All Forum Posts by: Bob Hines

If you feel they are qualified but you're still concerned, why not offer them a month to month lease instead of a year lease? That way if they find they can't afford it, you guys can part ways fairly easy. I have a couple who are both on SSID that barely made 3x rent and there wasn't anything else to knock them out based on my criteria so I offered M2M instead of my normal 1 year lease. They were fine with it. 5 months later and everything is going good.

Keep in mind that the S&P 500 was up 32% last year so 34%, while a good return and better than the index, is not amazing skills.

I view stocks and real estate as two completely different things. Stocks are an investment while real estate is a business to run. Even if you're a hands off owner with property management, you still have to manage the PM, repairs and updates. Not everybody can run a business but everybody can, and should, be an investor.

I have SFRs and duplexes so I went to a locksmith and had them create a master key system. I have 5 different keys that I rotate through the properties and I have 1 master key that works for everything. I was even able to create basement locks for the duplexes that will work for both keys and my master. When someone moves out I will put in a new lockset and keep that one for the next place. I think it's $30 for the deadbolt plus $8 re-key fee. Then I ***HIGHLY RECOMMEND*** buying what they call passage knobs instead of locking handles-tenants can't lock themselves out that way. The locksmith was telling me a story of an apartment complex that was having lots of break ins. The locksmith suggested changing from locking knobs to non-locking knobs and magically, the break ins stopped completely. If you needed let back in, there was a fee. If there was a "break in", the apt complex had to fix things for "free".

Since your goal is to start investing in real estate around age 59 1/2 in a Self Directed IRA, don't forget you're going to have to start taking Required Minimum Distributions (RMD) at age 70 1/2 on the Total Value of the SDIRA every year. Others have more experience with that than I do, but it sounds like a nightmare to value and distribute annually to me. Especially if your plan is to fully invest in rentals. I think you would want to be out of physical properties and into more liquid & easily valued assets by 70 1/2. Or at least have plenty of other assets in IRAs to fund the RMDs if rentals are a minority of your qualified assets.

Question 1: How do you handle calls from friends/relatives/telemarketers late at night, weekends or vacations? With caller ID, just don't answer if it's inconvenient to you. Let it go to voice mail or let tenants know you prefer text. If there is an actual emergency while you are out of town, you should have a contact with someone you could call to take care of such an issue-friend or handyman. In my experience, I've received more annoying phone calls at 3 am from friends and family than I have from tenants (0 so far).

Question 2: I don't see what the advantage of a PM LLC would be? Many on here will argue against having an LLC for owning properties in and I can't see what a PM LLC would do.

Question 3: I'm a Luddite, so I'm not exactly sure what is being meant here but I have found that when tenants come from online advertisements, I end up with more computer literate tenants than those that respond to a sign in the yard. If you are wanting a more computer literate clientele, go hunting for them where they are. My standard response to technology, modified for this question, is: "How many thousands of years have humans been renting without online work orders?"

Since you're thinking about self managing, honestly, it's not bad. I work my butt off in the beginning to find a good tenant and then after that, most months all I do is take checks to the bank with 11 properties. While I'm not there yet, I can't imagine it would be all that bad at 20 or 25 properties by doubling the calls I get now-very few. I understand the PM fee for finding a tenant as that is a good amount of work but I don't understand paying +/-10% every month to mainly collect rents.

My absolute favorite thing to buy at Menards is lighting. The older homes that I invest in have larger rooms and need 3 bulb lights instead of 2. HD & Lowes only offer the basic dome lights in 2 bulbs and you had to step up to 'designer' lights at $50+ to get 3 bulbs. Menards has two packs of 3 bulb dome lights for $25 and I've seen $10 rebates on them before. I know it's a small thing, but they solved a big issue for me.

I've gotten some good deals on electrical there but I HATE going into their electrical isle. Too much stuff too close together and it's tough to find just a plain outlet or switch. Then when you do find them, where the heck are the white ones??? Employees from other departments have told me that they've heard lots of complaints about electrical. I now get my switches and outlets from HD because the time savings is so much more (and Lowes is more expensive).

The one thing that drives me crazy about Menard's is, that they have so many sales that I hate buying anything that is not on sale there as it will be shortly-I must have the opposite of your luck @Dawn Anastasi :-)

State law in MO says that if somebody stays longer than the lease states, you can charge double rent. Even though it is state law, I added that to my lease so it is more tangible when I point to it. I had a family who were schemers-always had stories and getting different charities to pay their rent and I was just tired of dealing with them so I gave them the proper notice at the end of their lease and in that notice I included the move out procedure and a reminder that they would owe $1600/month rent if they were still there on the 1st per section X of the lease they signed. I'm not sure how much that factored into them leaving but they did mention several times that they can't afford $1600/month rent and they were out by the 1st.

I have 3 different life insurance policies to insure different risks. I have my original long term, 30 year term policy that will pay off mortgage and all debts and leave some money left over to get my wife by for a bit (not rich), especially with no mortgage to pay. I then took out another larger 30 year term policy when our first child was born. This is to help cover raising kids and college costs. This will carry through to when our youngest is 25. They are on their own after that. Then I took out a 10 year term policy to cover our real estate debts. I will add to/replace this policy as RE debt increases or if I still have significant amounts of debt after 10 years. We are both 36 and around age 40 we will look for another 25 or 30 year term for $100k-$250k to protect us through retirement age. I don't plan on having us insured past age 70 as we will have the assets to cover end of life plans.

Jon stated above to carry insurance until age 60 with term. From what I have experienced, I would suggest being insured at least until your spouse's age 65. I have seen several lose a spouse in the 55-65 age range without life insurance. Generally, most people aren't financially at the retirement stage at that age and depend on both incomes to pay bills so losing part of the income is very bad. If only one spouse works, the other is too young to take Social Security or has to take it at a reduced rate to get by. They are also at a strange point in life where parents are generally too old to help them and their children are still starting out and may not be able to help much financially. While losing a spouse at any age is bad, if it happens younger, you still have time to recover financially before retirement. Age 55-65 there isn't much time to recover for your spouse's retirement. Adding those few extra years to a term policy doesn't cost very much if you plan early enough. And you don't have to make them millionaires either, $100k-$250k is cheap and will be a blessing if needed.

If you have a bad feeling about her, try to find some reason to legitimately disqualify her. While I agree noisy isn't protected, how do you prove that or stand on that as your only reason to disqualify her if you get taken to court? She may not have a case but she could claim you did discriminate against family status in not accepting her and you have the time and cost of a court date. Telling the judge her family is "noisy" might be hard for a judge to swallow if you didn't meet the whole family. But if you had a credit score or lack of income to fall back on, something solid like that, you won't have to worry about getting to court.

Odds are you won't go to court either way but if you have a bad feeling, look closely at everything. If you have a good feeling, you might glance over things.

After this week, I'm leaning more to a handyman that can do everything instead of specialists. Monday I had a plumber that found it easier to remove the finished wall in a bedroom instead of the unfinished wall in the bathroom on the other side of the pipe. On Tuesday my electrician found it easier to use a hammer to make a line of holes in the middle of a wall to run a new wire instead of running it lower where the holes would be behind the baseboard and not needing fixed. What do the specialists care about holes? They don't have to fix them or appreciate the time it takes to repair them. Whereas the handyman either will have to fix it himself or has had to fix them and will think about how to minimize future problems.

Obviously you will need permits and licensed contractors for some jobs.

Not sure this will help you or not but thanks for letting me vent :-)