All Forum Posts by: Jonathan Taylor Smith

YES, I do provide a bonus / penalty structure to my contractors. I have them tell me how long a project will take to complete, and then I add buffer days or maybe up to 2 weeks, depending on how long / complex of a project it is and potentially accounting for weather if it is outside work. Then if they are done by that deadline, I offer a bonus. But for each day / week beyond that deadline, I impose a penalty. The numbers vary per project, but it helps to get things done on time. I do not worry much about "hurried or sloppy work" because it is also in my contract that all work must pass inspection, which may include the city / county (for permitted projects), lender and myself. I handle payments by draws and I must always be ahead and work versus payments. The final payment is always the largest. I also buy my own materials.

Hello @Jeanette Land - (Great last name by the way to be into Real Estate)... What out of state areas have you considered? If you're at all interested in North Carolina, consider the Triangle (Raleigh / Durham) and Triad (Greensboro / Winston-Salem) areas, which are my focus for both clients and myself.

Congrats! Occupied with inherited tenants or vacant?

Hi @Will Newmiller - I bought my first 3 properties with conventional 20% down loans, using funds from my business and loans from my wife's TSP. But then I was tapped out on access to funds, so I switched to creative means, obtaining the next 3 properties via lease-options. And thankfully, by the time I needed to execute on those options and actually complete the purchase of the leased properties, I had developed some private lender relationships that allowed me to complete those 3 transactions and several more thereafter. Now private lenders are my main purchase method, along with seller financing and BRRRR.

Actually, the HAP contract does say that we can charge the HA a late fee after the first two months of occupancy if reasonable and otherwise accounted for in the lease. So, I will be imposing a 5% late fee on HACW.

So much for "Guaranteed Rent" by accepting Section 8 Vouchers... I'm still awaiting receipt of November's rent from Wake County Housing Authority for a property in Raleigh, NC - that I manage on behalf of a client, who I aided in buying the property as his Realtor. After multiple calls and emails about the matter (even involving the local HUD office), I finally get a response that says "Unfortunately, HACW is experiencing a temporary shortfall of funding and will be unable to pay the HAP amount for this month..." (HACW being "Housing Authority County Wake"; and HAP being "Housing Assistance Program"). The concept of the Housing Authority running out of money never even occurred to me! One of the main benefits of participating in the Section 8 program is knowing that the rent will be paid each month (or at least the Housing Authority portion of it) - Now that's gone.

Congrats! I originally became a Realtor to aid in getting investment properties for myself, and now I also do so for others. I seek properties that are to some level distressed to rehab into rentals. What will be your strategy of focus?

Hmmm - "Wholesaler" has long been one of those professions that has a high turn-over as it becomes known that it isn't as easy as told. But I would not be surprised a bit to learn that more than 3 of every 4 Wholesalers may not have survived the major market change that took place in the post-Covid years. It has to be hard to get a home-owner to sell to you at a discounted price when everyone and everything is telling them that their junk house is now worth 2-3x what it was in 2019. And in 2022 people were bidding over asking for just about everything... If so, just place it with a Realtor and cash-in! That had to have a major impact on Wholesalers. But also, AI dropped in 2022, so maybe those missing Wholesalers are just using a different lead source?

What I've seen is that the most probable "problem tenants" (Section 8 or otherwise) are looking for "mom and pop" or unexperienced / unprofessional Landlords to take advantage of. So, making it clear from the start that you are running a professional rental business goes a long way towards avoiding those who are seeking just the opposite. This starts with how you present yourself and your business, how you answer the phone, your rental listing(s), your website, etc... But it really gets serious with how you handle showings, your application, how you conduct tenant screening, credit / background checks and your communication style throughout all of this. And once you've got an approved applicant, then you present them with your lease, which needs to be comprehensive in its protection for you and of your property (mine is 24 pages and counting as I encounter new issues, and it contains fines for certain violations) - check your state laws. Make it clear you'll be conducting inspections (I do them up to every 4 months / 3 times per year).

But in your question, you used the word "prevent', which is NOT possible. But such things as I've stated above (and a whole lot more that would require I write a book) will greatly reduce the likelihood of a bad rental outcome. I've been doing it since 2015 (including Section 8), and I've yet to have any damage done that exceeded the security deposit. And while I've had to file for eviction a few times (each over past due rent), none made it to the point of a Sherif put-out - and again, no serious damage done.

@Brandon Walston - Every state has their own landlord / tenant laws, but I think pretty much all of them (or maybe even at the federal level), you must honor the lease that is in place when you buy a tenant occupied property. Not sure, but there may be an exception to that if you are making the home your primary residence - but maybe not even then. In such a case, I'd prefer that the lease be month-to-month for this very reason.