All Forum Posts by: Christopher Gilbert

@Aref Shehadeh

Some of the items look like they are possible make-ready items where the property manager is doing some minor repairs to get them up to code or ready to rent.  The fees that bother me are the late rent collection fee and the other "trip" fees.  It is the property managers job to get the rent in a timely manner so they should not be getting paid extra to be bad at their job.  The "trip" fees are also just bad planning on their part.  They should be coordinating their repair crews or providing them access to maintain the property, that is built in to their management fee.  To me it seems like they are just padding their fees. 

I would shop around the area a bit more and see what other property managers are charging in your area.  Check your agreement with them and see if these fees are clearly listed in there or not.  There is usually a fee if the repair person cannot get access to the house but not for the manager to let them in.

@Fay Chen

We started off doing our own taxes for quite a while but ran into some snags when we started buying multiple rentals in the same year (the tax software no longer had all the options for depreciating and logging the costs of the closing expenses properly). 

We had to screen four or five CPA's before we found one that understood real estate investors but we have benefitted greatly, not only saving a small fortune in taxes but being able to plan a strategy around future investments (and sales of properties).  Book keepers have a definite place in helping run a larger business but I think you should stick with a CPA since it seems like your immediate and future need is with planning and strategy. 

I did not see much of a price difference between the two as our CPA charges us less than $800 to do our taxes and planning each year and has saved us a ton from deductions that we didn't even know existed. 

@Marcin C.

It depends on the situation and the judge.  In cases where the tenant loses their job or has some other hardship such as medical issues, I have found that courts are willing to award missed actual rent and damages and that is about it.  In cases where the tenant pulls a midnight move then the court will likely give you something extra but even then it is up to the judge.  I very highly doubt that they would award $1500 as that could be judged as excessive and predatory (in the courts eyes).  Remember that the judge sees these cases every single day so they are very aware of what going fines and rates are in your area. 

Our standard lease form has a fee for breaking the lease early but it is usually half a months rent and the old tenant keeps paying rent/utilities until a new tenant occupies the unit.  Also remember that just because you get a judgment does not mean that you will actually ever see the money collected.  Courts can award you all the money in the world but it is solely up to you to collect it and if your tenant is truly broke you will never see a penny of that judgment.

The best defense is a good offense so do your due diligence up front and only accept in qualified and "stable" tenants as best as you can.

Absolutely.  If you have serial numbers or pictures of the appliances in the property that should be enough to get you a judgment.  You may never be able to collect on the judgment but at least you can go in and flag the tenant in a background database somewhere that they took your items and make sure it doesn't happen to anyone else.

If you still have it keep their deposit and take them to court for the remainder of the balance.

We are in the process of doing our second cash purchase, rehad, refi and the mortgage broker originally told us that we could do 70% refi with cash out up to the appraised value. When the time came to actually put in the app with the lender though they said it was 70% LTV on the appraised value up to the price that we paid for the property. So we will not get additional money on top of what we paid but at least we get what we initially paid back.

Another thing to be aware of is that a lot of lenders will not do a cash-back refi on any property that you have owned for over 180 days for some reason so you will have to act quickly as soon as you purchase and rehab something.

@Julia Yagodina

When we first started doing flips we only found one place locally that would insure us and we paid typically about $600 per house.  The insurance was sketchy at best and similar to a builder's risk policy.  To be honest, if we ever had a claim I am sure it would probably be denied. 

The policies took quite a while to make it through underwriting (typically 3-4 weeks) due to buying the houses at foreclosure auctions and by the time it came through we were finished with the flip and had it on the market to sell.  The policies were good for six months and they would not prorate a rebate for any time that we did not use after we sold the property.

We did some "second home" policies on a couple of them but the insurance agency quickly figured those out and stopped offering coverage. 

Between the time lag to get the policy started and the high price we just decided to stay with lower cost flips and multiple houses at a time to spread out the risk.  All of the competitive house flippers and big boy funds in our area do the same.  I am surprised that some insurance agency does not offer competitive policies since it seems like they could make a killing on a $400 policy for only a few months of risk exposure.

@Mark Cohen

It is strictly a numbers game and I would expect very low results with simply a generic absentee owner list.  To be honest, I get about half a dozen postcards and letters every week on my properties and shake my head every time thinking about how someone just wasted time and money on them.

If you want to see better results you either have to send out thousands more mailings or maybe you should refine your list and try to pinpoint the type of owner that may be interested in selling.

Drive some of the list (driving for dollars) and look for ones that are not being taken care of or in need of obvious repair.  Focus your efforts on those and you will probably get much better contacts.  You could even go the extra effort and send them pictures of the houses tall grass or missing shingles and the owner may not even know they are in such bad shape that they may be more interesting in selling quickly.  I would rather send out 50 specific mailers on problem properties than 1000 generic letters that no one will really read.

If driving and looking is too much effort then I would look for another way to find deals.  Houses won't just fall in your lap, you have to go find them.

@Matt Holmer

This is one of the reasons that I gave up on property managers and self-manage all my houses.  When I had a property manager they said that they get out every six months to inspect each property but after talking with the tenants they had not seen anyone come by in years.  Most places put yearly in their contracts but I do not know of any that actually visit that often.  At best you may get a maintenance guy see the inside of a house as they are doing a repair but they are probably not going to pay attention to anything other some very obvious damage. 

You could negotiate in a frequency of visits from your property manager that you are satisfied with but you will have to micromanage them to make sure they are actually visiting and then they will probably charge you some ridiculous amount for each one (or a higher percent).

If you are burned out on managing your own properties you will have to accept that a PM will not manage them to the same level that you are and be willing to live with the risk that the houses are not being kept up as nice.

@Kevin Izquierdo

If you want to keep it long term as a rental I would wait until you save up a down payment and rehab $ for another property to fix up and then move into that one and do the same.  Rent out the old unit that you were living in.

If you want to sell the unit and capitalize on any gains in the value that you created wait two years and then sell as your primary residence to avoid as much in taxable gains as possible.  Then buy another with the proceeds and do it again.

There are a few other strategies that you can use like refinancing to try and capture some of the equity gain, sell using a 1031 exchange after you have it fully rented, etc. but the two above are your basic options.

@Jane A.

I recommend going through a mortgage broker since they usually have contacts at dozens of different lenders and can find just about anything that you need.  A simple search of the internet should find dozens in your area or talk to some other investors and they may be able to give you some referrals.  Some things that I have come across that are issues with cash out refi's is that most lenders for some reason will not do cash out's on investment properties if you have owned the property for over 180 days.  I am not sure if this is a bank specific rule but it seems to be across the board from all of the lenders that I have talked to.

Basically that means the only way that I have been able to do cash out refi's is if I pay cash for a place, fix it up and then get an immediate refi to pull my cash back out.