All Forum Posts by: Michael B.

Old Florida has done well by me.

They're a little behind on technology (no smartphone app), but the rates and approval mechanism have tended to be rather good.

And there's a branch on OBT in Apopka.

There's a lot more to the deal than getting nothing down. That's just one piece of the puzzle.

Getting nothing down deals that give you a negative cash flow is a really bad. Mr. Allen found this out the hard way. His deals tended to be little or nothing down, but he hemorrhaged cash on each one.

His nothing down deals were cool to write about, and he sold a lot of books. Most of his investments were in California, where appreciation was running at 12% or more per year at the time. However that didn't save him from filing bankruptcy in 1996.

He's continued to speak and write books since. He'll give a speech for a fee and still sells his books. But if you're going to do deals like him, make sure you understand just how awful monthly negative cash flow is. No investor can continue to grow with it. Even if you're a best selling author.

Payday loans are expensive because the risk of default is high and because there is a high fixed cost for servicing a loan. It's a pretty good clue that payday lenders aren't charging extortionist prices when you see just how many companies are in the business. Very competitive markets don't have outrageous margins.

The problem is that people who want to regulate these high cost loans have never known anybody who actually needed to get a short term loan. They don't move in the same social circles. Therefore people in the cloistered environs of London or Washington DC can truthfully say they can't see a reason for such expensive loans.

But it's not because there's not a market for short term loans, it's just that the regulators never went to school with such people in Oxford or Yale. Which says more about our regulatory system than the people needing short term loans.

Going back to the original question: a sex offender in the neighborhood isn't a problem to me buying. It falls under the broad category of problems that aren't mine.

If somebody has a problem living in the same neighborhood they need to do their own research. But the reality is there are lots of people in low income areas with criminal histories. Some crimes are violent, some sexual, some financial. It's up to the tenant to find a neighborhood with the mix of amenities, rent levels, and miscreants they want. It's not my place to put my judgement concerning the neighborhood over theirs.

I let them know that won't fly. I never let late fees slip. However I never end a conversation on something like a late fee. After letting them know they will be paying a late fee or I start eviction I change the subject. How's your wife doing? Is the air conditioning working well? How's your college daughter doing? Any problems with too much noise in the neighborhood?

I'm not my tenant's friend. But being friendly while enforcing strict adherence to rules is the core of who I am and how I operate my business.

I use texts frequently to communicate with renters; about rent, repairs and about anything else. Anybody under 30 has grown up with texting being the way they communicate. Letters and phone calls are routinely ignored. I'd never send a group text that could expose their phone number to other renters and I'd quit texting should anybody ask. But nobody does. It's how people communicate these days. It also gives me a record of who said what and when.

But to a larger point I always communicate with renters about when it's due and how they will pay. I'm willing to come by if they want; many drop it in the mail or deposit to my account. Even if they do mail the payment I find a way to spend a few minutes each month talking with each tenant. I want to be a name and face, not a far away owner. It's easier to stiff the guy you don't know.

I charge above market rents to low-medium income people, many with past bankruptcies or evictions, and almost never have turnover and very rarely have a late fee. I'm their biggest monthly bill, often 30% of total income. If there's a cash flow issue I want the issue to be with the hospital or credit card company, not me. They're impersonal, I'm the guy who asks about their kids and is always asking if the cooling system is working well or when I can change the furnace filter.

Several have mentioned that the credit card or utility company never sends a reminder. That's good. That means that even though they've much smaller wallet share than my rent they go behind me in getting paid. The monthly transaction cost of a few texts and a monthly face-to-face conversation is negligible when compared to less rent, higher turnover, and higher vacancy.

My business model is a high rent, fast maintenance service, and high touch. I'm not a friend, but a businessman that makes it easy to do business with me. I charge late fees promptly on the 6th, but that is very rare and I am almost never surprised when somebody is late. Landlording is a sales business an renters are my customers. Optimizing their willingness to pay me is part of customer relationship management.

Hey @Robert Steele .

I'm guessing that Florida will give Texas a run for your money on the prevalence of HOA's. Here you either buy in a HOA or you buy something built in the mid '60's or earlier. Everything I own is in an HOA (including my home).

Two of the 6 HOA's that I own in have a rental approval process. It's usually not too bad. I've never had an approval go over 3 days and never had a tenant rejected. In mine its just a way to make sure you're exercising just a little bit of caution as to who you bring into the neighborhood. And as for the information required the HOA has a reason to know who lives there -- police issues, emergency issues, etc.

Remember that HOA board members are usually retired guys. They serve on the board as a way to fill their days. They live to talk to people. Go to a board meeting and swap a few fishing/hunting/sports stories with them. It becomes a lot easier to discuss business if you recognize you as a person and not just a landlord. Most of them are always ready to offer advice on about any given subject. Just nod occasionally and smile a lot. Makes the relationship work much better.

That's looks like a very good deal.

@Matt McConnell mentioned the big thing you left out -- rehab. Most condos need at least a little work done to them before you can rent out. Maybe just paint. Maybe new floors. Maybe new appliances. Maybe major repairs.

Instead of the purchase price the more interesting number is acquisition price. This counts both purchase price and all of the things that need to be done to make it rent-able. Unless all of the other stuff is 0 (a situation I've never encountered) you need to figure out what the acquisition price is.

This wouldn't bother me much. With cop assaults there's always something going on and things got out of hand. A big night ended with a hangover and regrets. And the whole officer assault/obstruction stuff could be anything from very serious to meaningless.

If all else is good I'd probably tell her that I see there was an issue and won't stand for repeats happening. That way you look gracious but firm.

Especially 5 years ago this wouldn't register.

I would say don't do it.

Despite what you see on HGTV, flipping houses is hard work with no certain payoff. Especially in your case -- no job, no credit, no experience -- you're either going to pay way too much for the money and/or end up running out of money because you couldn't raise enough. And selling the flipped product can be a real problem, one that may not resolve itself within your Summer timeframe. Are you prepared to hold the house through the winter if it doesn't sell? If no, then don't do it.

If you want to get a taste of the industry hire on to a crew of some kind. Paint, or frame, or other construction trade. Or maybe paint a house or 2 on your own. Or answer the phone at a Real Estate agency. But don't go deeply into debt (even if this is an option) to try flipping a house. Just too many ways this can and probably will go wrong.

Your time to invest will come. Finish school and see what you want to be in a few years. After you've started your career there will still be houses to flip and $ to be made in many places in the industry.