All Forum Posts by: Bryan Petrinec

Stepping back to the original question, I was both.  I joined BP in June '17 with nothing more than an idea of what I wanted to achieve.  Mined BP, read books, and planned out a financial strategy.  Closed on first duplex in September of '17 and then bought 2 more in October.  Currently working on a pseudo-flip for family member who moved after being in large house for 20+ years with little maintenance performed.  Should be on market end of March then will continue to acquire multi-family properties.

BP is a wealth of information and most importantly, a great place to network with like-minded people.  

6 Units / 3 duplexes in N Austin TX area

Goal to get to 20 unit is 5 years (4.5 yrs now) - Not saying that is where I will stop, just a milestone.

Why - to supplement income in retirement and to diversify portfolio.  I have been fortunate with existing stock portfolio but realized that when I retire, I will need to start drawing on principal to maintain current lifestyle. Although I know I am not 18 and bulletproof anymore, I dont like the idea of my wallet determining my lifespan.  Real Estate was the best way to change that and so far, it is working!

@Nick Sheveland welcome to a great community.  I would suggest attending the REIAs and local meetups to network.  Austin proper is a tough market to break into but there are still some great deals in the burbs.  If you are truly as motivated as you sound in your post, you will find a way.  

I started with Rentigo, but I had some issues with them and they charge fees for normal ACH transfers.  On the positive side, I did like their dashboard, but it was not easy to see every the status of transactions.  I also liked the feature that late fees could be programmed into it so if the tenant was late, it was automatically charged.  My biggest issues was that there is not a way for tenants to pay in installments, and I have 2 tenants that pay ~1/4 of the rent per week.  They are never late with the full rent at the time it is due, so I am happy to let them do it this way if it helps them budget.  Also, you cannot have multiple people on the same unit, there is only 1 rent payer or you split it and they both need to pay rent.  I have switched over to Cozy and although they are a little slower than Rentigo by a day or two, but all the issues are taken care of.  My only complaint about Cozy is that late fees cannot be programmed into the software.  

At this level of software, I dont think there is one that is what I want without getting a premium package like buildium.  Cozy has been the best so far.

I started with Wave and was okay for the price (free).  But there are limitations and I hit them within the first 4 months.  I was looking at others and eventually went to QuickBooks online.  The prevailing driiver to not go with others was the fact that 1) there is a ton of support in the QB community and 2) your CPA or accountant knows QB and can import directly whereas there is less of a chance they will be as knowledgeable on other software.  

Unfortunately, QB Online has limitations as well and there are some work-a-rounds, but just costs more $$ and I am frugal. So now I am using QB Pro Desktop and would recommend this to anyone over the other options. It is not subscription based, which appeals to my sense of pay to own something vs rent, which is the whole reason we are in real estate to begin with. Also, I can manage multiple LLC's with different books without any additional cost. And to boot, it is far more powerful than I need.

QB Pro coupled with QBOX, which is an online sharing program allows you to invite your accountant, CPA, and others to access the same set of books, but when opened, you can lock out others until the changes are saved.  Very handy.  I do all the books myself and then get my CPA (which is worth the money) to review them every couple of months.  It takes them about 2 hrs so it is well worth it.  As I get more confident, I intend to wean myself off and have quarterly reviews.  It may seem intimidating at first but it doesnt take long to get going.  If you are not savvy in this area, pay to have some one set up your chart of accounts or find someone you can collaborate with.  Once you have everything set up, the time it will save is enormous, especially at tax time.

@Chirag Shah, you indicated cosmetic work and you are reaching out to GC's that typically take on larger jobs.  This is an expensive approach.  Develop a list of what you need to get done and get quotes from those specific trades or a handyman.  By cosmetic work, I assume you are talking about painting, minor drywall repair, possibly flooring and similar.  This will save you $$.

Also, if you are house hacking, I assume you are renting out the nicer half - if not, you should.  Then see how much you can do yourself.  Since you are living there already, you have more time than if you are trying to get it rented fast, so take the time to learn how to do these things.  You may not continue to do them in the future, but you will learn what it takes and be able to evaluate bids better down the road.  

For what it is worth, check out Bryco Services (selfish plug here).  I am a part time handyman that focuses on investment properties in the N Austin metro area and manage 6 units.  

Multifamily investor with W2 in Cedar Park. I would like to get involved in the meetup as well. I have been trying to get to the REIA in the Domain for months now, but like clockwork, something comes up on Tuesdays. It would be great if there was even a smaller ad-hoc meetup in the NW Austin/CP/RR area that took place Friday afternoons or the weekend. Looking for my next deal and would be great to hear what others are doing in the area.

There are a lot of factors that go into COC ROI in the Austin market. If you are looking at conventional financing with 20-25% down, the market looks very different than if you are buying distressed properties cash and doing the BRRRR method and getting all if not more of your money out in 6 months to a year. If you are new to REI and dont have the cash or the incentive to buy distressed properties needing major rehab, you will be lucky to find positive cash flowing properties in the heart of Austin.

Just this year I entered the market and purchased 3 duplexes in Austin suburbs and used conventional financing. I am seeing between 5-7% COC. Personally I am happy with these properties as there is a value add through raising rents to closer to market value, shift utilities to tenants, and general improvements as the units turn over, which will then allow 10-15% rent increases given similar units in good condition in the area. Although Austin has historically seen market leading appreciation rates, I am not banking on that, but will be a nice bonus.

This is a long term investment strategy for me, but everyone has their own drivers. Know what works for you. Don't compare yourself to others. Sure 12%-17% COC is possible, but how they got that may be a different strategy than yours. Know your numbers and what works for you. If 10% COC is what you are looking for, find it. But don't compromise on your numbers.  

This might be a way to get around having a real estate licence if that is required in that state for Property Managers.  In Texas, you need to have a licence in order to be a property manager for someone else.  Personally I think this is stupid.  I manage 4 properties for my father, but since I do this through my remodeling business, I have similar language in place as a CYA.  I know I can manage for my father without an issue, but just want it to be on the up and up as I represent myself as the PM to the tenants.  

I would love to start managing properties for others as I have seen first hand the wide range of property managers out there and feel that some of them are opportunistic vultures that have fees that are outrageous and prey on remote investors.  

Although I am considering getting licenced, there is nothing in becoming licenced that will improve my ability to be a good property manager.  

If this is a way to getting around licensing, let me know.

As leases come up for renewal, I offer to do something for the tenant based on the overall condition of the rental.  As all of my tenants are inherited tenants that have been with the properties for a long time (some over 10 years), I provide something along the lines of painting, carpet cleaning, general repairs, even if it is something they should be responsible for.  What ever it is, it will be less than $500.  I have found this does several things that benefits me:

1. the tenant knows I care about the property and when it looks a little nicer, they care a little more too.

2. The cost of the repair is insignificant compared to turning the unit over

3. Allows me to bring rents up closer to market rent with no complaints from the tenants (they feel like they are getting something for the money)

4. Allows me to spread the cost of the upgrades/repairs out over time AND reduces the overall turnover cost when that comes because items have been repaired along the way vs. allowed to deteriorate to the point of larger more costly repairs.  

5. And lastly, it provides me with a better baseline on establishing move in vs. move out conditions.  As I mentioned all are long term tenants, shortest is 3 years, longest is 13 years in the 6 units we have.  All were purchased as distressed properties, which was reflected in the purchase price.  That said, 5 of the 6 do not have move in reports.  I have taken pictures of all the units when I took possession, but there are some issues that have obviously been there a while, so based on the lack of proof, I would probably eat those costs anyway.  As they are renewed and these repairs take place, it provides me a known condition and if this area gets messed up, it will be a precedence for other areas as well. 

Overall, this has worked well for me and pays for itself in the long run.

@Michael Plaks, I appreciate the input. The goal into looking into this was to see if there were any advantages to my father renting this house back through the LLC vs. owning it as his personal property. At this stage, he is more focused on deductions than income.

As for the existing LLC, he is represented by his trust in the LLC. My bother and I put in the sweat equity in finding, managing, and interface with the tenants, while my father brings the financial backing for this venture. There is an operating agreement in place, and everything is going well on the family dynamics side of things.

On the future rental of this property, my question is based on the ease of renting the property. If my father goes to a facility and has issues, his POA will kick in. Will it be easier for the LLC to rent/manage the property or through the POA, or is there just really no difference.

We are just trying to explore our options as my father downsizes.  It sounds like as long as the rent is market value, there is noting "shady" in this approach.  Now we just need to discuss with our CPA the benefits vs outright ownership.  

Thanks again.