repair and it's out of your pocket. now let me fast forward that house.has not really done that well on appreciation,but for 28 years it has brought in approx 575.00 a month,just for a quick total thats 201,000.00 gross ,house paid off about 10 years ago,probably has netted me somewhere aroud 70k. so it sure looks like a smart thing now,don't it?
if i was starting out and i felt like i was buying a house out west here and it could rent and make the payment,break even.figure 10% vacancy,10% maint. i'd probably go with it and hope the appreciation floated me,till rents increased over the years.always no that you may/will make some payments out of pocket and that you can afford to do so.today my pirioties are a little different,if it don't make me money that makes it worth fooling with,i'm passing.i've got plenty to keep me busy and don't need a freebie riding along.
so what are the numbers on this house. can you buy it for 105,pocket 1500 for your commission,spend the 1500 in get ready cost. will it rent for 900.-950.?
larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
wait- this house you just described; 1100 sq feet with 2 baths and a 4th bedroom? is the finished basement included in that number; if not, is it same size? (add't 1100 sqft).i lived in my rental house for 5 yrs before leaving and it is same size, a tad over 1100 sqft. Built ca 1925. small kitchen with breakfast nook, 2 medium bedrms, 1 small bath, decent living room.
i don't see how that same space could yield the number of rooms you described, without them being teensy-
The house is a ranch with three bed on the main floor. According to the MLS listing the Bedroom sizes are:11 X 14 (master)
10 X 12 and
10 X 10The fourth bedroom is in the basement
private financing is the way to go.You really need to take houses "subject to". Bob's next test date: 12/10/07
Mrfix, isn't the appraised value going to be based on comps?
Isn't your house going to be the closest comp?
Seems like that's gonna screw up this idea, the best closest comp sold for a lot less than you want it to appraise for now.
Joe H
You're right about the lender finding out what I paid for the house.The appraiser would look at the history of the house and would state that info in his report and the bank would then have that information.I know people try to work around this though.
I talked to two different banks today about financing investment homes.The first one said they loan money on investment homes but their policy is to loan up to 80 percent of what I paid for the home. This is the common procedure. They don't care what the house will appraise for.But the second bank said they would loan me 80% based upon the appraised value, providing I could document the increased value.In other words I can buy a house for $32,000 and pay cash or finance through a friend or family member.Then I do the repairs and updating and I will go to the bank and get a loan. He said they would consider it to be a refi.If the house appraises for $40,000 (which I know it will) then they will loan me 80% of $40,000 which is $32,000 and wala I have bought the home and financed it with no money down.If this will truly work its the answer to my prayers. I'll look further into this and make sure he understands what I'm doing.He said their limit is 10 mortgages per person.
as a rule 2 people that know very little about real estate lawyers and bankers... they might know how to write contracts and loan money on it... but really... think about it.... bankers... just usually aren't that bright and usually not very rich...
I'll tell ya what to look for.... look for an early 60's 8-12 unit apartment building... the kind they build in inner city areas when the huge house that was sitting on the lot no one was interested in... before it became cool to have a big old house... look in the hood... look for one that looks like the owner doesn't care and look to see if about 1/3 to have the units are empty (look for the electric meters this will tell) look up who owns it... contact them see if they want to sell... and ask them to carry the note... many and i mean ALOT of these places are owned by the people who built them in 1960... they are old and tired... meet em talk to em... listen alot... and they might just rather have a note come'n in (most don't need the money) than chase'n rent or worry'n with it...
you are far better off with one address with 12 tenants...
much easier to refi an "apt building" than 12 single houses...
and thats my tip of the day... if you want the whole book send $99 to my pay pal account and you can get up to 20 email questions answered that will guild you thru this ... you too can be the next donald trump
p :)
99.bucks for advice from a guy converting condo's. man thats the best buy i've seen on the computer in a long time. do you have cute blonds,lounging on your yacht,like the guys on tv.?
you know you have real point though,when your talking to someone with hands on experence ,you buy them lunch. i worked for a guy restoring his classic cars late 70's-81. i probably should of fixed his cars for free just for the privalge of seeing him manuver and wheel and deal. i've been lucky to have met 3 guys like him and been able to asorb a little of their knowledge.
really 99.00? you should put a ad on ebay! larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
get me enough people send'n in the $99 and i'll get the blondes and the yacht...
i'll then be "financially attractive" like a short fat doctor...
p
The deal on management companies.
First look at who is doing the management . They are probably RA selling properties .
They know nothing about this business and have no incentive . They sent a letter to you when they havent recieved rent. They sent you a bill for the repairs . They take calls and give people the keys to the house but dont show it . Its like a deposit to get a key and off the people go to get in your house .
It doesnt work. If you dont have any choice in the matter then its a last ditch option. There hasnt been anyone that can stand up to my questions over this issue like I can answer it with me in control. Its a very bad option to say the least.
Tim
The management people in the small town that I was going to use were much more intimately involved in the process than what you are warning about. I do agree with you....you need to know what "managment" means. If someone decides to hire a Property manager, they need to investigate them and their practices and follow up with careful monitoring, just we do with all our subcontractors. You don't hand them the key to your vault, then come back and check on things in a couple of years.The folks I were going to use would do the simple maintenance if they could. They'd go to court to do the eviction. They hired the cleaning ladies etc. They also knew every laborer in town that would work for $5 per hour cash.Your opinion on control is not unlike most people that are self employed. One our our banes is our inability to release control and many feel like they need to wear every hat in every business they own. I know, I've been there. Bob's next test date: 12/10/07
Since Ive been here at the same address doing this type of business for 16 yrs , Ive heard just about everything . Im not saying that to make your experience less . All of the problems Ive heard about with MCs dont happen with me . It just dont get a chance to happen. They dont have 90 legal days to get out of my house which they will take if given. Thats the biggest draw back but there are several more biggies.
When you come up with results like I demand ;
Rent is due on the 1rst . They should have the money at that time and they should have paid it by 6pm. Thats my strike time to hit them. They end up seeing me at the front door as you said before . Yes they do." Dont you realize the rent is late ?" If they have the rent , it trains them not to be late or bad azz will come calling quickly. They need to know that , its important . "I need to look around while Im here . Get this trash picked up. " "Who does this car belong to?" Once inside I can see if things are going well or getting out of hand . I told one lady to buy a vacumn cleaner or move out . I can smell a dog or a cat before I get in the door which is against my lease. All I gotta do is smell it and Im into action. I spent 4 grand on carpet last year and it could have been 12 grand . I cant rent a top property unless its in that condition. I wont settle for anything less . I would rather evict and take another shot at a better renter before it gets out of hand .
My properties rent normally within 3 days average . They are in good shape and will rent immediately. If they arent then its my fault not the past renter . If its the ladder , I allowed it to happen. All my rentals are top notch and I get more rent than anyone . I dont get enough rent as it is and I dont share the money with anyone . I dont get 1 percent to value so IM not putting up with any ####.
Now to your side ; Ill never be any bigger than I am unless I find a way to change . When a person can effectlively delegate and manage then he or she could get rich doing it or go stone broke . Budget and I cant afford the gamble . We are too old to make it back so there cant be any costly mistakes. Ill bet we dont lose though.
Thats actually the two most popular ways to "play the game" . Offense or defense?
Ive been watching the bowl games and Im following the playoffs . Winning is winning and losing is gone . Ive watched people play the game not to lose . They are conservative waiting on the other team to make a mistake . Then when the game couldnt be any duller , boom, they catch an inteception and 60 yards to a TD. Then Ive seen teams with so much offense they could just out score . Most of the time though its a controlled game that wins . Peyton Manning wins games making 5 yd passes . You dont think hes doing much because he doesnt have those 40 yd pass plays . Then the end of the game horn sounds . Hes got 35 points and weve got 15. I think how in the heck did he do that ? I dont remember any big play he made . Game management being in control of the game . Collins is doing the same thing with the redskins or they wouldnt be in the playoffs.
Dont forget if youve got somthing worth losing you now have to protect it . Some have said I might go broke but they didnt have anything. Budget and I do have somthing we cant lose . Its taken me years to get here . I could have done much better if I was a good business man but IM not . Its not one of my strenghs . I dont feel like I belong where IM at either . Im just an old tradesman. Ive already had a bunch of good luck and IM due no more. My games been played and my defense is on the feild .
Tim, I value your opinion and know you aren't talking through your butt. You are in the perfect position to effectively transition over to a property manager...if there was one available in your area. It's very possible that there isn't anyone there. If there was one, you have enough knowledge to watch like a hawk until you were sure they were doing things right. you might wonder why you should "waste" all that money but every business shares that same dilemma. They "waste" their money training someone but the end results are worth it. Its the cost of business to get what you really need if you want to replace yourself. How would things work for you if you and your wife were bedridden and lived that way for the next ten years? You are in a position to say "fine....I set up my business to sustain itself even if I was incapacitated". Not many can say that. Not many have the opportunity. You do...you just haven't went for it. Bob's next test date: 12/10/07
Thats a wonderful position to be in. DWs ex boss calls it hands off management . Hes got 5 companies and he doesnt do anything except check on them and pick up his money.
When someone gets 5 houses it becomes that way if you arent taking the money. Thats an exellent position for someone that still works for a living . Two people are better . Two professionals make a pretty good living . 5 rentals is a good nest egg growing with little management . Ive always said I could retire with 5 houses . I dont know why Ive got so many. The problem is if I was held in the house and hired work done then 5 is not enough to stand alone. 10 houses paid for would be if they were owned minimal. 20 would be very cool and would pay all management . DanT said it best one time that you can let properties do anything you want them to do. If there was supplemental income [depending on how much and how much was needed ] you could plan them into retirement .
I told my wife at the end of this year I could no longer take care of buying and selling with my current rent load. Well, buying means rehabbing too. 17 houses is a full time job if they are run right . I can hire the rehabbing and the physical work and do the business end of both which is probably what Ill change to.
You had a good idea about taking care of others properties but I dont want to teach a management company in this area. If I did it myself it would mean an office and the realators have that first shot . Ive never thought my own office would be profitable in the small town I live in.
I agree with you . Im at that age.
I could sell out and take a tax hit and work at anything with the money meaning buying a job, but the dream to this business is retirement . Actually , its semi retirement but thats close enough.
Im really glad I didnt do apartments in this area as its very strong competition . Every new complex thats went in made me uneasy but the 3 bedroom rentals have always done very well. Thats where I was lucky becuase I didnt know it . Blind coon found an acorn.
Housing is cheaper here.An old one bedroom rents for $250 to $400An old two bedroom house rents for $400 to $550An old three bedroom house rents for $550 to $700The median price home in Wichita is $115,000This will buy you a 1950's ranch, brick, 1300 ft, 3 bed, 1 bath, 2 car. This is a decent home in a nice neighborhood.The $115,000 house rents for $900 to $1000 which is about what the payment is.
"Housing is cheaper here."
No it isnt . We are cheaper than you on rent .
I rent that last house on your list for 600/ 700, but no more .
Thats why the market sucks . Im having a hard time providing the product for that .
Another factor is the price of new homes.Here our lowest priced brand new home is $90,000. This is not a view out type of basement. It will come with one "daylight" window for the entire basement.$90 K will buy you an 850 ft, two bedroom, two car, unfinished basement with $10 - $15 K in specials taxes. Specials add about $110 per month to your payment.The contractor will finish the basement in the above house for about $20 K. The basement will have a bedroom, bath, and family room.The payment on the above brand new home with specials is total of about $900 to $1,000 per mo
"$90 K will buy you an 850 ft, two bedroom, two car, unfinished basement with $10 - $15 K in specials taxes. Specials add about $110 per month to your payment."
Ive got a brand new 1400 sq ft , 3bd2 bath, 2 car garage , brick , fence , storage building sitting on a curb and gutter street in a new addtion Id sell ya for 95,000. Id take 90 grand cash.
Tim,How do you handle lawn mowing? Is the tenant responsible or do you include it in the rent? If the tenant's responsible, do you have many issues with them doing it?++++++++++++++++++
"Where will our children find their enjoyment when everything gets itself done by steam? Frederick Law Olmsted, 1850s?"
Mowing is a big deal.
They are supposed to mow the yard or hire it done but I mow three days a week if that tells ya anything . If they fail to have it mowed I do it at a charge. I have personal and vacant properties too.
Ive got pretty much a dedicated lawn care trailer. I hook to it and its got every thing on it . I hire kids to do the weedeating , leaves , and such.
My 13 yr old son does a lot of it . He works full time in the summer for me .
Thanks Tim,Just wondering. One more, if you don't mind: Any problem collecting on the charges when you have to mow or have it done?Ken++++++++++++++++++
"Where will our children find their enjoyment when everything gets itself done by steam? Frederick Law Olmsted, 1850s?"
Ken , Im a firm believer if you live by the pass then you have to pass .
If you play defense you cannot be afraid of the pass.
Im a lanlord that will throw your butt out .
All charges are to be paid by the first of the month . Due date .
You have till the 5th of the month at 6 pm . After that I start eviction. I deliver a pay or quit letter that night and thats good for 24 hrs. The 7th day you get an eviction notice giving you 10 legal days.
I dont vary from that .
I wouldn't vary from that either Mooney. In MI, it's gonna take you a couple months to move someone out and if you goof up any of the paperwork, a couple more months. It is not a landlord friendly state like yours. Bob's next test date: 12/10/07
My 13 yr old son ...........
Tim, I knew you had a son but wasn't sure of his age. Do you foresee him taking over this empire of yours someday?
Realistically I don't see myself living to be anywhere near 80, my wife is 12 years younger then me and doesn't have a clue what I do OR which end of the hammer to use OR which contractor she could trust to finish the work OR............., the last thing that I want is to have several big projects sitting around when I die, which obliviously could be tomorrow( but I'm not planning for that ). I do catch myself thinking about the projects that I do take on that will last several years down the road. Are you giving any thought to that sort of stuff. I know that your wife probably does have some working knowledge of what you do, even though she doesn't like being down in the ditch with you(did you ever think that you were to hard on her when she was working with you, maybe that's why she's selling insurance now! :) ) but it sounds like your wife wouldn't be totally in the dark if some unforeseen circumstances arose, those are things I have to worry about because of my wife's lack of knowledge in my business.
Just curious what you have planed for the future and when you can no longer get out there and git er done!
Doug
My wife knows the business very well. Her problem is getting things done to the houses and personal confrontations. She can handle the business of the rentals book work but she doesnt need to be knocking on doors evicting people and giving orders to them to clean up their act .
I have a daughter that probably could but she knows nothing again about the houses .
My son is not old enough but he can do lots of things right now . All depends on how long I can go I guess . Ive been really sick and drove to to work and he did the work. Thats probably why he can do as much as he does right now . If I gave a list of things he can do it would sound like bragging . He always has money in his pocket from working for me and hes good at what he can do.
Him and DW might make a run at it but I have advised against it .
There are numbers now that budget is giving Jim as the reason why.
The reason we are crying in our milk is becuase we arent getting returns on our investments . 1/2 percent in rents dont cut it . The only reason Im holding on is becasue I took a 35 percent increase over the last two years in value . Thats where the gains for me has been. Other than that its hard to provide a rental house on a 1/2 percent . Hes telling Jim that in that post really. We cant operate and pay out . A lot of people have a hard time understanding that . A farmer stays broke half the year but hes got assets. He can sell a cow if he has to but he doesnt till that time keeping his money out there eating grass or it growing .
Thats pretty much been my style . I get some money saved up , I go buy another house .
Now at 4.5 percent intrrest in the bank looks better to us that letting her fail. I havent ever done that but I suggested she sell the farm lock stock and barrel. Tools and all . Everything .
I suggested she sell the farm lock stock and barrel. Tools and all . Everything .
I've got an old acquaintance that has maybe 23-25 rental properties, all on section 8, talk about a glutton for punishment!
His wife is maybe 20 years younger then him and in his will and per their agreement she has to keep the property. Apparently one of their sons and her are supposed to continue to run it. I never met the son so don't know if that's even a possibility, he didn't ever work around the property though so makes me wonder?
When he was going over this with me I couldn't help myself, I had to ask him what she ever did to him to subject her to that kind of punishment.
I think you have the right idea with your plan, and hopefully nothing will have to be done for many years to come.
Doug
Tim, are you comparing apples to apples if you cash everything in and earn 4.5%? Wouldn't you start eating into the principle while trying to live off that return? Bob's next test date: 12/10/07
I won't speak for Tim, but you can get 4.5% as a long term income on bank accounts (CDs). I've actually thought about this a little bit because the expenses can eat away a big piece of the profits on rentals.
One rental I had required a new driveway/road into the property. It is a singlewide that rents cheap - around 300/month. Cost of the road was about 8 grand. That's over 2 years before I have any return on the money. But, this place is about 15 years old and has other things that need work. Roof leak and I'm out of state - cost $250. Heat problem because the system burns out wiring harness. $75/ per, 2-3 times a year. Door needs to be changed $700. Negative return.
Another house needed a new well - cost ~$6,000. Another one had a bad boiler - cost me close to $1,000, plus a month's rent. It was a one bedroom, minimal rent.
I could go on, believe me. Even the work I do myself costs for materials and help. But if I sold the properties, used some of the property appreciation to pay the taxes, then put the money in the bank in a CD, I can come out ahead. Why? Because there are no expenses. Income is clear.
Oh yeah, and no headaches either.
Don K.
EJG Homes Renovations - New Construction - Rentals
Ken, Re: Mowing, I have two duplexes next door to one another. I cut or pay to have those yards cut. My single family houses, the tenant is responsible. My duplexes are on a street of mostly single-family, owner occupied homes. I don't want my houses looking bad, when the homes surrounding them are owner-occupied. I didn't want one guy cutting his 1/4 one week, and the other guy waiting two weeks. It's just easier to have it all cut at the same time. Also it's hard to provide secure storage for each tenant to have a mower.Gre
Thanks much. We're renting out a house with a large yard, tenants responsible, just wondering how its worked for others.++++++++++++++++++
"Where will our children find their enjoyment when everything gets itself done by steam? Frederick Law Olmsted, 1850s?"
Ken
I have several rentals and I second Tim's statement. Mowing is a nuisance.
One of the properties I have in NY is a 2 family and I didn't make a big deal about the mowing when I turned over the property. I told the tenants where the weedwacker was, bought a brand new mower and figured it would be done. Wrong! I went to the house from VA pretty regular this year for business and I think I mowed it more than they did. Leaf raking, same thing. I mentioned to one of the tenants that the leaves needed raking - in November - and she had her son work on it one day, then he went back to college. I don't want the place looking like the owner's lazy. I don't want complaints from the neighbors. In a few weeks, I'm sending a letter telling them if the lawn is not taken care of properly, I'll hire a landscaper and add it to the rent. I know they won't be happy, but it needs to be done. Best bet is to put it right into the lease, up front from day 1.
I've seen this many times on other properties with other landlords, but I erroneously thought these tenants (MINE) would be different. My own stupidity. People don't wan t to be bothered with lawn stuff if it can be avoided. It won't happen to me again.
Don K.
EJG Homes Renovations - New Construction - Rentals
In a few weeks, I'm sending a letter telling them if the lawn is not taken care of properly, I'll hire a landscaper and add it to the rent. I know they won't be happy, but it needs to be done. Best bet is to put it right into the lease, up front from day 1.
How would you suggest as the best way to do this? How would you word it in the lease?
Best way to handle the issue of landscaping is to discuss it up front with the tenants. It doesn't have to be nasty, just tell them what needs to be done. Make sure there are no misubderstandings.
As far as how to word it in the lease? I don't have one of my old ones handy. Probably something like,
"Tenant shall be responsible exclusively for all yard maintenance, including but not limited to the following: Lawn shall be mowed weekly, flower beds shall be weeded, weedwacking shall be done weekly, driveways and sidewalks shall be edged, leaves and any other debris shall be cleaned up, shrubs shall be cut at least every three months beginning in March. In the event that landlord determines that tenant is not properly maintaining the premises, he shall notify the tenant of the deficiencies. If tenant does not remedy same within 14 days, landlord may hire others to perform any necessary work at the exterior of the premises and such work will be done at tenant's cost and expense. Tenant agrees to pay any bill presented for such work within 14 days, and such amount shall be considered 'added rent'. If tenant does not pay, this may be the basis for eviction or other legal action."
This is probably a little verbose, but it depends on the particular situation and particular tenant.
Don K.
EJG Homes Renovations - New Construction - Rentals
sounds good, thanks
I think you misunderstood me when I suggested that you train a property manager. I'm in agreement, you should hire one of the existing real esate offices that do property management...THEN TRAIN THEM TO DO THE THINGS THE WAY YOU WANT THEM DONE! You probably could negotiate a flat fee for all of your properties.If you own 17 houses, it will take you about two of them to pay the property management bill and another 2 of them to do the routine maintenance if hired out to handymen. That would leave you with the income from 13 units as your fishing money. If you can't live on 13, then buy two or three more. Bob's next test date: 12/10/07
"I think you misunderstood me when I suggested that you train a property manager. "
Lol , you missed my point.
Im not teaching anyone in this town what I know . Im at an advantage now because they dont know what they are doing in property management . Its a sideline for them since business falls into their lap. None of them get up in the morning thinking property management .
Every time they hire a sub , he makes profit on labor and material just like the gig here . There arent any 7 dollar an hour help that get it done but thats what they try to use and screw things up first of all. Then comes the higher subs . It gets quite expensive . One Lab can cost 3 grand on carpet. They could have 5 Labs in the house and no one would care with the owner out of town which is the ones they get .
The reason is they get their money what ever happens unless the property is not rented. They can rent the property easily just like I can but they wont take care of it . The owner signs a years contract @10 percent.
I could write a book on management companies.
I want them to fail. If they were successful they would be competing with me . They dont . Renters tell me all the time they are looking at the nicest house theyve seen. If there 5 in the paper , that means I beat 4 and it happens time after time .
The owner finally gets discouraged because he gets a big bill and no rent . Most people are making payments on two places . If the rent doesnt hit and somthing happens like 5 Labs , no one will rent their house until they spend the 3500 or what ever . One filter not changed over 6 months can cost 3 grand in damages. It happens every week. One house was used to cook crack and it has a yellow ribbon around it after a year.
They arent repeat customers because like I said they are in another state most of the time . You can switch to the next one but wont get any better service .
Property management is the biggest rip off in real estate . I like it that way.
Tim
Tim, I understand your skepticism. Obviously, I don't understand your situation as well you do but this is what I'm hearing from you: you don't trust anyone to do anything and you don't want to hire any of the management out. You are a one man band with health issues and would like more time. So...hows that working and how will it work if you don't get out of bed for the next year? Posting on BT doesn't get your job done and you aren't training your replacement. Wouldn't your business implode? Who's going to be on the porch stop collecting the rent the way you do when you won't train anyone? Bob's next test date: 12/10/07
What I said before .
Just do the management and hire out the labor just like you do. I can hire subs that do subbing for a living . I hire a real estate agent so why not plumbers and such?
I can still buy houses , make auctions , and collect rents . Theres quite a bit to finding the buys . What I mentioned is where they moneys at . Its never been working on them. It did go well together though.
I bought a backhoe thinking I would sit on it when I wanted to clearing rough land . I can do that pretty well.
If I go down there will have to be an auction. That wont be all that bad. I can live for a long time off that . Just depends how bad it is like everyone else . If I can walk , Ill make auctions at least. Then theres my wife but I dont want her doing the rentals .
What would you do? This is the question every one should ask themselves. Are you ready to be disabled ? Are you ready to die ? Is your family taken care of if you passed away? Do you have life insurance or equities ? How would you live if you were diasbled? Thats the questions DW is asking for a living right now , lol.
What if you couldn't do the management? I'm not trying to bust you. I'm giving you a lot of credit for putting yourself in the position that you are. You have the opportunity to take the next step and create a truly passive income that wYill sustain you and her forever as long as it is managed properly. Right now, you are doing it all. If you are incapacitated, the entire operation is in danger. If you can't participate in the management transition, the entire operation is in jeapordy. If you are fully functional when the transition occurs, you stand a much better chance at getting it done right. You are a poker player. I'm sure you can see the odds. Setting up a management system while you are still active is kinda like hedging your bet.Listen to your wife....she seems like a smart woman.
Bob's next test date: 12/10/07
jim,i gotta to jump back in on this management thing again, right now if you own a propety thats worth 100k,rent is probably in the 8-850 range = 10 k a year. now around here the property taxes on this thing are about 1100 a year, insurance will be in the 900 range, so your down to 8k a year if it's all paid for.if things are really going good you might get by with deducting 600 a year vacancy. we won't even throw in maintance,even though thats dreaming.7400 a year net
now if it isn't free and clear this discussion stops right here,by the time you make p& intrest on top of this,your dead in the water to even think about hiring management at 5-10%.
so now i give someone the 1st month rent plus they pick up another 1,000 for collecting the rent i'm down to 5400 a year to bank in my account.and not one penny to maintance. now just dream up a figure to hire everything maintained.
take a 100k to the bank,put it in a money market today at 4.9 collect 4900.00 a year and never worry about another thing.
if your a small investor with less than 35 properties and have to hire outside management,your screwed.now if you hit the number of 35-50 units ,i would look at setting up a office and hiring someone to staff it and deal with it on a day to day basis,.while i'm out cleaning toliets.... i did read about a guy who did this, as he would go out to repair something he repersented himself as the repairman who work for the company,no one knew his real role so he got a real good view on what was taking place.love that idea. larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Fundamentally speaking, I think every business, including the landlording business can be planned to incoporate all costs. That's great theory but we all know sometimes reality stands in the way.I might be misunderstanding your figures but using the numbers that you are presenting, it would appear that you don't have room to pay that property management fee. You are suggesting that you would need to pay a fee of 2000, which represents 20% of the gross. I wouldn't consider paying that either unless the provider could prove to me that I would make more money using their services than if I did it myself. When I started this new round of management discussion with Moody, I was discussing his situation with his 17 units. I'm assuming that most of his are paid off and I'm also assuming that he is generating enough income from them to pay the management fee and still have enough money left over to live. The fundamental goal would be to transition the business from an active business to a passive business. Your scenario doesn't seem to be the same. However, that doesn't mean that someone elses situation couldn't benefit from the thinking. Mr T was suggesting that he could pick up 40k houses and lease them for 700. That seemed to leave plenty of room for a 10% management fee. Bob's next test date: 12/10/07
the sernario i presented was with a house with no mortgage. there are probably some real estate investments ot there that can throw off a 12-14% return. but for a small guy with less than a 1/2 of mill ,about the only thing is the cheap #### that started this disscussion. i think as mrfixit does that i could go buy 10 -25k house's in the next week and they would return in the area of 15% or a little more.but the headaches would be unreal,i have already seen the bussiness end of 2 guns over the years and this would bring the count up quickly.... larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Well like I was telling Doug and what Ive told you ;
Ive played my game and my defense is on the feild .
I dont forsee getting any bigger unless it just happens . You ever hear of taking what people will let you have ? Thats true in almost everything . I know I told you about the auctioneer doing a good job. He told me he just took what they would let me have ! My poker playing is like that as I pick on players but they have to be willing sometimes to lay a hand down so I can bluff. If you dont do some bluffing you cant win. If the only thing I bet on were good hands they wouldnt give me any money.
People willing to give their money is the key to all business .
Ive always said I took the houses they would let me have because I sure didnt pickum.
I dont know Jim. I dont know whats gonna come tomorrow. Thats always the way its been with me .
"Tim, I understand your skepticism. "
It wasnt meant that way but it is a pet peeve of mine so mebbe IM biased but it is fact .
Jim
I appreciate the info regarding Mrlandlord but its of little use to me, I have absolutely no interest in ever becoming a landlord on the same level as I once was, or that of Larry or Mooney. It's just not something I'm willing to ever consider again. I'm sure that MrLL has some good ideas that can be implemented in other facets of the business world and maybe I'll go take a look at what he has to say.
Where you doing work in the Travis Heights area? I know that part of town fairly well.
I have a few investment properties, those along with a few other investments are my retirement and if it means that I don't have a million or two to retire on then so be it, maybe I don't need that much, I'm pretty simple, all I really need is an 18 year old girl and I'm pretty well set!
Hell I have two properties in a historic district that if I could find the time to get them restored will yield me more then I ever hoped to make on rentals. Those I can do at my leisure and I'll enjoy that more then any rental property. I enjoy what I do and the guy that I work for so that's not something that I'm willing to give up yet. We also have a building lot down in San Marcos that we dont know what to do with yet, maybe move back and build on it?
I'm just not willing to give up that much of my life for rental property, whether you use a management company you still have to do the leg work to find the properties, take a look at Mooney, he spends a great deal of his time looking for them, I have kids and other hobbies that I enjoy way to much.
Priorities! I wish you all the luck in the world, the thing I see about you that I don't see in myself is that you are more driven, I'm in this thing to fart around and have fun, if that means that I have to give up some of the money that can be made then so be it, there'll be more for you!
I miss Austin a lot, if I ever get back down there I'll have to look ya up.
Doug
I don't blame you for avoiding the landlording. I'm not interested in that either. I would consider commercial landlording as long as I had a NNN lease. Were very close to Riverside just west of 35. Were adding a second story on a junk house.Have you tried selling the building lot? Is a tract home? Bob's next test date: 12/10/07
That's me . . . "mastered the art of dealing with people". I spent the afternoon moving a tenant out of one of my low-end units. One bedroom efficiency that I've been renting for $250 a month. Yep, pretty low-end. Not an eviction, but the down-on-his-luck unemployed (unemployable) guy had a heart attack and just can't make it any more. So I'm just helping him get his stuff out of my way.Friend says, "How can you do this, and keep smiling?"1. I bought the house for $3000 down, over twenty years ago.
2. "Useless" here has paid me $15,000 over the last 5 years. Not
such bad R.O.I.
3. For 6 to 8 hundred bucks, paint and a couple of new ceiling fans,
I'm back at it, maybe another $15,000 over four or five years.
4. I've had a lot of good no-expense years, versus a few years where
I've had to plow all of the income back into the house, but the
good years far outnumber the bad ones.
5. Not worth a cuss at bookkeeping, my own receipts for paint and
carpet and appliances get mixed up with the rental stuff.
6. I sort of enjoy the work, making one shine after a tenant.I've heard many people say, "I had some rental property once, boy, I'll never do that again." That's the guy I want to meet, make him an offer, do him a favor and take a problem off his hands.Where's Tim Mooney ?Greg
Have you tried selling the building lot? Is a tract home?
When my wife accepted a job offer down in San Marcos one of the conditions that she asked for and received was a building lot, we got a tip from another person who had a similar experience, moving but was ready to build where they were. They excepted the condition and we were allowed to pic out a lot, couldn't exceed $40K.
No tract homes, all custom builders.
Because we don't have any money in the lot and its in a nice area, Houses between $275 - $450k, we decided to keep it for a while, decide what we really want, property tax on a vacant lot are not all that much and I'm sure if we sold it we would be paying a lot in taxes (not sure on that part, never looked into it but considering that we didn't pay for it it'd probably all be capital gains? don't know for sure) It was part of a package deal, so maybe it would be considered paid for (part of my wife's pay?) and capital gains would only apply to the profit, which has probably increased due to the increase in property in San Marcos. Our realtor that sold our house for us said that the San Marcos area has really gone up since we left so I don't know?
The money would be nice but having the lot isn't hurting us so for now its just going to sit. Texas is always growing!
Doug
Edited 12/31/2007 10:51 pm ET by DougU
A friend of mine that is a landlord took me to school when i complained about my renters, He politely told me it was my fault and no one elses if i had problems, Just a few titbits..... Everyone must go and get a credit check and background check, 25 bucks, He had about 25 forms they fill out, If someone is 5 days late the eviction process starts, Someone else moves in, More rent plus they must have a background check and cannot live there unless there name is on the forms, {unless visitor}, See a dog or pet there and it was not Oked, Fine 500 dollar deposit, No deposit eviction starts, He knows the law inside out, Best thing to do is join a local landlord group.
I've already mentioned, I'm not a landlord and I don't want to be a landlord. I have landlorded and I used a property manager. It worked for me. I didn't have to evict anyone but maybe that's because I wasn't in the low end market. You've basically ruled out every suggestion that I made and I know for sure you didn't check out the programs I mentioned or you would be thinking and talking different. That's your choice. I find it interesting that you think hiring a property manager means turning it all over without watching it closely. I think my course of action, if I was tired of the grind, as you seem to be, would be to hire a property manager, then watch closely till I was 100% sure that they were doing the right things. Your idea of paying them after they perform seems reasonable to me and until they could show me a solid track record, I wouldn't be blindly turning anything over to them either. I do think I could find some property managers that took those plugged toilet calls and could get a rooter router out there though and get the carpets cleaned too if that is what you desire.The idea of taking a call after 5 puzzles me. The rent is due and you need to take calls after 5 to collect it? You know your tenants better than me so I have nothing to say about that. I certainly wouldn't be taking plugged toilet calls at all hours of the night though. If plugged toilets is an ongoing call issue, I'd supply five gallon buckets for the emergency hours between 5Pm and 9Am. Of course, there would be a 24 hour emergency hotline to leave a message on.I did notice that you think you would need to be open 8 to 7, six days a week. If you think that, it will be true. If you think you can get it done in 40 hours, that will happen too. It's amazing how things work out when we put our mind to it.Your paragraph about those with poor credit and no pockets seemed to skip over the part about getting co-signers. I'm not saying that you will have an easy time about getting someone with decent credit or the required co-signer but I know one thing for sure: you won't get it if you don't plan for it and demand it. The Landlord guy has programs that you could instantly implement that would significantly increase your chances at getting this higher level of tenants. If you have decent housing stock, you can get the best tenants....if you have plans that attract them. You don't need Mooney. Your stating your case clearly. He runs his rentals like you do...showing up at the doorstep collecting the rent. That's one way to do it. You guys have your ways and my hats are off to ya. Bob's next test date: 12/10/07
This thread really interests me as I have been in the rental "business" for 24 years now. It took me a bit but I did learn that getting a good tenant was the key. I now know that it is better to have the unit empty than having a tenant who is not paying rent while in the process of destroying the property. I always check references. By the way, the worst tenants I have had all fall in the category of "well educated professional".
I also treat it as a business. My business is to serve my customers.
As they are customers 24 hours a day my phone is available 24 hours a day. I will decide when they call if the problem needs my immediate attention. When a furnace quits, or a water heater bursts I want them to let me know immediately. In fact I want them to tell me of any problems them find in the unit. One of the benefits of having well-kept units is that you usually have better tenants who have a bit of common sense and will not call in the middle of the night to report a bad light switch.
I have 27 units (down from 40) and do nearly all the maintenance and still have a lot of time for golf. I don't know how a small landlord can afford to have a management company take 10% off the top in addition to hiring all maintenance. Just having a service call is expensive plus paying top dollar for any parts. Then there are the calls about a dishwasher not working where one finds it is not fully plugged in. The management co. would send a repairman for that -$$.
Additionally, I have always have had a 95%+ occupancy.
Just my 2 cents worth.
Your operation sounds like a perfect fit for many of Mr Landlord's ideas. I said many, not all.I don't see anything wrong with providing a 24 hour emergency number, even if you decide to handle all your property management in house. I would do the same, but it wouldn't be ringing in my bedroom. It would go to an answering service that would send me a page. I'd then go to the computer and download the message and decide which course of action to take.You mentioned that having better units results in better tenants and tha is the foundation of Mr Landlord business. He accomplishes that using about a dozen very creative "programs". One "program" is set up to provide the downstroke for his best tenants to buy a new house. He does this in a way that he makes more money than if he didn't have the program. Will it work for you? Maybe...it all depends upon the local building conditions. In this day and age of huge builder inventories, I KNOW it would work. If I had stayed in MI, I had already arranged to get into the landlord business in a small town. Their rental market was solid and the houses priced right. The property management company would have handled all the paperwork and calls and they do this for dozens of absentee landlords. It's a small town and there are plenty of very low priced retirees who would have went over and flipped the switch on the diswasher. That service call would have been $5 or $10. More likely, the Property managers themselves would have went there first and there would be no charge. I'm not saying your situation isn't different. I'm saying that the term Property management shouldn't automatically be dismissed because every locality is different and the terms of the contract are negotiable. I'm sure your 27 units would be handled for a flat fee by the company I'm talking about for much, much less than 10%. They were fairly competent people and willing to implement any program that I talked about. It would still be up to me to supervise them, but they would be taking those calls at 3 in the morning and I would still be doing the actual maintenance if I desired. Bob's next test date: 12/10/07
I will certainly investigate your suggestions as I am at the point where I will soon (2 1/2 years) be ready to either sell all or find a manager I can train and trust. I might consider a management co. but I'm not sure what is available. As long as I own rentals I will be involved with at least some of the maintenance. I enjoy most of the work - especially when the golf game goes south.
By the way I have only had about one late night/ early morning call per year if that. I try to do preventive maintenance.As soon as I posted this I got a call from a friend who in the conversation said their water had burst with a sound like a gun shot.
Of course water everywhere even though they were there to shut it off.
I'll keep answering the phone.
Edited 12/31/2007 12:53 pm ET by 5brown1
Sorry to hear about that pipe burst. If I was a landlord (I'm not), I'd certainly have quality shut off valves clearly marked and easily accessible. A little more about that property management firm in that small town: I sat in their office for many hours discussing a wide variety of things and I saw them take a very large amount of calls from renters seeking properties. Most often, they didn't have anything available and just turned them away. One of the reasons that I thought about using them was just that: they were already in the real estate business and taking calls all the time for people seeking resort rentals as well as long term rentals. They didn't have any properties that they couldn't fill. Their problems wasn't finding renters: it was finding housing. Bob's next test date: 12/10/07
<go ahead go to court ,get the judgement, garnish their wages, when it's all said and done you will make about 5.oo a hour for your effort.>Not necessarily. I recently went to court, and then had to garnish wages, of a previous tenant. First time I'd ever 'used' the system. Court took less than 1/2 hour, filling out garnishment paperwork 2 weeks later--maybe 5 minutes. Entire judgement in my pocket for less than an hour's 'work'. Granted the court judgement is not guaranteed, but I was amazed at how easy it is to garnish wages. You DO have to know where they work though! <g>
sorry meant to post this to mrfixit.
the best hour i ever spent was with a agent [commercial] from wiegand,it was 15 years ago but i think his name was rollie? anyway we sat in his office and explained to me wholesale and retail buying and selling of real estate. now as simple as that sounds i never really thought of it,i just always thought good buy bad buy.
see if i can condense it,if you buy beyond a duplex in multi family,you have to buy at wholesale,because when you sell the only buyers out there are investors and they are wanting to buy at wholesale,they have to to make it work. now when you flip to single family it can go either way when you sell. if it is absolete [meaning neighborhood is old and going down hill,not enough baths or small ] most of your market will be investors,and they want wholesale.now if you have rental in a good hood with what people want they will buy and the house will sell for retail.
now as i type that it seems so simple,but i didn't know it when i got started. this house down south is a perfect example of how it can slide to a wholesale property [not because of the shooting]i bought that in 79 3 bdr ,brick 1250 sq ft,1 bath no garage]been converted to rec room]. this house was almost twice the house i was living in,i paid above retail then because it had a 8.5% assumable loan,no qualify,35.00 transfer fee. intrest was at about 11 then.
now 30 years later, who wants a 1 bath ,no garage,no basement house? not many and that is why that area is going to rentals,i would guess 60% now. that house will end up selling for a wholesale price to a investor.
i tell you how i find some property later,i got to go put in a toliet......no golf today larry
i did know of 27 properties for 300k,cleaned up [5k a pc]they would of brought about 30 35k each,not bad but the holding cost for me would of killed me,it would take me 5 years to get thru them and gone.
if a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Edited 12/31/2007 4:05 pm by alwaysoverbudget
Larry, what if you picked up the phone today and called your tenant and said "would you like to own your home instead of renting it"She would respond "Yes"Then you would put her in a rent to own program. She would own the house and she could do whatever she wants. Paint the inside. Update the kitchen. Whatever she wants to do.In return, she is now responsible for all repairs. If the toilet backs up she will now fix it. She will be responsible for steam cleaning the carpet.Her rent payment is interest only. If she wants to start paying toward principal she would need to increase her payment amount accordingly.You would need to determine purchase price and terms such as how many years for her rent to own program. For example, it could be five years. She would get financing in place and theoretically buy the house from you in five years or whatever your agreement is.As you are sticking your neck out and financing this deal you are entitled to set the sales price at higher than market value.There are landlords doing this today in our community.
There are landlords doing this today in our community.
there doing it but they're also ending up with some of the properties back with more work then when they sold them!
That's a full time job as well.
Doug
i may someday do some rent to own,i have done a couple rent with option to buy, but by the time the option comes around they have had a change in there life and don't pick up the option.
heres why rent to buy doesn't really work for me at this point.i live my life around taxes,most of my stuff has a zero base cost,so anything i sell me and my uncle get to spilt up,even though he never help plunge the toliets.i am where i am through 1031 tax exchanges,no doubt about it.
lets say i have a house that is worth a 100k,i gave 65k for it 20 yrs ago.this sounds great ,BUT it is depreciated to 0.00 so if i sell outright for the 100k i'm going to net after taxes 65k maybe.now what do i do with that?unless i'm really lucky i probably can't buy as good of a house as i sold,but i can at least look and buy something.
now if i do a rent to own,the money dribbles in 12 months a year,i'm still at risk that if they tear the heck out it,or something worse . they hit the road,but if everything goes as plan in 5 years they can buy it for 90k becuase of the rent appling to the purchase,i go to closing pick up my 90,send my uncle 30 and go looking to buy something. but wait,houses have went up,the house i sold was really worth 112,and i got 60k,i'm screwed ,might as well spend it on learning to play golf.lol
i think the time will come when i will owner carry to sell this stuff,but i have to know that i'm done buying and accumalating property and me and my uncle are going to cash in and split our winnings.
this is a option i'm looking at with the house that had the shooting,along with about a 100 other ideas,plan 1 is i'm hoping a tornado hits,missed it by 200 feet back in 98,damn. larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Larry, I don't know the details but my friend evicted a tenant and went to small claims court to try to recover unpaid rent.She then LOST in small claims court. I didn't ask for the details but it was really discouraging for her.
Ex Kansan who owned rental property in Hutchinson.
7 Units.
Great experience.
Lied to, threatened (by a real nut..chased his wife down the street with a knife), you name it.Fixed the units up very nicely. Had a couple long-time tenants who we made sure to take care of. I made the mistake of being too busy to find good tenants. But, then again, how do you know?One of our larger nicer units actually had a motorcycle overhauled in the kitchen.On the small claims court situation. Had a friend who had a lot of properties. He won one time and only because the tenant was a no show.I won once but still never collected a dime.Took 6 years to un-load the 7 rentals
Learnt my lesson very well.
well you just shot a hole in a idea that i've been playing with,move the rentals into a small town,less competition,people would tend to be a little better because someone knows someone,and if you trash a place word would get out. guess not,huh? i would think hutch would be prtty good,with enough size and bussines to work.
when it's time to sell,real estate is as liquid as a rock. it's easy to buy,and tough to sell. larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Larry my email address is wichita_realtor at yahoo dot comYou can send me an email about the houses you've got for sale and I'll see if she's interested.I thought about your rentals and I think you sound like a really good landlord.As opposed to my son's landlord and probably most landlords.When my son looked at rentals I helped him and we talked to a property management company. They showed us the house, had him sign the lease, etc.I have a lot of experience doing this stuff and so I helped my son.I went with him when he signed the lease and they provided a property condition report. I wrote on the lease and paperwork that the carpet was dirty and needed to be cleaned.I noted some other problems with the house. The woman acted annoyed and irritated that I would list things like the garbage disposer not working.Anyway, the woman told us the carpet had not been cleaned as the landlord was getting ready to replace it.My son said he wanted to rent the place and I said "great, let's go ahead and sign the lease" and he did.I helped my son move in a few days later and guess what.There was no new carpet.Guess what, the old carpet had not been cleaned.We went ahead and moved his bed in and his computer and I drove to Dillons and rented a steam cleaner and shampooed the filthy carpet.He lives in a decent place but it doesn't have a concrete driveway. So you walk through dirt and mud and track a lot into the house.It was the dirtiest carpet I've ever seen.Another thing.There is a large old diseased pine tree beside the driveway and it was dripped sap on my son's car for over a year.It has ruined his car !You can't wash off the sap. It's like glue.I guess the point is I want to be that kind of landlord some day.The kind that has a property management company who just takes calls and says "we'll get back to you".The kind of landlord who promises new carpet and then forgets to do it.The kind of landlord is who usually "out of town" or something along those lines.I think I would even be the type of landlord who WOULD allow pets.I would charge them more !!!!I would not have carpet in the house and just let them have at it.Maybe I could get two months security deposit and then I could sleep better at night.I'm just thinking out loud. I've never done what you're doing and I think with all your experience I'd like to introduce you to my client who is the investor and maybe you could help her and advise her.Just don't talk her out of buying more houses. Just kidding.
<Maybe I could get two months security deposit and then I could sleep better at night.>You could but it would be illegal. <g> KS statutes only allow a security deposit of one months rent. (58-2550, I think.)
You described my life as a landlord and that of any number of landlord that I know of. At least the small ones(ones that do all the maintenance themselves).
About the only way I know of to avoid all that is to turn the property over to a management company and you and I know that isn't going to make you the money you need to live on.
You can go to MrLandlord all you want but you know that you'll be back out there fixing toilets, shampooing carpets and missing that round of golf that you so desire - because that's the way it is in the landlord business!
And theres nothing "unprofessional" or "unbusinesslike" about what your doing. Its just the way it is.
Doug
Larry it's none of my business but I'll ask anyway - how do you find the homes you buy to use as investment properties?Here's what I've tried that HAS NOT worked.Several years ago I saw a house in the MLS system that I thought might work as an investment. I was primarily interested in fix and flip but I was open to anything. Buying to use as a rental or whatever.I drove over and looked at it and just like I've done 100's of times, I will look at the house, see what it needs, go home and get out pencil and paper, make a list of repairs and prices, potential profit, etc and then determine there is no profit there. In other words the house is priced too high. I'm not going to pay retail price.I see this all the time.So anyway, the realtor called me and said "what did you think of the house?" and I responded "it won't work as an investment" and I say "I'm looking for something I can buy at wholesale".I said "the numbers won't work, but thanks anyway"The other realtor said to me "would you be interested in buying ten houses. These are similar homes. Older smaller rental homes. and I said "uhhhh, surrree, I ggggguessss"The other realtor says "If you buy all 10 of these I think I can make it worth your while". My eyes lit up and we scheduled a meeting for the next day and I went to his office and got a list of the houses.so I take them home and study them and drive by some of them. Some are vacant and I go take a look.I spend quite at bit of time and my final conclusion is "this guy is just trying to sell me 10 houses at retail prices". There is no discount to buying these as a package deal. I kick myself for spending so much time on this thinking I had some great opportunity.I guess I had my hopes up thinking since I was buying 10 it would be like buying large quantities at a lower price. You know like going to sams club. Like going to Sams club or Costco and buying 100 rolls of toilet paper. You buy in large quantity and you think you're going to get a good deal.Anyway, this has happened to me twice (maybe more I just can't remember anymore) where I put a lot of time into buying a some "hot package deal" and it ended up it was a total flop.
"Larry it's none of my business but I'll ask anyway - how do you find the homes you buy to use as investment properties?"
Read my threads on it . Its the real deal if you have cash on hand. Theres no cheaper way around.
By me the cheapest house is 200 grand,[ Oregon} Im amazed houses are so cheap elsewhere, I wonder if theres vacation spots near you that the houses would go up faster in value?? I have 2 rentals but the money was in the appreciation and dividing the extra lots for me, The rents pay for themselfs and my note, If you can buy a house with a future extra lot wait 5 years the lot is worth what you payed for the house, At least thats what used to work.
You might want to try searching/posting on reiclub.com
She has 15, and it's not working for her???? I suspect that 'sweet little old lady' is a gray-haired shark - and she's been lying to you.
Managing property is a full time job. Anyone who thinks all they need do is sit back and watch the money roll in is living in a dream world.
Indeed, I will go so far as to assert that, if she has 15 properties right now, she has to already know how that business operates. If that's the case, she needs our advice like a fish needs a bicycle.
Otherwise, one must recognize that in any business there is RISK. One big risk is that values will NOT increase, rents will NOT be collected, repairs WILL drain your finances.
The best thing a newcomer can do is hand the property over to a management firm, and let them earn their percentage. After that's done, the best thing the owner can do is live nearby, and keep an eye on the management company.
In reading the threads, it looks like a good investment.
Cost is $35-$45K-at 20-25% down, if you can get a bank to take the loan, you would be paying a few hundred a month in mortgage. (Figure 7.5-8% for investor financing and $35K mortgage and your payment is around $325-350/mo. Add in monthly insurance and taxes and you know what your monthly cost basis is.
You need to figure in a few thousand dollars on each rental flip for putting the house back together (you can assume carpets, paint, etc as it sounds like you know what that entails)
Then you have to figure out what % of your tenants are going to stop paying and become squatters for the last 3 months before you can get them thrown out. How may months per year each unit might sit vacant?!?
You need to develop relationships with the local police, and the local district justices or whomever handles the legals of getting tenants evicted, etc. I've had rentals that have been screaming successes and others that I wish I never bought.
I have 17 higher end rent houses and they are my primary income now.
I guess it depends on how you look at it . Bein a cowboy aint all ridin and shootin.
Bein a landlord is not a dream job , nor flippin houses.
My doctor thought it was cool what I do and I told him I thought it would be cool to be a doctor.
Tim
fixit,check out mccurdyauction.com. they are having a auction around 3 of march. lots of multi family. i would expect this stuff to sell on the low end of retail.they won't be giving them away ,but might be some decent buys. larry
if a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Edited 1/25/2008 9:02 pm by alwaysoverbudget
Wow Larry, they're auctioning off 41 houses on march 6th.Sounds interesting.Thanks for the info !
Larry, do you think one person owns all 41 homes they're auctioning on March 6th?I noticed a lot of the homes have been converted into duplex, triplex, and four apartments, etc.I don't think there will be much interest in those houses.They're probably old beat up rentals.
Great post . Very imformative .
To all;
Making residential apartments in old houses ;
Do your homework . Start with planning and zonning . Then the city inspector.
Any time you change the use of a building especially from res to com , its a big deal unless its a day care . Daycare has a ton of regs now so its not easy even then.
Anyway the building will now be commercial if it passes P&Z. Then you have to pass the inspectors tests. I wont go into it but I inspected buildings like this all the time for different uses .
Next is plumbing , H&A and Electrical. Too much too list but those of you that do the work for a living know what an uphill battle all that can be . First it always starts with new services . Those old houses were ran on 60 to 100 amps and now for this upgrade were talking 500 amps minimum. Depending on what goes where . Separate meters? Get ready to shell out the green.
Wheres the new plumbing going to be routed ? Is there room or a way?
Always lots of feeding wires through closed walls.
H&A regs are the same deal no matter what building its in. Its commercial code .
Any time a buildings use is changed from residential to commercial you get to start brand new with out grandfathering . Just like you were building a new one . You must provide the same . Also theres fire codes in commercial that need to be looked at too.
So a building like this needs a review by the building inspector .
Most folks do P&Z and the review before they buy if they are smart . Plenty of people dont and get turned down too. Some commisions will not allow commercial mixed with residential . Sometimes they will only if its new . Normally [I was on the board too] if someone shows up to protest , its dead in the water. Never gets passed if that happens . The neighbors have a vested interrest already while the newcomer doesnt so they get a little handle to flex in the process while the residents are hefting clubs .
Always do the homework before you spend money.
tim,around here you don't go to a commercial zoning,but you do have to rezone from single family to muliti family. your not going to get muliti in a block of all single family.
i have no intrest in doing this,i would come nearing to taking one of the old house's thats been converted and turning it back into a large single family thats located in a real desirable area.larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
"tim,around here you don't go to a commercial zoning,but you do have to rezone from single family to muliti family. your not going to get muliti in a block of all single family."
Same thing .
House equals R1
Duplex equals R2
Multy family is R3
According to codes its still commercial and not residential to switch to multifamily.
As you said most will not permit it to be done in solid residential. I know I wouldnt want it done next door to me .
A long time ago I guess it was easy but now we have lots of goverment in the way .
A long time ago I guess it was easy but now we have lots of government in the way .
Tim, this might be one time that that's a good thing!
All those houses that I mentioned that were converted to 2,3,4 and even 6 plexs were done when it was to easy to do it. No codes for such things and most of those houses showed it!
The city that I referred to is now inspecting all rental property on a regular bases and making the landlords fix the violations.
Around here if you let a multi plex(converted house) sit empty for 1 year it automatically reverts back to single family dwelling. The city sees that there is a problem with all these converted houses in one area and whether it's right or not they are going to slowly but surely get them back to single family dwellings, or at least a good share of them.
I doubt in the town I mentioned that you could legally convert a house to multi family living. They really are dead set against it happening anymore.
Doug
I have not given a lot of thought to this.
Dad did several back in his day but I have not done one for myself.
I looked really hard at buying one but I dont remember considering any more.
The income looked attractive but with a harder look it was a two story wood frame . High pitch roof with lots of dental work and extras. Wood slider windows, claw feet bath tubs , orangeburg and galvanized pipe plumbing . It had wood setting pretty close to the ground but it didnt have termites but I saw many repairs that were done by the same guy, lol.
It needed a roof strip of three layers and somthing else not legible . My guess was a layer of roll roofing or selvage.
I estimated about 60 gallons of paint on the exterior with 80 man hours.
The list just kept building with all the repairs .
Finally I decided making a living needed to be easiar.
The house has gone down hill since I considered it . I dont think anyone did anything to it . The outside looks even worse . One day Im gonna , isnt gonna come for that house I dont think. If I ever meet the owner , Im gonna give him a rountuit coin. DW used to give them to customers when they countnt get around to giving a purchase order .
After what you said, Ive reflected over the ones Ive saw and especially the ones dad did since I helped him on them. I even lived in two years ago. The majarioty are dumps Im saddened to admit. That caused me to ask myself , what happened? The only thing I can think of , is the amount of work failing on them over the years. They arent worth a lot of money but they need a lot . Its possible they have hit the negative because I dont see them worth fixing . As they go down, their hoods go down as well for they are very old addtions that have lots of mixed stuff in them. Theres even pink paint on one .
Their future doesnt look good .
Last summer a young carp bought one and he made a daring attempt at bringing it back. I was really proud of him. He got the outside looking sharp! Somthing happened negative . The units arent rented and it sits. I hope he didnt run into money problems . I cant imagine whats wrong unless its either being foreclosed or he just ran out of money on the inside after he tore it out . I can understand missing the money on one of those old buildings .
How are you defining "commercial".And for duplex, if you are using the IRC/ICC the duplex is still under the IRC.And in MO, it has to be somelike relatively large number (I think it might be in the 8-10 rnage) of units before the property is taxed as commercial. In MO the property is assests at so called market value (because it down from the outside and on a group bases). Then the tax value is a percentage of the market value.There is a different percentage for residential, ag, and commercial..
.
A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
Bill
similar here in Iowa, just because a place has multiple units does not mean that it is commercial property.
I figured that what Tim dealt with in Arkansas was a State thing. I know that here multi units are not necessarily considered commercial, until like you mentioned, they have 8 or 12 units, not real sure on that part.
I figure that Arkansas is different the Iowa which is probably different then MO.
Doug
As I said , R1 is single family only. R2 is a quiet mix of two /one family.
R3 is a commercial zone which allows triplexes. Under review it is considered to be commercial. However not a lot changes with a triplex except fire codes. Most of the draw backs of this type is local goverment . Under the 1995 AR plumbing code they were listed as commercial as well which was used here until 2006. That has since been replaced by the national code .
In other words a building makes commercial grade by local goverment in review.
More than 5 properties tax wise I thought or 5 units but IM not sure . Thats not relative anyway imo.
Any commercial property here has to pass fire codes for such as by state fire marshal which is state . That includes access, parking ,and turning radius. If the unit has a corridor where multiple occupants exist, then those exists must have lighted backup signs with lights.
Then theres the handicap regs .
Local demands on commercial compliance is heavy on parking but I think they got that from the fire marshal.
I think where you are getting your thinking is the differences in a building which has corridors. Not sure . The truth is though if its rated commercial per city [per use]then it gets a commercial review which then stipulates the type of review. Theres a review plan for each type given in code review. Thats where I get it . A typical duplex that enters like a house gets a residential type review.
The killer is fire and city regs.
i don't know if there is one owner or several. i wouldguess that it's one as they all seem to be about the same cailber. you could take the address's and do a tax search on them at sedgwickcounty.org and you would see who owns what.get your financing in place and go buying!!! i have made some really great buys from mccurdy over the years.he runs a good auction and i don't worry about any hocus pocus going on. larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?