All Forum Posts by: Al Bunch

Chris - my thoughts exactly.

In Texas I cannot garnish wages for a judgement, the best I can hope to do is file a lien against real property or sell the judgement for pennies on the dollar. Neither one puts cash in my pocket needed to satisfy the actual damages.

He got scratched off the list before I made this post, but I wanted to look at the psychology behind his decision and see what others thought.

So I'm interviewing property mgmt companies and yesterday I talked to two new ones. While throwing questions at them, the second company said they typically only charge $300 for a security deposit (vs. the standard "equivalent to 1 mo. rent" - though I prefer to differentiate by making the deposit a little more or a little less depending...).

Anyway...

This guy's logic ran something like this: If I charge a tenant $300 for a security deposit, I'm communicating to the tenant that the deposit is simply token and they are liable for -all- damages above and beyond normal wear and tear on a property. I make up for the low deposit amount by screening out anyone with any type of criminal background, requiring a slightly higher credit score than my competition and a few other factors he said he had gleaned in his 30+ years of doing this.

He also said (and I somewhat agree) that because tenants value their privacy that regular property inspections are seen as an intrusion and that frequent inspections will cause a tenant to not renew. Based on that he inspects PRN or every 6 months. To me, this sounds like a lazy answer for, "I don't have time to inspect all the properties I manage, so I try to deter that type of requirement".

In the past, I've told tenants at my self-managed properties that I would be stopping by every couple of months to change the A/C Filter and walk the property to look for things that may soon be in need of repair/replacement in an effort to keep the property in shape. I always mail a letter to them a week in advance and ask them to tape the letter to the front door on the day specified so I know they received it and are expecting me - no letter, no inspection, but I always call to follow up and re-schedule for the following week.

Looking for more experienced opinions on all this as I plan on adding more rent properties to my portfolio and turning them all over to mgmt companies.

...also (and I couldn't resist)...

A closed mouth gathers no foot.

Whenever I hear this one thrown out there, I always think back to my 20's when I was hungry and "knew everything" - I passed on a LOT of good advice because I thought I was a subject matter expert. Some time in my 30's I learned to keep my mouth shut when someone was sharing their experience or experiences...you'd be surprised at what you can learn with open eyes, open ears, open mind and a closed mouth.

...to license..or not.

I've heard everything from you MUST have a license to do any RE transaction (bs) to don't even think about getting a license (due to fiduciary responsibility)..and everything in between. Personally I've taken a few RE courses in the past, but never had a desire or saw a true need to get my license.

I'd like to hear both sides of the argument. I'm also looking for facts, not opinions.

I'm really just kicking around an imaginary property that represents a lot of what I see coming across my inbox.

Dawn A. - I hadn't thought of it that way, roll up any capital expenditures into the mortgage since they have to be amortized anyway and then do minor repairs/cosmetics as expense items. Both with an eye on getting the property performing as soon as possible.

Nick Miller - Rent, Sell, Lease option - preferably in that order as I'd rather buy and hold, but for the right $$ anything is possible and I'm always willing to exit if someone comes in and makes the right offer at the right time. Any other interesting exit strategies you'd care to share?

Jackie Lange - I'm just playing what-if with numbers. $20k is a cosmetic rehab (floor, paint, fixtures, little landscaping) for the properties I'm looking at. I'm assuming the deal makes cents (pun intended) already and just looking at which side of an imaginary line an landlord would put repairs on and which ones.

In the past I've wholesaled and rehabbed, one of our secondary exit strategies was rent/lease. Now that it's a me instead of an us, I'm more interested in buy/hold than moving properties, but I wouldn't turn my nose up at clearing even $5k if someone walked in and made the right offer. The time value of money is always at the top of my mind...and running trades through takes time - hiring a GC costs money, finding a wholesale buyer for a good deal is a snap (if it's truly a good deal).

Thanks everyone for the input.

If I pick up a property using hard money and budget $20k for repairs - $8k of which are for the roof and flooring, how would you proceed:

Roll everything into the repair budget and get it done under the hml before you convert, or, finish all the repairs except the carpet and roof and do those after you convert.

There's no underlying motive for doing one or the other, I'm just looking for and pros or cons.

I got out of stick built investing about 10 years ago when I started owner financing mobile homes, since then the regulations, fees and licensing requirements concerning mobile homes has just gotten more and more onerous, so I liquidated and got out.

What are current investors looking for structure-wise in a flip these days? For instance, if I lock a property up with paper, what would be considered passable numbers? 65% ARV seems to be what I remember as a magic threshold for most investors.

I realize my question is highly subjective and vague, but I figure it's at least a good starting point for conversation.