All Forum Posts by: Brandon Weis

Most important things for a market:

1. Jobs

2. Jobs

3. See #1 & 2

In your opinion, as you are starting out at 0 reviews, do you think it is a must to beat the competition on price to overcome customer's hesitancy or lack of trust with no reviews?

Or what are other tips to start gaining traction from the beginning?

I think it would be beneficial to set up your own management company to manage your assets. It can help keep things straight, and it would look more legitimate to lenders, buyers, investors etc. Anyone that is looking at your assets is always going to need to factor in property management, so you can show that as a real expense (and really make it as high or low as you want).

I work in a vertically integrated real estate and development company, and I cannot imagine how things would run if we did not have an internal property management company that essentially works for the other companies but also stands on its own.

Does anyone have a recommendation of a national collection agency that is effective? We have tried multiple local collection agencies, and we have not received a penny for over a hundred thousand dollars of bad debt submitted to them.

We keep hearing, "It takes time" but it's been well over a year with the most recent one.

@Nathan Gesner on your section where you say "The backup plan is to have a strong lease. If the tenant fails to establish their own policy, enroll them in your renter's insurance policy and charge it back to them. If they fail to pay, then you can choose to try eviction or just hold the charges until the end of their lease and collect it from their deposit."

Can property owners or property managers enroll a tenant in a renter's insurance policy and charge it back to them? I may be incorrect, but I thought that was not a possibility. If it is, we may just do that from the beginning in order to not rely on tenants to do it themselves. 

We have historically had in our leases that renter's insurance is required, but we had been lax on enforcing it because owners didn't really care and not all tenants had it. We are now beginning to crack down more as some insurance companies for property owners are asking for copies of all renter's insurance policies to issue liability coverage on properties.

Aside from having in leases that renter's insurance is a requirement, how do others actually enforce the tenant getting it? Do people require it before signing the lease? I feel like that sounds simple but in reality would hold up the leasing process for tenants that are not proactive. 

In order to encourage tenants to get renter's insurance, we have been contemplating instituting a $50 monthly fee until they provide proof of renter's insurance with the owner listed as an additional insured, but not sure how well that would hold up if we ever had to evict.

How your T12 will look will come down to your accounting software and how it has it formatted. I would spend some time working on the formatting to make it as simple as possible to understand for a banker or buyer. It should clearly state the operating income, operating expenses, and net operating income. Do not make the mistake of including non-operating expenses in your NOI. It is incorrect, but it will also lower your value!

We use Yardi for our accounting, which leaves much to be desired at times, but we have spent a lot of time working on our financials to get them to look the way we want. A T12 will be an income statement/P&L from any software you pull it from.

@Keaton Sheffert 1 neighbor is certainly easier than 50, so that is good! On my personal rezoning, that was just this summer and construction should finish right after Christmas! I am house hacking it, so I will be living there for at least the year minimum, but don't really plan on staying longer than that. They were trying to pin down how long I would live there (and would not have liked the 1 year answer). Fortunately, my connection on the board kept steering them away anytime they came back to that when we met on it.

@Matthew Kwan Thanks Matthew! Also, the banks that did approve me told me that they could only use the rental income from the other units (75% of it) for an FHA loan, not a conventional with 5% down (which was my goal to avoid upfront PMI and have it automatically drop off at 78% LTV). Is that a national guideline or is that just more local bank conservative standards?

I just had a bank tell me that per new Fannie guidelines, the minimum down payment on a 3-4 unit is 20-25%, even if it is bought as a primary residence. Personally, I think they are wrong. I think they are just an extremely conservative bank and that is their interpretation of Fannie's guidelines.

I have already gotten approved from some other banks (credit unions), so I'm not worried, but I am curious if anyone else has run into a bank telling them they need at least a 20% down payment on 3-4 units, regardless of it being FHA or not. I truly just think this was a conservative bank/incompetent loan officer.