All Forum Posts by: Bryan F.

Call me crazy, but I’d prefer my tenants let me know when a toilet is leaking, sewage is backing up in the basement, or the furnace went out when it’s 0 out. You know who’s likely to make a suboptimal decision on what to do about a property repair? Probably someone who’s never owned a house before.

You might want to just start with hiring a good local PM and have them take over management from here. It sounds like getting a crash course in screening and placing tenants, managing rent collections, and getting rid a problems could prove to be a costly education for you. If they haven’t trashed the place and are pretty much current on rent, you aren’t out much yet. “Yet” being the key word there. A good PM will navigate the local rules of getting them out legally if that’s what needs to be done, or whip them into shape, all without you needing to pay a for attorneys and taking the headache out of your hands. Might save you some $$ in the long run.

Hire a debt collector who will take 30-40% of collected funds. You might not be able to collect now, but you certainly could over the next 20+ years if you get extensions on your judgements. You can also get a lien on any assets they do have like a car. Next time they try to go trade it in or sell it, you are the first to get paid. 

Big hvac companies will always try to sell you a new system. If they didn’t say the heat exchange was cracked, I’d probably get a second opinion from an independent licensed hvac contractor. You might be able to get by with replacing the evaporator coil and a blower if the system isn’t that old. That will cost you far less than 11k, or 6.5k for that matter.

Quote from @Luis J.:

Thank you all for the responses! I talked to another PM, yes it's a slow time for that market and it usually picks up after the New Year.

The prospect tenants have been Section 8 with $1400-$1500 vouchers (rent is at $1350) meaning they more than qualify. However, it could be that they are opting out for more square footage.

The value proposition of the unit is that it's brand new with new appliances. We're also going to offer a discount on the deposit and see how that goes.

Thanks again everyone!

Here's the link.
https://www.zillow.com/homedetails/1914-Herring-Ave-1-Waco-T...

Two to comps
https://www.zillow.com/homedetails/1413-N-7th-St-UNIT-A-Waco...

https://www.zillow.com/homedetails/1614-Bryan-Ave-UNIT-A-Wac...

With that in mind, I'd try and to find a way to get the full 1,500 (as opposed to lowering the rent) and focus on ways to lower the portion of out of pocket expenses the tenant is responsible for as much as possible to entice them to sign with you. That might be waiving the security deposit all together if they'd are responsible for coming up with that, offering a $500 grocery gift card on move in, or free internet to lower their monthly out of pocket. An extra $150 per month in rent is an extra 1,800 to you per year that you can allocate a portion of to making it more attractive to the tenant while still keeping your NOI up.

Those are small units for 3/2. Have you tried offering a rent special like 300-500 off the first month (or the security deposit so you don’t lose income) to reduce the upfront cost of signing a lease for the tenant without negatively impacting your long-term collections?

Quote from @Allan C.:

@Edgardo Jove I’ll ask a different question - have you done everything you can to minimize expenses? Expense reductions are more sustainable than margin improvements and they have the same bottom line impact to your P&L. In most commodities businesses expense optimization should be your first focus area.

Agreed. RUBS on sewer/water/trash, re-quote your insurance from a few carriers, and appeal your taxes to boost your NOI without spending money. Do the last two annually. 

Quote from @Travis Timmons:

I'll second @Nicholas L. - try to find something local. I invest out of state and will be moving to the primary market I invest in to be local and hands on. It can be done from a distance, but it's better to be right down the road. I can only speak for the markets that I invest in, but it's probably a 20% markup from local vendors when the customer is out of state. You'll have more control, more market knowledge, better contacts, and more confidence in your investments if it is local or within a couple hours driving distance.

If you're looking for a cheaper market, consider Milwaukee, Indianapolis, or maybe a smaller market like Champaign-Urbana, Bloomington-Normal, Quad Cities, Madison, South Bend, Fort Wayne, etc. that is a closer drive. Ohio is fine, but you'll likely drive by a several equally lucrative investment markets on your way to Ohio. 

Agreed. Start local first and learn how to be a landlord, estimate repairs, manage renovations, etc and then move out of state if you want to scale with your next property. We started local here in Chicago with a duplex in an A class Northside neighborhood on an owner occupied loan that we've completely renovated (a lot of it ourselves). We pivoted to out to oos investing about 5 years ago. It's a lot easier to know what to look for in an agent, interview PMs, and wrangle contractors from afar if you've got a couple of reps under your belt having done everything yourself. It's a get rich slow game. Start with the basics first.

Quote from @Ben Gleason:

If rent is late for December, I would make sure to give pay or quit notice the first day you are eligible and then file for eviction for non-payment the first day you are eligible to get the ball rolling.

So 3 bed 2.5 bath units with 2 car garage? The advice you’ve gotten is pretty spot on. You’d get that in Huntertown, but it would be a bit of a stretch in New Haven. Not totally out of the realm of possibility, but you’d likely be setting the new high water mark for the area.