All Forum Posts by: Buddy LaRue

Congratulations! That's one in a row, now go get the next one!

Details, we must have details. The best way for everyone to learn is by each others successes!

A full time job should not stop a person from being a landlord and managing the properties themselves. Almost every investor client I have worked with has a full time job and multiple properties. There's really not that much work to it once you have a tenant in the property if you have done your preparations for the tenant prior to their move in (having the property in the best condition possible). My personal guidelines are that an investor should be able to handle having at least 10 doors that they manage themselves in their local area.

One thought for you - next time you have to replace the carpets (and it will happen eventually) you may want to consider putting in wood-look vinyl plank flooring in most of the unit, except bedrooms. It looks good and if some of it becomes damaged you can replace only the damaged portions easily and cheaply. I prefer carpeting in the bedrooms only because most of the tenants I've had prefer that (except in S. Florida, here hard surface floors in the bedrooms are more desirable).

Always, but always get a security deposit. Don't let this be negotiable. Back rent?! The property was being managed by a property management company and there's back rent due?! Good to hear you're not using them again, and I'd be warning the other homeowners in the development not to use them either. As soon as the tenants missed a payment, I'd have served with a 3 day notice!

Live and learn. Let this past experience be the worst one you have to deal with. It will get easier and you will make great money in this!

Best of luck to you!

@ RE: In the agent's defense, this is only fair IMO. To work with me - the agent is going to need to put in a lot of work and have a pretty high knowledge base. Those are valuable, and as such, may be worth paying for.

The "admin fee" as most brokerages put it, doesn't typically go to the agent, only the broker with whom the agent has their license hung.

If you really want to help your agent, refer him/her business.

Read every bit of paperwork before signing. These brokerage fees are popping up more and more. I've seen $295, but never $595.

I'm lucky that my current office doesn't charge these fees, but my last office did. If you disagree with the amount they want to charge (if it's more than $0, I wouldn't agree to it) discuss that with your agent. Chances are if you balk at it, they'll drop it. If not, find another agent.

@Ben Hughes You ain't just whistlin' Dixie! However there are a few agents in town (mainly with Lifestyles Unlimited that I've found....especially since I worked there) who do know what they are doing. Unfortunately, If you are not a member of Lifestyles at the Challenge or PIG membership level, these agents cannot work with you if you are an investor.

@Kyle Tam Southwest part of the city is very good as well, however it is hard to find deals there. Katy, Richmond, Sugar Land are excellent areas but hard to find a good deal with reasonable capital gain. If looking on the north side of the city, my recommendations are to keep it west of the 59

My thoughts are to always go with a small residential home instead of a mobile home.

Mobile homes can be good for cash flow if you watch your numbers carefully and your cash flow isn't destroyed by the mobile home park's fees (a park in Rancho Mirage where my former partner now lives has increased its fees every six months for the past three years and is now up to $620/month), but mobile homes generally do not increase in value. I realize you are in SoCal (I lived in SoCal for 15 years - Palm Springs area) and mobile homes did see an increase in value, but they were the last type dwelling to see an increase in value.

If at all possible, find a small 3/2 home with at least a 1 car garage or carport, (2 car garage would be even better), minimum of 1,000 sq. ft., where you can realize a 100% return on capital gain and at least a 10% cash-on-cash return that's cash flowing a minimum of $300/month. It won't be easy at first, but the deals are out there. That way you've doubled the value of your dollars at the time of purchase, are cash flowing, and SoCal being what it is you should see an increase in the value of the property, but that increase in value is speculative.

By purchasing small stick-built homes with the appropriate returns, you're not only investing and making money, but your exit strategy is much easier. A single family residence usually sells faster and easier than a mobile home.

Just my two cents.

@Georgia Jones To find estimated property tax amounts for a property in Tallahassee (or anywhere in Leon County) you can go to the Leon County Tax appraiser's website at http://www.leonpa.org/taxEstimator.html to help you run your numbers. I would take the purchase amount, plus the amount of any repairs you plan to put into the property and base the estimated tax on that number.

As far as insurance goes, it's not cheap in Florida. When I run my numbers I use an estimated 2% of the purchase price and repair amounts. This will include the land (which can't be destroyed) but I find the numbers work well for me. It'll probably come in high, but I like to estimate my costs high when running my numbers. If it's a good deal when the costs are high, it's a better deal when the costs come in lower. If you want to compare rates online try this website: http://home-insurance.shopandcomparerates.com/

There are many things you can do to help cut your insurance costs. First of all is keep an eye on the type of construction of the property. Here in South Florida you want a house that is of "CBS Construction" - Concrete Block and Stucco. Hurricanes do less damage to them and they're less expensive to insure than frame constructed homes. You also will want to get inspections done to the home during the inspection period of your contract (preferably by an inspector that your insurance company uses). These are: the Four Point Inspection (checks electrical, heating, plumbing, and roof), and the general inspection.

I don't know about Tallahassee, but in South Florida you would also want to look into the cost of hurricane protection for the home. "Inexpensive" hurricane protection for windows and doors for my personal home (a 3/1 frame construction home, built in 1941 and 2 blocks from the water) came in at just over $2,300 to cover 13 windows and doors (leaving one uncovered just in case we stay during a storm - we need some way to get out of the house). We didn't get any discounts off the insurance because we're leaving one door unprotected (in order to get a discount ALL openings must be protected). If we leave (which we plan to do if we get a CAT 2 or higher storm) then we will simply use plywood over the exposed door. I briefly looked into the cost of impact windows and doors for the house, but it's outrageously expensive (the front door with no windows came in at over $1,500, a French door on the back of the house was over $2,000 and the windows were a little over $1,000/each!). We do not have a garage, but if you come across a property with one make sure you look into the cost of having the garage door protected as well. Impacts or winds that blow in the garage door cause major damage (rip off roofs from built up pressure on the inside of the house).

One thing that I know a lot of investors don't bother with is flood insurance. Personally, I wouldn't own a property without it. It's cheap and as far as I'm concerned more than worth it. In the end, it's just another number that gets figured in.

Hi Georgia

I'm wondering why you decided to choose Tallahassee? Not that it's a bad choice, just wondering.

Wholesaling long distance would most likely be rather difficult. A buy and hold strategy can be done, but like Scott pointed out you have to have a good team in place to make it work.

I'm in West Palm Beach and am finding deals in South Florida for my clients that cash flow quite nicely, and some of them are out of staters as well. Connect with me if you'd like to discuss further.

I would probably replace the unit, and probably with a gas burning water heater. If the property is a buy and hold, your tenants will appreciate it as it will cost them less to run. If it's a flip, the new buyers may weigh it in their decision. By replacing the unit, it's a win-win situation. I don't see you can lose.

Ceiling white on the ceilings, oil based semi-gloss on doors and trim, flat on the walls (it's easiest to touch up).

I always recommend white ceilings, white trim and doors, and a taupe (medium tint) on the walls. Never paint walls white! Tenants hate it as it's too severe. Taupe will give the property a clean, neutral look. If you can cheaply update any metal fixtures (door knobs, and light fixtures especially) to a brushed nickel instead of brass, it will help give the entire place an updated look which usually translates to the property renting quicker.