All Forum Posts by: Cory S.

My advice is to watch your cash reserves, you're going to need them. 

Don't just buy the first cheap old house you find, as those tend to be the money pits and don't appreciate much, and the community that they maybe located in have a higher turnover, which is a profit killer.

Research your markets as some states are more landlord friendly than others as well as more tax friendly.

Don't invest in markets that will nickel and dime you to death with fees as some cities love to do, as in city permits, landlord, and occupancy taxes.

Invest some of the money in REIT dividend stocks, or mortgage notes (for land) where you are the bank collecting, while avoiding insurance, property taxes, and repair expenses.

Those are some alternatives to SFH rentals and yes they have their own risks as well as do all investments.

Owned a SFH in the Cleveland market for 4 years (2016-2020) in Warrensville Heights, in Cleveland.

1952 Cap Code home 4 bed 2 bath 1,600 SQ. FT. detached garage

- High Turnover (4 years, 4 different tenants costing $9K to $15K per turnover)

- City permits

- Occupancy Tax

- Landlord Tax

- City inspections (Always finding something for me to fix, more money every single year)  

- Lots of nickel and dimeing from the city

- Property taxes are pretty low.

Be sure you do your research on the area you invest in and the income families make in that area to help maybe reduce the turnover.

Yes, the cash flow looks good but beware the expenses I listed can offset that cash flow.

Consider the current interest rate on your rental property and how much would it increase with current rates if you do a cash out refi. 

Expect to pay much more in insurance as well.

I have Proper Insurance for my Atlanta STR and the premium is $2,627 ($218.92) a month.

All State was over $4,000 when I got a quote from them.

The best feeling is having a job, with the peace of mind knowing you are financially covered, if you were to ever lose that job.

* Have plenty of cash reserves for repairs, turnovers, etc.

* Get a good trusted inspector to do the inspection of the property, check property history.

* Some insurance companies give discounts on your landlord policy premiums if you bundle with your residential and auto policies. Or some give discounts if you pay the premium in full.

* Look for properties in landlord friendly states, that also have low property taxes.

* Focus on newer properties, even though they may cost more, they tend to need less attention in repair.

* If you are getting a loan, put at least 25% down on the loan, and pay for the credit points to get the lowest interest rate possible.

* Increase your rent by about 5% annually (if needed), to keep your profit margins the same, as inflation, insurance, and property taxes tend to rise annually (insurance yes, property taxes sometimes, again depending on the state and city.)

* Find a good reputable property manager, sometimes the mom and pop ones are better than the big corporate ones, as the mom and pops tend to give greater attention to the few houses they manage. Also, make sure they are Johnny on the spot with their communication, as you are flying blind if you are an OOS investor.

* Have separate bank accounts for your personal checking and your rental business to build your cash reserves with direct deposits from your PM on rent collected. Don't touch this money, because you are a HVAC, roof, water heater, septic tank, away from bust.

* Your PM will provide you a 1099 tax form to do your write offs at the end of the year. 

No problem, I wish you good fortune!

The taxes were annual. 

Again this is in Warrensville Heights, so it might be different where you are, and I was never told about them myself until I got the bills in the mail along with code violations.

The deposits were only $900, so it doesn't cover much. 

Turnovers are just expensive, no matter how they leave the property, make sure you have plenty of cash reserves for wherever you go.

Some PM's don't like to bother the tenants, so they don't do their inspections all the time like they should.

I recommend newer properties, the old ones cost too much to upkeep and the insurance premiums are higher. 

IMO, Alabama and Georgia are good markets as they are very landlord friendly, Alabama has the lowest property taxes in the country, good cash flow, and Georgia has good appreciation (but more expensive to buy) 

I've been in the Austin, Atlanta, Birmingham, and Cleveland markets and I never had the run around in the first three markets that I got in Cleveland.

The taxes were from the City of Warrensville Heights, which is in Cleveland and they were flat rate $100 to $200 and not on % and again nickel and dime here and there. 

No, I didn't do section 8, just seemed everybody was ready to move on after one year, and they always left the place in a mess as the cost on turnover was from $6K to $12K on each turnover when the tenant left. 

The city made me fix this and that, put this in, take that out, like for example I had to build a stair railing, (it was a 1952 house that never had one and now in the 2020s all of a sudden it was an issue to have one?) fix the garage foundation, fix the sidewalk, the interior paint I could use, etc. every year it was something, and I was always why wasn't this reported with the other so called violations last year, it was like they were looking for stuff.

Also, I had to pay the utilities and I would get reimbursed later through the rent, with the PM, which I always had a dispute with on the amount to reimburse, as the PM's didn't trust the tenants to pay their bills.

I'm just glad to be out!