All Forum Posts by: Drew Sandlin

Aaron McGinnis How do you determine how much your work is worth? If, for example, you mow the lawn for one of your rentals, how would you account for this cost/cost savings? Do you determine how much a lawn service would have charged to mow the lawn, and then "pay yourself" that amount? Or do you just clock the hours you spent working deliberately on a property and then divide your total profit in a given month or year by this amount for your "hourly wage" earned through operating the rental?

Do you have variable wages that you "pay yourself" or do you have different wage rates for different types of work you do? For example, would you pay yourself less for mowing a lawn as opposed to doing the duties of a project manager?

This is a great question, Bryan. I'm very interested to see how you guys account for these things, because your time is money, and time spent should be accounted as such.

Dividend stocks. That's where it's at, imho. Companies like AT&T, Lockheed Martin or some solid utilities that pay 4, 5 or 6% dividends annually can give you a sick return if you reinvest the proceeds. Until I have enough saved up to get into the RE market, that's where I've got most of my cash parked. Where else can I put it? The bond market is crap. Interest rates are so low that loading it into a CD will get you next to nothing. I don't have the risk tolerance to get into companies like BAC or the likes. Just my two cents, though...

Drew

@Brian What I'd like to do (again, let me know what you guys think about it) is to purchase the property as a long play. I'll live in it for a few years, get it repaired and established with a tenant on the one side, and fully paid for. Once that happens, I'll find another rental to do the same to. Fix it up, live in it a while, find a tenant for it, and then shop around for another property once it's paid for. Rinse and repeat. I don't intend to sell for a while, if I can help it.

This way I'll be familiar with all the quirks in the property, I'll have ample time to fix it up without having to worry about finding a tenant, or about making several different mortgage payments. There's not much campus housing at the university, so there's a fairly consistent demand for rentals in the area.

@Gerv You're right; there's still a lot of information I need to find out before I can know if it's a property worth pursuing. I checked the county's website, and the last appraisal (2010) was $33k. The owner doesn't live at the address, either. I think one side was rented, and from what I could tell, the other was vacant.

@Al I hadn't realized it until I really started reading BP posts and articles, but investing in rough parts of town really is a community service. Landlords get a terrible rap when in reality they're often the ones putting the most effort into getting properties and neighborhoods looking nice again. That's what I'd like to do with this one, and hopefully others in the future.

@Gillespie Ideally I'd like to pay cash, and if I'm able to get a decent job out of school (cross fingers) I'll probably end up doing just that. I wouldn't say the area is a war zone, although there are areas about 1-1.5 miles away that are pretty bad. There's a reason a police station is in the area. I've been going to school around there taking night classes, so I'm pretty comfortable with the area.

I'm planning on calling the guy tomorrow sometime and I'd like to ask him if I can see the property. What are some things that I definitely need to ask? What are some red flags to watch for? If there is a tenant in the property, how will that affect a deal if I decide that the property is worth pursuing?

You guys are great! Thanks for the fantastic information!

Drew

Thanks for the great advice! How do you guys typically deal with a "for sale by owner" situation? A better question, I guess, is what should I NOT do in this kind of situation? I don't have much (read none) experience purchasing properties, and so I don't want to look like an idiot when I ask to see the property.

Drew

Hello all!

I'm currently a senior in an engineering program, and at the end of this spring, I'll be looking for a place to stay. After I graduate, I'd like to purchase a small multifamily home, possibly a fixer-upper, and live in one side while I rent the other. Firstly, what do you think of this strategy as a way to get into the rental market? I currently have about $7k in the bank to start out with.

Secondly, I've found a multi-family home in a neighborhood close to the college that is very similar to what I'm looking for. The neighborhood looks rough, but the property is one block away from a police station. You can see the back of it from the house. I don't know the exact crime stats for this area, but from what I can tell, most of the folks that live around the campus are low-income and college students. How do you think this will impact the value of the property/the rent that I can expect from renting the other side? The property is 1,100 ft^2, 4 bed, 2 bath. Zillow has it estimated at $55k. Sign out front says for sale by owner.

Any thoughts would be great!

Drew

Thanks for the reply, Kathy! So for example's sake, say that you called the tenant and asked if it would be alright to inspect your property in two weeks, and the tenant agreed (assume all of this is in compliance with the lease). You write this information down, and store it with your records. Two weeks from now, you go to inspect the property, and the tenant freaks out, and sues you for harassing them (It's just an example; pardon the outlandishness). In court, the tenant says they never agreed to have you inspect the property on the day you showed up (the previously agreed to date). How can a note written yourself hold water in court? In "my word vs. his" situations, how do things typically proceed?

Disregarding the fact that writing this information down is an excellent business practice, and just good common sense, are there any legal advantages to having things like this written down?

Sorry for the long post!

Drew

I've been reading a few books about owning rental property, and in several places, I've read that you should document when you enter your property to inspect it, when you recieve a phone call from a tenant, when you send a notice to the tenant in writing, etc. Basically whenever something related to your property or tenant takes place, you document it.

How do you document things like conversations with the tenant, or entry to inspect your property in such a way that they will stand in a court of law?

If you were to write down when and for how long you inspected your property, how is anyone going to verify this information, and is there anyway to record these actions such that they will stand in court?

Thanks!

Drew

As much as I hate BofA and would like to do something about it, I don't think that moving deposits and obtaining loans elsewhere is going to be that damaging to them. Banks don't need deposits right now; they don't even want to make loans. With the Fed Funds rate as low as it is, the only thing BofA cares about right now is making money off the spread between the 0-0.25% Fed Funds rate and the 2% 10-year US treasury rate. They borrow from the Fed and buy treasuries, and effectively get free money from the government, risk free. Banks make crap tons of cash, the government gets a crap ton of buyers for treasuries, and you and I don't even register on their radar.

Thank you all for the excellent information! I've been out of the country, so I haven't had great internet access; sorry for the late reply. I will definitely investigate those sources. I guess I didn't realize how expansive things are!

Hello all!

I'm new to the forum (this is my first post) and I have to say it has been an excellent source of information regarding things of the real estate nature, and also in general.

I'm currently a college student, should be done with an engineering degree in a year (cross fingers) and would eventually like get into real estate.

Right now I'm trying to get as educated as I can about things, and one of the recurring themes I notice in this forum is how people can get SCREWED if they dont cover their a$$ leagally.

Where can I find the entirety of real estate/rental law? Should I hit up the library, or is there a place online I should check?

Thanks!

Drew