All Forum Posts by: Deanna O.

My father and I had this very discussion a week ago, and both options have pros and cons right now. His opinion; Sell now, hold the cash. Prices are high (delusionally so) and there are likely to be a lot of "fast & cash" options when the S@##  hits the fan in Sept (when unemployment runs out in the states that haven't already cut it off). 

My opinion; Nothing I want to put my $ in right now in my preferred market area (none of it crunches as rentals). I own one property free and clear, but nothing I would be able to purchase would cash-flow as well my current property once the financing/transaction costs are accounted for.   

Capex (hot water heaters, etc) are expenses you should already be budgeting and setting aside every month, and dealing with when maintenance is due (maybe before the HWH busts...which is always on a weekend when the plumbers are on OT, or when the tenants are out of town for a week...).

The smell. I had this problem this year on a new-to-me (100 year old)  property. Painting the basement walls with waterproof paint has done wonders for a problem that has existed for almost 20 years (a bit more updating on the the gutter/drain system is still in the works). In my case, I will also need to vent some outside air into the basement to solve the problem entirely. The basement was originally just furnace room/storage, and open to the foundation. It got drywalled in 20 years ago.  This sealed off the dust, and gives a grand storage/workshop area,   HOWEVER, it also sealed off the airflow, with the result that any dampness wicking through from the outside soil makes any nearby surface mold heaven. For your place, check to make sure water from the roof is still flowing away from the foundation (foundation landscaping is often the guilty party), also look to see if there are any sewer/sump grates with sitting water (clogged sewer drains, failed sump pumps, depending on the house layout). If the home plumbing sewer/drain system is visible inspect for any signs of leaks/water around the visable joints/downspouts (. If it's 50 year old cast iron it might be due for replacement (not THAT big a deal if the pipes are exposed to the basement). Look around the basement ceiling for any signs of water.  Toilets can leak around the seal, showerpans leak, and washer drains have leaky joints, and water leaking from an upper floor can travel along pipes and drip down to the house sill or into the soil.
Have someone flush toilets and run sinks while you are in the basement to listen for tell-tale drips.


 

I totally get why someone might not want to pay online. The danger of getting hacked while dealing with financial stuff is real, and devastating if you are on a fixed budget. Many online services (ie Avail) charge $2-3 per payment. Being forced to pay an extra fee in order to pay rent would be pretty annoying. For what it's worth, at least at this point, Apartments.com doesn't charge a fee unless the tenant pays with a credit or debit card. The landlord is charged if they want the rent "next day" instead of a couple of business days.   If this one tenant will ONLY do MO allow her text a pic of the MO right before she puts it in the mail and accept that text as the "received" time, as long as the postmark matches the text date. No text and it's "received" when it arrives.   

Hi all,

Anyone else find that they are getting approached by scammy "new" BP (young, male) members who are absolutely clueless but want you to "mentor" them? "Hi! I'm XXX. I' in Italy.  I'm know less than nothing, but I am looking for a mentor! I plan to become a broker and sell Real Estate in the wealthiest part of your town!"

I say "less than nothing" because what they think they know is wrong, and  they don't seem to understand simple concepts.

him; "I want to be a RE broker!"

me; "First you get your RE sales license. You have to have your RE sales license for 2 years before you can get your broker's license"

him; "I want to to get my broker's license and sell RE!"

Glad you found someone. Just throwing out that I've rented FROM American Heritage Properties for over 20 years, & found them to be pretty good to work with. As far as I know our landlord is generally happy too.

My personal opinion is that San Diego doesn't make much sense as an investor.  When the market is hot, it's amazing, but I'm old enough to remember past (spectacular!) crashes, so I choose to invest in other regions of the state where the income/rent/price ratio is a bit more sustainable. 

Financing;

I would have been better off if I had started sooner on the journey of jumping through all the silly hoops needed to build a good credit rating (as long as I did it like I did --WITHOUT getting into debt and thus becoming a bad risk LOL). 

Private money--if I'd known about PM I could have purchased my first rental property much sooner. My timing wasn't bad, but there was a house in 2009 that I would have actually preferred to the one I bought in 2010.

About 10 posts back, & you'll see that "mortgage" includes insurance and taxes. You are right that the house doesn't "cash flow" $434, but the other items aren't as quantifiable - a bad tenant can trash a house, stop paying rent after the first month and destroy the place before they leave 6 months later, while a good one might stay for 20 years and take care of the place as if it were their own. Also, SFR in many (most?) places leave the utilities to the renter. "Gross after fixed expenses" might be the better description.

IMHO the best thing a "first timer" can do is set up a separate bank account, and all the rent (and deposit) go in, all the expenses come out, and DO NOT take any income off the property for the first year.  This gives you a great snapshot of what the property is actually doing financially, and keeps you honest. The numbers seldom turn out to be what we'd like them to be, and they are never as simple as "rent minus mortgage = cash flow". As an added bonus, the separate account makes tax time sooooo much easier, and you can figure out total expenses, rents, and income in a matter of minutes. I also suggest keeping the tenant deposit in the "rental" savings account, while everything else goes in the "rental" checking account. The deposit belongs to the tenant, not you, but that's easy to forget that everything in the same account.

Part of the equation has to be taxes (consult a professional who understands RE taxes). Homeowner deductions, annual income, cost of financing, and your own personal comfort level dealing with renters (or PMs) all play into it. The capital gains tax alone could make or break a deal. 

I took Capex from both buyers at the same point --when I deducted 50% of rent for expenses. Both collected $160k in rent over 14.67 years. Over the past 10 years I've found that some of the old rule of thumb guidelines (1% rent, 50% expenses, etc) have turned out to be pretty close for the market I invest in. Obviously there are always exceptions, but I actually have a lot more respect for them than I did when I started.