All Forum Posts by: Frank Adams

Revenue is not the same as INCOME, which is really what you're after!

I don't know how typical we are but when we were working we did 4 loads a week, on average. 16 loads in a 4-plex, generating $4/load, $64 sounds a bit high to me. $4 PROFIT per load sounds ridiculously high.

What is that going to do to your water/sewer and gas or electric heat bill?

If it's plumbed for W/Ds I'd let the tenants just do their own. But that brings up the question of how to account for the water and utility use. Unless each system is routed through the corresponding units plumbing.

BTW, years ago my wife had the responsbility for operating a coin laundry, long story! Nothing ruined a "date night" more than the call from an irate customer saying "the da**ed dryer ate my socks, come retrieve them!"

Frank

I think the cabinets look fine. I doubt that you could strip and restain anyway, lower end cabinets have a "picture" of wood grain. I would clean the cabinets with Murphy's Oil (I think that's the name) or similar. New counter tops would be an excellent idea, IMO all wood grain counters look VERY OLD.

Clean out the stuff, particularly kitchen.

Why is there a wall clock in the bath?

Laminate floors in living room perhaps.

Take a look at your ceiling, I can't. I once had a really nice patio home that looked dated and no matter what I did it still looked a bit tatty. I had a buddy help me remove an old aluminum slider and put in a french door. While there he looked at the ceiling and commented that it looked pretty bad, no water stains or anything, just "bad". The paint was a bit dark looking but it was a high ceiling and difficult to paint.'

This guy owed me some $$, hence the help on replacing the door. His brother in law was a sheet rock guy and he said they'd re-do the ceiling, including paint if I'd wipe out the rest of the debt. I said OK and even BEFORE the paint was applied it looked like a new house. It cost me a bit, but I figured my odds of ever collecting all the money were slim and it made the whole house POP.

Good luck

Frank

NC Mark wrote; "Seinfeld" aired an amusing episode on this subject. I rate the low flow showerheads about the same as the 'water saving' toilets one must flush multiple times to get results"

Eighteen years ago when that show was popular the above statement may have been true. It hasn't been true for quite awhile now.

We have low flow heads on all our showers and friends from "water abundant" parts of the US can't tell any difference between ours and theirs. As for the toilets, I'd rate them as good, or better, than any I've used in my lifetime.

BTW, two people in our house and we've NEVER gone over 2,000 gallons per month. Our city bills in 1,000 gallon increments so we're using less than that.

Frank

Terri wrote; "Do a rental agreement with one of the new prospects, with an addendum that outlines this problem . . . but how to word it . . . ?"

Why would you have to write an addendum to either lease? Clauses spelling out the rights and remdies (money damages) of ALL THREE PARTIES should have already been in your leases.

The following is rather OLD as I haven't had a rental since '99, but it's verbatim from the Texas Real Estate Commission lease in use at the time.

HOLDOVER: IF TENANT HOLDS OVER AND FAILS TO VACATE ON OR BEFORE THE CONTRACTED MOVEOUT DATE (END OF LEASE TERM, OR ANY RENEWAL OR EXTENSION PERIOD, OR THE MOVEOUT DATE AGREED TO BY THE PARTIES), TENANT SHALL BE LIABLE TO PAY RENTS FOR THE HOLDOVER PERIOD AND SHALL INDEMNIFY OWNER OR PROSPECTIVE TENANTS OR PURCHASERS FOR DAMAGES (i.e., LOST RENTALS OR PROFITS OF SALE, LODGING EXPENSES AND ATTORNEY'S FEES). RENTS DURING THE HOLDOVER PERIOD SHALL BE DUE ON A DAILY BASIS.

Frank

Bienes wrote; "The alteration is they want to saw off part of the bar countertop island to make the surface completely flat (it's kind of hard to describe without a photo)."

They want to saw off the "step up", right? Even on a bar it's a major deal. Not sure of the thickness of it on a small bar, but I've done this on two kitchen couners to put on granite. I wanted to add "counter-height" chairs and make an eating area.

On those the thickness of the vertical part was almost 3 inches. Want to guess how much sawdust that generates? Not to mention that it has to be done with some precision to avoid a problem with fit and finish.

Simple answer is what Peter said.

Frank

Charles,

Another consideration is that you both look younger than us, and as I got older I was less inclined to do work myself. I'm funny about the work that I PAY to have done. I expect that the person doing it, as a professional, should be able to do it at least as well as I can.

By the time we were selling ours my wife had been retired a couple of years and I was selling off part of my company. I thought I was going to work a few more years but I ended up only working a few more months.

I don't regret selling when I did but I would have had more income stream had I waited another year on a few of them. OTOH maybe some of those loans would have gone south in the downturn of '07-'08.

BTW, I'm not interested in leaving an estate because we don't have any kids. Seeing the way many of my nieces and nephews are, the youngest of which is late 30s, had my kids turned out that way I wouldn't be leaving them other than a token amount of inheritance.

One other thing about the long term. Neighborhoods change and with it their desirability and value. Sometimes they go up, sometimes they go down. Cashing out prevents future appreciation but also depreciation.

Frank

Dan, it's an excellent idea IMO, one that I used and I've been happy with it. However everyone's situation is different.

Rich wrote; .

1. "Once you move out of owning, your future gains from principal reduction, tax benefits and possible appreciation stops instantly."

True, but in my case I owned everything free and clear, and lived in TX where appreciation isn't much of an issue. Since about the 1980s or so whenever someone says "tax benefits", they really mean LOSSES.

2. "Instead of tax breaks, you become taxed, taxed and taxed. First on the gain from sale, and then the income you receive."

See above regarding "tax breaks". Yes you do pay taxes, but you pay taxes on the rent you receive as well, moot point IMO.

3. "Most likely, you'll also lose equity from cost of sale, and commissions."

I've NEVER paid a commission on any seller financed deal I've done. When you ADVERTISE the benefits correctly you'll have your choice of buyers.

4. "You can continue exchanging up forever and change basis and grow your future estate."

That's OK if you're interested in an "estate". I have no interest in leaving an estate. I plan on ENJOYING what I've worked for.

5. "Just re-fi and get your money out to live on,,,tax free!!"

OK, to get access to MY OWN MONEY, I'm going to pay, points, closing costs, fees and then interest to get what I already own. And then have the hassle of my overworked wife writing checks each month. No thanks.

Once I knew that I didn't want to spend the rest of my life in Houston, or be a long distance landlord (IMO there does not exist a reliable, trustworthy property manager) I decided to sell my 16 rentals on a seller financed basis.

As the leases expired I gathered comps from agents and advertised as follows; 3/2 in Running Rat Estates, owner will finance with $2,000 (sometimes as high as $5,000) down.

By and large I was selling for 12-15% OVER COMPS. I generally charged about 1 1/2 to 2 % over the prevailing interest rate. I prepared the documents and charged for it. Closing was handled at my bank, they don't charge for notary service.

I've gotten a few of them back, but always resold at a higher profit and started the clock over.

The downside is that over the years some buyers have refinanced and some have sold so my income has dropped from $130K/year to about $45K. Although I did receive the balance on the sale and reinvested those proceeds.

I looked on this as my own "bond fund" or as my wife says a "FrankieMAE" fund. I've always adjusted the rest of my holdings to reflect this.

Frank

Let me see if I've got this right. For the good feeling that you'll get because you'll have "very little cash tied up", you want to incur some expenses. Is that about it.

So, you want to borrow, $10,000, and pay 10% interest on it, or do you think the CC company is going to keep the interest low indefinitlely? You'll then be paying the CC company $1,000 per year, an added (and unneccessary) expense.

Then when you go to figure your income tax (probably about 17% of TAXABLE INCOME) you'll save $170. That sounds like a terrible idea to me.

The above example, 17% is based on a more realistic hypothetical than what most people use when they holler about paying "35% of every nickel I earn in income taxes".

On $100,000 of TAXABLE INCOME, the tax is $17,369. That's about what a couple with a combined income of $150,000 would have assuming they each contributed to a 401k and had some "normal" amount of itemized deductions, and 2 personal exemptions.

Frank

Kevin C wrote; "The Homestead exemption has nothing to do with the assessed value."

Kevin, please re-read my post. I never said it did. However, when there is no homestead exemption on the property it is not subject to the LIMIT OF 10% that taxes CAN INCREASE in any year.

Frank

Not to stir the pot too much, but let's look at who really benefits from the immigrant problem.

1. Business owners who want CHEAP LABOR.
2. Business owners who want labor that CAN'T form unions.
3. Politicians who don't want low wage labor to VOTE, for the reason that, in general, lower wage workers vote D.
4. Politicians who don't want the immigrant problem to go away because it's a great way to "rally the base". These same pols don't want the abortion debate to go away. Both are great ways to raise money and rally the base.

I have a good friend who basically spouts all the Rush Limbaugh points on this. His feeling is ANYONE with skin darker than his should be stopped on the street and forced to show ID. He somehow thinks that it would be "easy" to round up 11,000,000 people. No ideas on how to identify the ones to round up.

Somehow he firmly believes that "hard working Americans" are lining up to cut lettuce, pick fruit and other such labor. This is a guy who won't mow his own lawn because "it's hot and hard work". I guess he also thinks that all business owners, particularly CORPORATE FARMS AND FOOD PROCESSORS are raging liberals.

Is there anyone on this site, or their kids or friends who would work the fields in AZ, process chickens in AL, TX, AR? It is difficult work and not highly rewarding.