All Forum Posts by: Andrew Q.

Thanks everyone for the solid feedback!  This is what I meant when I said seems to good to be true, just wasn't quite sure why.  

The builder info is from a friend who has done several high-value condos in hot areas, so it's not just a random contact.  The general plan would be to buy the land cash and then take out a construction loan to fund the home builds, so land $ will be tied up for a while but nowhere near the full amount.  I probably am leaving out several of the fees for design and permitting as @Julie Marquez mentions. 

I don't have the intricacies on how the builder is setting his pricing, though I suspect he is looking to make a certain $ amount off each build.  Thanks again for the comments!

I'd also recommend the refinance as long as you're committed to staying in that area.  Selling comes with realtor fees and taxes plus tenant-occupied will not be appealing to people looking to use the home as a primary residence (there goes a big piece of your market).  

You could 1031 the proceeds into another property but that comes with specific rules and I think 180 day timeline, if you don't meet the criteria you're paying taxes on the sale.  Maybe your best plan is to first learn more about multifamily and find a deal, then proceed with the 1031 exchange sale.  

Good luck!

Looks great and I think you'll be glad you went with a new one! 

Hi BP! I've done four BRRR deals so far and recently hooked up with a builder and am looking seriously into small scale build-to-rent. Honestly it could be build-to-rent or build to sell, but I'm sticking with more conservative build-to-rent numbers in case something unforeseen happens with the market.

Would appreciate if I can get some feedback on my estimated return - I'm getting a little over 25% cash-on-cash returns after units are rented and refinanced but this feels too good to be true.  

I realize there are many other intricacies associated with working capital, loan draws, time value of money, appraised values, etc... but just scoping at this point and trying to get reasonable numbers to start with

Inputs/Assumptions: 

• 19,000 sq ft corner lot for ~$120,000 in Houston - subdivide into 4 lots at 4,750 sq ft each. No HOA restrictions
• $80/sq ft SFH build cost for 1700 sq ft house
• Property tax rate at 3%, insurance roughly 1%, property management at $125/month

Calculation: 

• (Annual Rent - taxes - insurance - prop mgmt) / ((build + land cost) * 30% left in properties after refinance)

Any comments are appreciated!

Resolution - 

Ended up getting the tenant & family tickets to a baseball game as he's a big fan.  I don't think he was expecting anything and was very appreciative.  This was unfortunately a little expensive but much cheaper than non-payment or rental credits - and who knows maybe they'll extend their lease as a result.  The rental area is high demand and rent is over $1000/mo but I would rather avoid all the headaches that can come with early turnover and angry tenants.

I have done a rental credit with a different tenant in the past for a different issue, they ended up breaking their lease anyway and it was really money down the drain in that instance.  

My big issue is I do not want to set up the expectation that there are rental credits available if the tenant is inconvenienced.  I would rather generate/recover goodwill with the tenant than an expectation if something goes wrong they'll be compensated.  

Hello BP, 

A quick search didn't find anything on this specific topic.  Two questions for the community, with #1 the one I really need help with.

1. Does anyone have experience with giving tenants small gifts as a way to smooth over aggravations from unexpected renovations while tenant occupying the property?

background - after almost a month of rain, original wood floors in SFH started to buckle due to moisture and poor condition of subfloors (pier and beam foundation). Big tripping/general hazard so something had to be done now as lease is not up for another 5 months. We have been installing new subfloors and vinyl tile one room at a time and tenant has to move all their stuff from each room each time, and then back after install complete. So not a small amount of effort by tenant plus no access to each room for 2 days. I am considering giving a small gift, ~$50 value, as a thank you for lack of complaints and avoiding any requests for rental credits, which we will not do. The property is in a high-demand area but I want to maintain a good relationship with tenant regardless.

2. We have had good success with giving a small gift at each move in as a way to reduce minor complaints.  This is a bottle of good but inexpensive champagne and disposable champagne glasses - 'hooray for choosing us' sort of message.  I got this idea from the BP podcast and seems to be working well.  Anyone else have success/regrets with this approach?

Thanks for any comments, 

Andrew

There are good deals out there but they need varying levels of renovation.  Identify your criteria, set your budget, and get a preapproval letter from a lender so you're ready to offer immediately when you do find something.  

I would suggest targeting homes that need cosmetic upgrades or are just outdated, slowly work through those while you're there, and do a little house hacking by renting out rooms as soon as possible. 

Just found this, let me know when you reschedule!

@Rudy Planter My experience was similar.  I did receive tracking info but every time I checked it was not yet received by usps.  No response to email questions.  Then the book shows up unexpectedly on my door but I have to go to forums b/c no electronic content.  The phone thing is also bit frustrating as people can take calls from home.  

Anyway I received my book on managing rental properties which is great and it's all worked out.  The experience has definitely made me question why I paid extra on BP bookstore vs. amazon/audible

--  heads up to BP that the bookstore experience could use much improvement --

@John M. I looked at all the main mgmt companies in our area before switching last year to a different local manager.  Turnkey was on the list and has a local office, however I got several negative reviews from owners on property upkeep.  They weren't all negative but the local companies stood out with no negative at all so I went with my favorite.  I've also received flyers from Vacasa and the cost is tempting but am happy with the service and responsiveness from the local provider 

We're paying 20% so make sure you shop around. I got a list from the HOA of all the owners and requested feedback with pretty high response rates - people were happy to give their opinion and this is how I made my decision.

Just to reiterate from my earlier post - service to your guests is a higher priority than saving a few % on the mgmt co.  If the guest have bad experiences they will disproportionately share this online and it's hard to recover from.  Checking with other owners in your complex or area is your best option as you may find that one of the cheaper options is doing a great job.  Hope this helps!