All Forum Posts by: Bob Hines

I've been a landlord for 5+ years now and I've never had this kind of response to a listing so I need some suggestions. On Monday I posted a house for rent stating we need 1 more week to finish so I only had a pic of the front, garage and yard as the house is still a mess. So far I have received 22 phone calls and 11 emails about the house. I've told them all I'm showing it 600-630 next Tuesday to keep everybody in a nice tight time frame. What do I do if I have 20+ people show up and if even a handful put in applications? I've always done a first come, first serve for reviewing applications because of the fee, but what if I have people racing to fill out forms in the kitchen at the same time? Go with the one that finishes 30 seconds before the other? The screening service I use charges $50 a person/married couple so I don't like to take money from a bunch of people because it's a real cost for them and a hassle to give it back.

What are some strategies that you have used with high demand situations?

I say sell it if you can make $50k. Here in St. Louis you can buy a nice house in a good area for all in at $50k or less. Get your rehab funds back to do it again and a 'free' rental-sounds like the way to go to me.

That said, I am working on a house that I plan to keep as a rental that if I flipped it, I would make $30k-$40k after some increased rehab costs. I plan on keeping it and then refinancing with either a 30 year mortgage or a LOC to get my money back out. I figure I'll save on capital gain taxes and still get to use my money again. But I haven't had an offer to buy the house, so that would be a much different situation.

I purchased a property from a seller that didn't want to use an agent and we worked directly with a title company. They gave us all of the documents and walked us through every step of the way. I think we used US Title that time and I've had some pretty great experiences with Continental Title for some possible contacts.

I have commercial lines of credit on my < $50k houses. I actually prefer LOCs to mortgages as I can pay extra on the loan to reduce interest costs and still have access to the cash when I need it instead of it disappearing in a mortgage. Talk to some local bank's commercial department.

As a new build, I would highly doubt the pro-forma as there is little to no history of expenses. Most likely the seller is using low expenses to make the deal seem better than reality. Check out expenses-taxes, insurance, use a good vacancy number etc. Don't let them con you into decreasing repairs and capex because it's a new build, you're still going to have those expenses down the line and tenants do cause damage. Make sure the promised rents are actual markets rents by searching craigslist and other online listings.

Also, with any turnkey, I suggest you make sure the property is actually worth what they say it is. I see lots of "Cash Price" turnkeys in my area that are priced on average $20k over what it would sell for on the open market. If you can finance the property and a legit appraiser says it's at market value, that is a good sign.

Next you will want to make sure you find a good property manager to make sure things are running smoothly and can find good tenants and keep your property rented.

If you want to have both $5 mil and $20k/month, you would be better off working on creating the $5 mil in capital first as $20k/month is $240k/year or a 4.8% annual return on $5 mil. If you only want a 4.8% return on $5 mil, you would probably be better served by investing in dividend stocks and bonds at that point.

If you wanted the $20k/month more than the $5mil, that could be had for a lot less than $5 mil. ($2.5 mil at 9.6% return, $3.0 mil at 8% etc) of real estate. Then the question would become, "Do I continue working for the $5 mil once I have enough income?"

I suggest re-evaluating your goals and determine what is the most importantfor you as your goals seem a bit conflicted-they are great goals individually but most people don't start out in real estate aiming for a 4.8% return. If you want the $5 mil, you need to create and realize equity. If you want the $20k/month, you need to create cash flow.

From what I have seen from turnkey providers in my area, "Cash Price" actually translates to, "The price is so high it will never appraise for this so financing is out of the question" instead of the implied "Deal".

I would suggest checking any potential turnkey property against the MLS or Realtor.com. Make sure the price isn't totally out of line for the area as you will probably never be able to make up that permanent loss of capital. If you can finance a turnkey property, I would say to look more into it and proceed if it's good. If it is cash only, ask why and be very, very suspicious.

I have 3 daughters so every year, for those tenants that have been with me for at least a year, I give them a case of Girl Scout Cookies. The tenants absolutely LOVE getting them and it helps me as I would have ended up buying those boxes anyway so my daughters can get the stuffed animal or another prize. But now they are a business expense that I can write off.

Congrats on the deals coming in! I know people do North County Section 8 rentals but I've never been able to pick their brain to see how they go. I'll be very interested in following your progress.

From what I have seen, when there are occupied units, most of the time you view the unoccupied units and make the offer contingent on seeing all of the units. This is because it can be hard to schedule showings with giving the tenants enough notice based on leases and laws. I wouldn't automatically call it a deal breaker if you can't see all units on an initial viewing. If you view the last 2 units and they are trashed, you can counter or walk away.

I'm not in VA, but my understanding is that the Pay or Quit is for each occurrence as you told them to pay, or to quit. If they remedied that by paying, you would need to issue a new one for the next instance.

I had similar tenants so I suggest getting them out ASAP. Mine ended up paying eventually each month, sometimes with charities, so I waited until the lease was up to serve notice that it would not be extended. I've had great tenants in there since.