All Forum Posts by: William Bannister

If your financing and this is your first deal then 4 unit is about as big as you want to go, when trying to finance unless you arent personally managing. If you plan to manage you need a crash course in management before you buy a 4 unit!
Banks likes to see experience if your doing 4 units and above but I would still look at deals and run it past your banker. Explain it to your banker before you bring him a deal you would rather start on a 4 unit because the roi is just better.
A local banker might over look the lack of experience on a smaller 4 unit if the cash flow is there and your down pmt and credit are in good shape. They will definitely want to see 2 years income taxes. 20% down probably.
Just remember there is a lot more management involved in a 4 unit. You will probably be paying fort at least lights in the driveway and also have to manage coin ops in basement once every couple weeks.
You will have lawn mow and snow blow duties. Its not that big a deal on a 4 unit compared to a 24 unit. The thing is if you have a day job you will want a manager and let them do it. You will pay them somewhere between 150 and $200 a month for this activity if you decide to let them do it.
The coin ops could help defray your water bill a little if its not separated.Also regarding the buildings heating system make sure you check to make sure the numbers to pay utilities dont wreck your plans for positive cash flow. Call the utility co and check electric and gas usage to see where it will put you in your monthly expenses. On older 3 and 4 unit buildings. High utility costs on buildings can drive the price so low that you can find bargains and go green with building and have great cash flow after stabilizing units.
I have been in negotiations for almost 6 months with an owner that left town on a 4 unit and this building needs a heating overhaul at present doesn't look like much for cash flow. A new furnace and insulate building could change all of that.
My most important due diligence on older 2 to 5 unit buildings has been call to check utility costs.

Welcome James to BP

I live by most of Dave Ramsey advice except his take on gold and silver. his take on gold to me just doesnt add up.
I like buying houses with cash even if I am not doing 10 a year.
It just seems fewer people get there homes and cars foreclosed and reposed that arent making pmts.
If your really that worried about how you look when you go to a meeting then park a block away. I think most intelligent investors actually would respect a lesser car as a form of frugality.
I do understand everyones great desire to have nice wheels I have some nice wheels even though I never get to drive them since its a 2 seater and we have 3 in our family. lol

A lot of reasons is correct as Brian says. courts can drag it out in divorce, death or bankruptcy and keep property from being sold. you name it even title problems can pop up for a bank.
You could call the court and ask why the sale was postponed. They might tell you.

Welcome Landon to BP. I put myself through college living in my own boarding house just like you. Free rent it was! It takes me back to keggers and all sorts of other subjects that made college great.
Its very cool I like your goal, You already see the value in it since you have been living rent free for a while.
I had a huge walk up 3rd story attic in my house i had during college years. I called it the penthouse suite it was huge about as large as most 1 bedroom apts.
The only things I didnt have up there was a stove for cooking. I had my own bath and set up a sweet living room. I had a frig and microwave up there and rarely came down except to be social with my room mates. We had a pool table in the dining room and the living room was a game room for play station. Then it was play station 1. Our large front porch was a depository for bicycles.
Ok back to earth I was reliving some fantastic times. I wish I was 21 again. Remodeling that attic in that house was once of the most exciting projects i ever did in real estate. I was young and had a friend that knew all the trades. He showed me how to do drywalls and insulation and electrical and plumbing , flooring. All so I could have a nice apt on the third floor of my house.
College days are hard to beat!

I like college towns but Im not so much into college rentals for 2 main reasons they often are empty 2+ months out of the year and they are more work to turn over as the apt comes empty. How ever I am told by those that do college rentals that the higher returns make up for all that. another thought is that the students graduate in 3 years and are gone which means you never get tenants to stay over 3 years. I say 3 years because the majority freshman stay in dorms or are home with mom and dad. If students dont get along then you have other issues but it causes some units to go vacant before the lease is up. Or one student leaves and the others are on the hook and may not be able to afford to pay. We wont go into 1/2 barrel parties and other things that they do.
The non college rentals as one might call the rest of the population could stay in your unit many years if they dont want to move. I like people that stay in my units a long time its cheaper because Im not paying for turn overs.
im with John on investing in college towns though because its important to have schools,jobs hospitals and something about the area interesting like here are some examples. a nearby water feature like beach,ocean,port,major river,lake mountain w skiing, or mild climate.
I look at 3 things 1st when I am looking at a town to invest in Jobs, Schools, Hospitals. The other stuff I factor afterwards like Growth, ROI,local economy, political city,is it a capital those usually do Well.
If you decide to go with college rentals get co signers and decent security deposits, Dont forget the credit check and condition reports they are important.
College students are pretty smart at figuring out if you miss something they might be able to stay free for a while or not pay at all. You would be surprised how fast they become experts at tenant landlord rights vs the rest of the population out there. I have not had that many college rentals near a campus but have had plenty of students rent my homes off campus.
If you are in a city where that college is expensive it can be nice since often those parents pay entire rent and its guaranteed. In towns like this I find the college areas appreciate pretty fast. Take a look at the property around most Ivy league schools.

Age might be a factor as older people might not want the hassle of managing debt. Its might be easier to manage 3 paid for, then a bunch with debt and less cash flow per property and possible stress.
The current rates so low its really hard to argue 4% and 5% money. Do they plan to hold long?
A longer exit strategy it would seem having your hands on Cheap 4% money could be powerful especially if rates of interest go up. It make's it possible to sell them and stay in the deal and create notes. Who know Im just trying to think here.
Even though I dont like debt I know I do like cheap interest money.
Seems to me interest rates can only go in one direction.

I was recently working on a turnover of one of my homes and decided just for kicks to take 12x12 ceramic tiles and cut all different shapes of squares and rectangles and long narrow and smaller wide and it worked out well. The back splash was only 1 foot high but a longer one at least 15 feet long.
I did buy 4 colors. The one color matched the floor and counter I had just done. It was a lot of fun but it did burn up a blade on my tile saw that was over 20 bucks.
The tiles I bought out an end run at a store called Menards which I am sure most here have heard of if you have done business in the Midwest. I paid 73 cents for the light brown color.
The labor was a bit longer then usual. I was trying to match different sizes and shapes and given the chance to do it over I might have just went ahead with another product. I might have just done larger pieces to speed it up. It turned out great looking and was a lot cheaper then buying the small tile with web that holds it together.
Maybe if I get the opportunity I will post pics of this after I finish the rehab. Its a work in progress right now.
I enjoy doing tile work its been a great way to reduce flooring issues in my apts and add value.

Im going to agree with the posts up here on beater cars. They actually arent dependable to get your job done in real estate. I drive cheaper cars not beaters. Well if a car with 75,000 miles on it is a beater then maybe I am wrong then.
The key is get a car that is at least 4 years old the depreciation is significantly less after they are 4 or 5 years old and they still have life in them.
I go to police auctions and buy them with about 50,000 to 60,000 miles on them. I spend between 3 and 4k sometimes a little more if I decide to put new rubber on it before I take to the road. I suppose some people may claim in order to feel good about themselves they must have a nice set of wheels. Others feel wealthy in a nice car. I am worried behind the wheel of a nice car it might get wrecked, something so expensive. So I keep driving older cars..

the 1st 6 or 7 years of my investment life from age 22 to about age 30 I invested in the stock market and real estate. After 7 years I looked back and had done far better in my real estate. I also had done enough reading to see the manipulation in stock market to be much more apparent. While real estate can be manipulated to and I suspect things like tarp to buy mortgages are form of manipulation..at least your in control of the property you buy. Its not like Enron where the value can go to zero..Unless you buy a home next to a gas station and the leak on your property totally destroys the value of your asset. The risk is there in both markets.
This current stock market has been on a an explosive move upward for 5 years now and who knows how much longer it will keep going before it crashes or corrects. I suspect investors there are seeing that and so maybe they are taking some chips off the table and putting them into real estate.
Hedge fund investors are investing in Calif and AZ so they definitely are doing something that they think will work for there client investor base. Just do a search on the matter and see a lot of info on it.
What drives me far and clear of the stock market are this. People like Madoff and Kenneth Lay. Some of these companies are decent companies until these crooks get there hands on them. The Ceo has so much power to destroy these publicly traded companies and loot them that I just dont see my future putting money with others.
The things like libor scandal and whale trade to me make me think if I and every American quit putting our money into what they control maybe the corruption would be less if they had less money to play with. this isnt political its just where can I go with my money where it is safe but it will produce. At least with an apt building I can drive by it and I know its still there. Hopefully trying to keep it simple stupid will work for others like it did for me but who knows maybe I have a dinosaur mind and I am a relic.
The quantitative easing has also helped the stock market and will continue to do so but it will do the same for real estate.
I agree by the time things are on tv its not news its been going on for a long time. So that said if your trying to time the market in real estate, the market is already out of the bottom and heading to its way up. I hate to invest base on tops and bottoms in the market place. It just seems to risky since I dont own a Chrystal ball.
i like to think of each home or apt building I buy as a spread I just bought. How much cash flow will I get off the spread I just bought. Or how much can I make off this home if I fix it and sell it.
I suspect if I was a stock market investor I would be looking at individual companies like that too with the idea is this company undervalued? Does this company have low debt and good profits or dividends or is this a solid company and it wont disappear tomorrow.
When Facebook opened up as an ipo you could have offered it to me for 1 dollar a share and I would have still most likely not bought it. Its just me. I still tell people its headed to zero or less then 5 bucks a share. Right now If I was to buy anything publically traded it might be energy, Specifically oil and natural gas for the long haul.