All Forum Posts by: Anna Buffkin

Better than unusual tenant habits.  I enjoy trying to figure out the why when I first walk through a rehab house. That's where you really scratch your head.

This is rather generic, but I don't know why so many tenants refuse to replace light bulbs.  I buy them by the case for turn overs.  I had one small house where I replaced 16 bulbs.  I told my husband they probably moved out when they couldn't see each other anymore.  I wonder if they would have stayed if I supplied light bulbs. :-)

I agree that much of this comes down to relationships.  I have great relationships with most of my tenants and my contractor.    

I've have the same contractor for 5 or 6 years now.  I rarely shop around for a quote unless it's something big and I am unfamiliar with pricing.  He knows when I call him he has the job and he will get paid promptly.  As such, I get good, quick service.  He offered to provide portable HVAC window units to my tenants when I had my last issue as it took 2 days to get the unit though the tenant opted to visit family for the interim. 

A lot of people don't want to tell tenants they are the landlord or want to appear bigger if they only have a few units.  I take the opposite approach.  I sell myself as a small mom and pop landlord who can take care of the tenant because I am not some big corporately managed entity.  My tenants have my cell phone number.  I tell them they can call me anytime between 9AM and 9PM M-Sat and 12PM-9PM on Sunday or 24 hours in case of emergency.  I have not gotten a call in the middle of the night in about 5 years.   I let them know my husband is a high school teacher and I use my small rental property business to allow me to stay home and raise my children who often accompany me to a property.  I let them realize I am a person and not the overarching nameless "Man" lining my pockets with their rent money and caring little for them.  I back it up by actually fixing things in a  timely manner, listening to their concerns, and forgiving one late fee a year.  I am good to them and for the most part they are good to me.  The ability to talk to me and express their frustration with an untimely maintenance concern tends to defuse much of the issue.  Please don't confuse this for being soft.  I can and will evict a tenant in violation of the lease.  I just don't treat every tenant like a bad tenant in wait. 

I usually don't give any kind of compensation for maintenance ,even HVAC here in South Carolina, but I broke that rule recently.  I had a property that everything seems to be going wrong.  Maintenance accounts for 52% of rent and It has been about 75% of my total maintenance.  The HVAC went out (This was CAPX and not even part of the 52%).  A tree fell on it and I had to get the insurance adjusters out.  The house had old clay drain pipes, but the city didn't want to issue a permit for replacement until they failed for some reason.  Well, anyway they finally began to cause backup.  The tenant has been awesome through it all.  I gave her a Walmart gift card as a thank you not an apology.

Unfortunately, all of this is sunk cost.  I would lower $400.  Sell and move on.

I'm in South Carolina.  $1700 is really high rent in this part of the country.  Most of the rental pool would not qualify assuming you require 3X rent.  

I did a quick google search.  The median income of Statesville is only about $35k and median rent for the area is only $710.  Your tenant pool is quite small.  Just like trying to sell a high end home, it takes longer as most people can't afford it.  

I would check the price.  I noticed property managers in my area tend to try to push the price and then do price drops trying to get the most rent possible which equates to more money for them, but less for you when you figure in the opportunity cost of having a tenant soon at a lower rent.   If your PM is not being responsive, I would change managers ASAP.

@Adam Webb I think there is value in being just under market rent as mentioned above as long as you are not astronomically low.   

If market rent is $1000 and you are at $950 or $975 as part of your strategy, I think that is fine.  You will probably get a bigger applicant pool and find a good tenant faster.  If it takes an extra 30 days to find a tenant at $1000, it will take up to a year and a half of tenancy to make up the difference.  

If you are crazy low, you are just hurting yourself and your business.  If market rent is $1000, and you are renting for $750, you are leaving a lot of money on the table.  Additionally, great tenants who know the market rent are going to wonder what's wrong with your unit.  Check local ads, rent-o-meter, and census rental rate averages to see if you are priced right.  

@Aliz Raksi.  Glad to meet another married couple partnership with the wife as the investing catalyst.  We may are the smallest minority group on here.   

My husband is like you husband except he doesn't look at the numbers.  I'm accountant. He's an English teacher.  He assumes I know the numbers better than him and doesn't ask.  He is, however, a sucker for a good paint job and has a hard time seeing past ugly carpet or heaven forbid cabinets that are missing in a house with a kitchen we plan to gut anyway.  

I try to focus what he does bring to the table.  First off, he is a teacher and looks great on a loan application.  He's also a check for me as he keeps me from biting off more than I can chew in a rehab.  Finally, he is a native of the area we invest in having lived there nearly 30 years.  I can give him an address and he can usually tell me where is it and give me a yes/no on the location without Google maps.  

Our biggest rule is don't buy anything unless both of us are on board.  I can run all the numbers, drive by, and even call our realtor or the owner, but if he vetos it, we stop.  I have learned in resent years to just show him the ones that fit my quick requirements and if he vetos, I stop rather than wasting my time.  If he says move forward, I go more in depth.  

Finding another partner and own money wouldn't work for us as we consider all resources ours.  

If knowing the numbers is a sore spot for your husband, do y'all need to know what the seller paid?  I personally look it up, but if knowing is going to cause your business to suffer, maybe that metric isn't needed for the two of you at this point.  

This is a simplified analogy, but I don't need to know what the grocery store paid for the ground beef to know $1.99/lb is a great price.  I just need to know what other stores are selling similar beef for and if the cost of beef can fit in my budget to know if I should buy it.  

@Chris Mooney

Chris, A VA loan to house hack sounds like a great way to get into a property with little to no upfront cost. Low and no money down strategies are great. I use them, but a lot of people get into these properties with no money saved and making maybe a couple hundred dollars a door that goes to fund their lifestyle and not saving for the unforeseen inevitable.

You will have vacancies.  You will have maintenance.  You will have the HVAC unit break down at the worst possible time.  (I had a roof and an HVAC unit fail in the same week in June.)   You need reserves for the these.  

If you have a plan for these, you are fine.  My recommendation, for what that's worth, is to set aside 25- 30% of the rent for CAPX, vacancy (holding cost while no one is there and cleaning), and maintenance which will be higher when you have a vacancy as you always find stuff.  I would then have a line of credit or credit card ready in the event you have a roof fail and an HVAC go out in the same week before you have built up a reserve.    

Also, if you are doing a rehab on 100% financing and credit cards for the reno with the intention of BRRR-ing, you risk the going over budget (you will go over budget!) and/or a bad appraisal. If you can't get all your all-in back out at refi, you have no money for the next deal + a new credit card payment which is higher than your monthly cashflow. Now you are still broke and you hate real estate.

Though less of an issue in my mind though this may be a big deal for others, if you buy turnkey or have little to no equity from a no money down deal, you take away an exit strategy as it will be harder to sell in the short term without taking a loss. 

Nothing's wrong with a low money down strategy as long as you aren't doing no money down because you literally have no money.

Note: I am a small landlord with 8 rentals.  I am sure some of the "big guys" can give you better advice on how much to hold back.

My husband is my silent partner unless something needs to ne painted.  I handle all the day to day items of self management, property research, and financing. 

My husband is a teacher and looks great on a loan application, but he is our breadwinner and doesn't have much time to spend on real estate. While I'm not on the application, my lender knows to call me. I now work from home doing a little accounting on the side while raising our children, but make no where near what I once made. I put all the "bad debt" like our lines of credit and credit cards we use for rehab and down payments in my name and mortgages in his. Both of us go on title and we jointly own our LLC.

Though I manage the properties and do the buying research, my husband has absolute veto power.  If I present him a property and he says no, we move on.  Don't buy anything you are not both on board with. 

On the same token, you have to learn to trust your spouse.  I have purchases units without him seeing them before close or at all.  He trusts my decision as I know what things  he would veto and let him know any negatives before signing an offer.  He is generally more concerned with the condition and location as he knows I wouldn't bring him something if the numbers don't work. 

We have been married for over 10 years and have survived the trials of the infant and toddler stages with twin boys.   While our first rental was in 2012, we have been actively investing since 2015.

I was just looking into Zillow rent application.  I have been using Smart Move for years.  I am trying Zillow today for the first time on some seemingly low risk applicants.  I will have to let you know how it goes.  

Glad to see a new investor that appears to have his financial house in order!

This is a lot harder question to answer than you would expect.  That is probably why no one wants to tackle it.  I'm sure you have looked at the rules of thumb like 10% for maintenance and 10% for vacancy + CAPX hold backs.  The problem is these are averages over a total portfolio.  With just a few doors, the numbers can skew significantly in either direction.

I have 8 rentals.  YTD my maintenance expense is 10.21%.  Last year it was just 4.80%.  5 rentals currently have maintenance expenses under 4% YTD. The other 3 are at 8% of rent, 19% of rent, and 52% of rent.  Yes, one unit is at 52.56% of rent YTD.  It's a long story and doesn't even include CAPX as I put in a new HVAC in June, which is not included in this number.   

The 19%  repairs cost irregular as well as I had a tenant in the unit since 2015 who moved out in May, and the unit had last been renovated in 2013.  There was a lot of wear and tear type upgrades needed.  Also, the month of missed rent (vacancy) skews the percentage as I don't account for vacancy directly in my bookkeeping.  

As far a vacancies, I had no turnover in 2017.  YTD, I have had 4 move outs.  

This has been a tough year as you can see especially after a stellar 2017.  

Now that I have terrified you.  I would hold back in cash the rule of thumb percentages each month, but have a credit card or line of credit available for the unexpected.