All Forum Posts by: Frank Adams

The lender wants/demands their money on time, every time. They don't care about the source of the funds and more than you would accept lame excuses from your tenants about late or non-payment.

You mention "sewer", but is it sewer or septic? Could drastically change the expenses? Overall it sounds pretty good except I'd probably plan to expand a bit slower. Over expansion can kill your business faster than almost anything. The exception would be finding multiple homes at a great price that you can have moved at an excellent rate.

In my experience setting a firm goal like tripling that quickly might lead you into the "gotta do this deal" trap. As I've done more than once, OUCH!

A note about Houston, we lived there for 25 years and still have a house we collect a mortgage on. The house we lived in from 1988 to 1995 and collected a mortgage on until 2003 never had water reach half way up the curb in all those years. My wife's dearest friend's house, six doors up the street, flooded for the third time in 6 years during Harvey and they sold it to a CA investor for about $60K. They had paid $135K in 2002.

Another friend posted TV news footage of the neighborhood as their boat went past our friend's house. The water was almost to the top of the garage door. I'm pretty sure FEMA will update their map.

I don't really know much about the subject (just want to get that out there) but I had a friend who had a similar thing happen to him. A couple of people suggested regrading the whole yard, very expensive and would have ruined his cash flow so he kept asking around. He asked a mutual friend who came over and looked at it and proposed a cheap, and easy solution. His problem, like your only occurred a few times a year.

What he did was dig out an area in the middle of the 4 or five worst area. He kind of tapered the ground leading into each one. Then he dug trenches out to the front yard/sidewalk area. I think he rented a "Ditch Witch" machine for all of this. He just created 4 "French drains" and it solved his problem for less than a few hundred bucks.

You might go to the forums on doityourself dot com and post it and do some research on French drains.

Someone above suggested an annuity, which is bad advice to be giving without knowing much more about your Mom's situation. With ANY investment, annuity or otherwise, probably the most important question to ask the SALESMAN, because that is who you're dealing with is the following;

If I buy this NOW and sell it TOMORROW, how much of my original price will I get back?

That will tell you how much commission the salesman is earning.

Another bit of help regarding asking for financial advice, anyone can call themselves a FINANCIAL ADVISOR, many insurance agents and CPAs do this. Only a very few can call themselves a CERTIFIED FINANCIAL PLANNER. To do that requires adherence to s very strict code of ethics.

The first order of business is attracting good tenants to begin with. That means that not only does the house show well but it's got the normal features expected for its market; garage door opener, high efficiency HVAC, solar reflective window screens, attractive landscaping, good quality appliances and fixtures, nice decor touches.

The best thing I ever did for keeping tenants longer was to require a minimum two year lease going in. Once I did that my average turnover went to five years.

One problem that many rehabbers overlook is that you run the risk of buying a place at "market value". In economics that is the price agreed upon by a willing buyer and a willing seller, under no duress, agree upon. If the property is "known" in the marketplace there will be enough potential buyers to keep the price from falling to below market.

If you're hiring contractors to do the work you, or any other buyer will pay market rate for that work. If you pay market rate for the property and for the repairs you'll have a property that you've bought for FMV. Where will your profit come from?

That's why many of us work hard to find "off market" deals and either have someone who will do QUALITY work at below market rates;  a skilled handy man or do the work ourselves.

When I was doing most of my buys and flips I had a very good paying, salaried, job. There were weeks I worked 60 hours but it was generally doable for me to arrive late and or leave early, I just needed to be available on short notice. My office and house were six miles apart and everything I invested in was within that radius.

Generally I learned how to do more difficult projects by finding out a simple repair, a small bit of bad sheetrock had a bad stud and window framing behind it, etc. 

Despite my job and good education, MBA from a well known school I've done roofs, installed piers under a cracked slab, added a couple of half baths-doing all plumbing myself, installed more ceramic tile floors than I care to count, etc.

Either learn some estimating and construction skills or look for projects that will create a major payoff from small changes.

You're doing great, keep it up.

If the landlord has any sense the only things you'll likely learn are the dates of occupancy and payment history, and maybe how much of their security deposit was returned. Almost any other questions are subjective and a smart former landlord won't answer them.

Examples:

What kind of tenant were they?

Did they cause any problems?

Did they take care of the property?

Oy, the stories we all have.

Applicants: I wish we could buy our own place but we don't have the income.

I look over their app and they earned within a few thousand of what we earned. We did rent to them and later sold it seller financed. The reason they didn't have much money was they bought a new car every six months or so and always "screwed" the dealer every time. Fifteen years later they sold the house for barely enough to pay the balance, BECAUSE THEIR DAUGHTER WANTED TO GO TO A DIFFERENT HIGH SCHOOL.

New tenant, two months in: My rent's going to be a little short this month I need new tires for my TA (Trans Am).

Me: I hope you like sleeping in your car.

I'm not so sure about the "insure up to the value, regardless of your equity" bit. That sounds excessive. I'm surprised you've been carrying that low a rate on your cars. IIRC we've had 250K property and $500K personal injury on our cars for more than a few years. Our NET worth is a shade over $3 million and our umbrella is for $3 million. I think ours is just a bit under $1,000/year but we're in Colorado, not California