All Forum Posts by: Bryan F.

Quote from @Chris Seveney:

Quote from @Nico Welthy:

Quote from @Chris Seveney:

Quote from @Dave Allen:

I'm in a bit of a situation

My wife and her parents are selling a duplex they own together.

My wife is trusting me to re invest into cash positive investments.

We could stand to take as much as a quarter million, and tax free since we lived in the property 2 of the last 5 years.

What are some suggestions for markets that would provide cashflow? I'm looking at Duluth MN because of a video posted on BP, but I recognize this is an opportunity most would dream of, because it's one I've often dreamed of

Well now it's in my lap, and the pressure is on.

Hit me with your scenarios, what would you buy? Where?

Thanks for reading

David

 I would not buy anything right now, I would wait a year or so and see where prices are headed. In the meantime I would put the money in a low risk account gaining 4-5% which for $250k would be around $1k/month.

Hey Chris - what is driving the sentiment not to buy anything right now? I came into about 800k and looking to go into commercial multi family in the Midwest (Iowa most likely). 

 I think it depends on the individual and opportunity. I would not buy something right now just to buy something. Now of course there are still deals to be had out there, I am not saying that, but its a lot harder to find those deals today than five years ago when everything was a deal due to low interest rates.

We are always buying but this is my business, so we have a team etc. to manage it. The person who comes into money but not a lot of experience in real estate should be a little more cautious right now.

So overall, I am not saying - do not buy, I am saying be careful. For example I know many who are now just lending because they are getting 10-12% short term which is far better than any cap rate on real estate. you do not have the equity upside as you do real estate but its a way to play the short game to see what happens over the next 12-24 months and decide when you want to buy.

I’m with Chris. You’re already getting the tax benefit, so I wouldn’t feel the need to roll the gains into more real estate. I’d use it as an opportunity to diversify into some other investment classes where you might be getting a more attractive risk premium for less work right now. As long as you stay invested and let your hard earned capital continue to grow, you can pick your spots when a real estate opportunity offers outsized returns comparatively to other investments.

Cash flow is never going to be what your spreadsheet tells you it’s going to be. Focus on buying based on value. That’s what will make you money in the long run. 

I'd recommend reaching out to Jordan Wildman with EXP who's a local real estate agent and investor in the Fort Wayne to get started in the market.

Fort Wayne offers a number of different investment options from older multi-families (more labor intensive) to new construction build to rent. There's a number of property management companies and individual mangagers in the area. Depending on the strategy you end up going with will probably dictate what property manager makes the most sense as they all have their different niches they excel at.

You'll need to get those in ASAP as I believe the deadline for getting your appeals in for Allen county is tomorrow. If your bank ordered appraisal (if you had one from your purchase) is less than the assessed value, that's a good starting point to submit as supporting evidence. The GIS site can also help you pull comparable sales if you want to submit comps yourself. Additionally, Allen county allows you to use the lesser of assessed values based on either the comparable sales, or the income approach. You'll need to provide leases for the property that are no more than 18 months old. We had a lot of luck getting some our multi-family's down substantially this year switching some to them income method. Good luck! I'd recommend making a habit of doing this annually, and getting started the moment you get your packet in the mail.

I'm not sure that someone's past performance in the market will be helpful if you are trying to assess your potential future performance. We've been investing in Fort Wayne for a number of years now and have done well. The next 5 years are going to look a lot different for investors in the market than the last 5 did. We are at likely record high price to rent ratios (like much of the country) without much upside on rent growth in the mid-term paired with steeply rising taxes, financing, and insurance costs. So the question comes down to what's your strategy and how active do you want to be in your investing? Gone are the days where you can buy a cheap 100 year old multi-family off the MLS, turn it over to a local property manager, and make a great cash on cash return out of the gate. If you plan to be more active and scrappy in your investing, there's always a way to make money. If you want to be an armchair investor, you can probably find easier asset classes that will offer a better return despite what your initial spreadsheet numbers might be telling you.

Quote from @Tom Server:

My tenants were used to paying cash, since the property manger used to live near by and would go collect. Now I am the landlord and live 2 hours away and switching the payment to be mailed to me by money order or personal checks. Im dropping off pre stamped and addressed envelopes, which I know is much , but figured ill try to make this as easy as possible.  Does anyone use like a bill slip to add into the envelope ? something that has the month and they can write the amount they sent ?  

You are missing out on an opportunity to train your inherited tenants to pay on time (and potentially extra revenue) by not using an online rental payment option where you can automate your late fee collections. There are free options out there like apartments.com and Zillow. This is 21st century. Don’t make your life more complicated than it needs to be.

What are vacancy rates in your market and does the current tenant plan to re-up for another year? I read that rate as paying an extra month and half worth of your annual rent collection to buy income insurance for the year. Seems like expensive insurance to me, and if the tenant is already planning to re-up, then it's definitely not worth the premium.

Quote from @Michele G.:

4 tenants (students) were supposed to pay security deposit today for April 1 move in. I have not signed lease yet as I want all signatures, co-signers and security deposit in place. 

They just let me know they can pay half on April 1 and the other half next week after they move in. 

What would you do in this situation and what would you tell the prospective tenants? 
 
thank you 

We don’t even stop marketing until we have leases signed and all deposits, fees and prepaid rents paid. First come first come, first serve. You shouldn’t even entertain giving keys before all money is paid. Set the expectations from the beginning on how they need behave, or expect nothing but problems once they take possession.

Fees are income deposits are not. I’d check your lease language to make sure you are clearly stating this as a pet fee and not a deposit if you are not returning the funds at the end of the lease. Deposits have the expectation of the money being returned if parameters are met, and you could well get challenged on this by a tenant if your lease is phrasing it as a deposit as opposed to a fee. 

Quote from @James Wise:

For those unaware, I do Property Management in Ohio. The majority of our clients are out of state investors. Usually from places like California.

For the last decade+, every single year, without fail, we get 1 or 2 rookie investors that turn down a unit turnover bid of like $5,000 because they want to do it themselves for like $3,000.

Thing is, they have to take time off of their job and fly in to Ohio from California to do the repairs which are always done incorrectly, and it always takes them 3x longer than us. When you add up the lost wages, travel, lodging, lost rent and the cost to pay us to fix what they did incorrectly, they turn their $3,000 job into a $20,000 job.

Literally every year for the last decade I've seen at least 1-2 guys do this. And we just watch them and laugh and laugh and laugh. 

This is hilarious. Spend the money on flight and hotel when you acquire the property to thoroughly inspect the property and put together a detailed improvement plan. If you want to save 2k, get bids to do the work over time as cash comes in and before things become a major issue. You should be traveling cross country for opportunities to make 100k, not save 1k. If you need to do the work to make the numbers work, you bought wrong.