All Forum Posts by: Alan Pederson

For me it was dreading the thought of working till I was 67 at a job I don't like and working around people I don't like. The pay and benefits are really good and at 55 I don't want to start over somewhere else. I kept looking at our finances and knew unless we found another way to start making money, there would be no way for us to retire early. I want to retire at 62.

I had that same voice in my head telling me I could fail and possibly fail big. I looked at the numbers and it just made sense to move forward and try real estate. We were looking at using $40k to buy the first house (down payment, closing, repairs, etc). If we failed, we could sell the house and might lose $10-20k if things went really wrong. That same $40k was only making us $2 a month sitting in our savings account. I figured once we retired we would have an income of around $120k and live off of about $100k a year so that $40k was only a few months of living expenses. I told my wife that I would gladly risk a few months worth of money at least trying to succeed as opposed to sitting here making only $2 a month. I had several people that told us horror stories about residential rentals and were probably just waiting to say I told you so when we failed. We moved forward and bought the first rental. We make a nice return on that property and it has went up in value 45% in the past 3 years. Dealing with tenants is a pain in the rear sometimes but it's all going to be worth it in the end.

Cut the kids out and just purchase it on your own. I love my kids but I would never go into business with any family member except my wife.

The wood sure gives it a 70's look. The cheap route would be to paint it. To actually update it, you would have to take it out and put in sheetrock.

I just got burned on property taxes here in Texas as well. It wasn't something that I really looked at when buying properties. I look at it now! If tax values are well under the purchase price, I know they will come along at some point and raise taxes. Luckily, the house that was affected the most was cash flowing about $500 a month and when the taxes went up $300 a month it didn't put me in a negative situation. I raised the rent $50 a month and will raise it again next year as well.

I don't think I would have purchased a property that had such a low cash flow to start with. Now that you have it, you have choices (sell or stay). You could keep it and get a roommate and/or raise the rent on the other side. You can always sell but then you would have to find another place. The housing market here is really hot right now so places go pretty fast.

My wife isn't very good with math. When I kept telling her that she wouldn't be able to retire until 67 if we didn't find a way to make money other than our regular jobs she started to listen (she's 56 now). She's been a teacher for 30 years and every year it's harder and harder for her to go back because of the stress. Next year she is going to retire from teaching and go find something else to do. This was only made possible because of the rentals we have.

Biggest challenge I faced was getting my wife on board. I was ready to jump in a couple of years before she was. I just kept after her about investing in real estate and she finally caved. 6 months after the first deal, she was 100% on board and started pushing me to find the next house.

When I bought a house about 12 years ago for my primary residence, I probably looked at 300 houses before I purchased one. My realtor kept showing me houses that were to expensive even though I told her what I could afford. She kept saying I'm just showing you houses based on what you qualified for. After a short talk, she started showing me houses in the price range I wanted. There was always something wrong with each house. It had foundation problems, fire damage (completely gutted), bad neighborhood, needed to many repairs, etc... I knew exactly what I was looking for but I didn't want to waste her time driving all over town each week. I wanted a 3-2-2, around 1800sf, single story, with a fairly flat driveway (i have a boat) or extra parking, some repairs are fine, and in my price range. I told her to just send me the listings and I would check them out myself. If they looked promising, I would have her set up an appointment. It took almost a year but I finally found the house I wanted. I loved that house. It had a really nice layout, the exterior looked really good, and it was only a couple of blocks from my best friends house. The bad thing is that less than 2 years later, I got married and my new wife refused to move so I sold the house and moved into her house.

I will drive by a property and get out of my car and look around if it's a vacant house. I will even peak in windows. I would never try to go inside without an open house or agent present. In Texas, there are a lot of houses with foundation problems. I look for major cracks on the outside walls and wood rot by the roof. I've even knocked on the doors of neighbors to ask them how they like living there and if there are any problems in the area. I usually don't waste my realtors time setting up an appointment to see a house until I have checked it out on my own first.

I collect the application fee when I receive the application.

This subject came up a few months ago when one of my tenants was going to be late on rent. They thought what I charged was to high. They had been tenants for about a year and a half at this point. The rent is $1,300 a month. I have a 5 day grace period before rent is considered late. After the 5th day, I charge a $75 late fee and another $20 for each day it's late after that. Is this to high? What do some of you charge?