All Forum Posts by: Charles Perkins

First of all treating rental income as a hobby is a very bad idea.  I doubt seriously that you are properly reporting income on your tax return.  Hobby income and expenses are treated differently than investment activities or business activities. Chances are very high that you are not claiming tax losses that you should be.

There are many ways to create relationship problems and one highly successful one is mixing business with pleasure.  I would follow the advice others have given.

It would be a good idea to familiarize yourself with current landlord tenant laws and have an appropriate lease drawn.  Even relatives and friends can create liabilities and maintenance issues through their activities.

I worked in various capacities in construction.  First as a painter/accountant with a commercial painting contractor.  There l also learned to do commercial job take offs and estimating.  Later I worked at general contracting firm did accounting takeoffs for a variety of jobs.  They specialized in concrete tilt up, but did a lot of time and materials work for a self made real estate tycoon who owned a lot of Federal Way.

Along the way I got my CPA license and practiced in several differing sectors including doing some work with low income housing projects.

As far as my start in RE, it was with buying my first personal SFR and later moving to a new residence. Keeping the first as a rental. The rest came with time and experience.

I saw first hand the success of other RE investors having worked in a number of construction jobs.  There success inspired me to look at RE as both a short term and long term investment.

Turns out there are many successful investors in this area.

I value a property on information I have today.  The real question is have you done enough due diligence?  Part of due diligence is learning about the community and what is going on nearby.  No property exists in a vacuum.

If the city is reviewing a permit application for a landfill nearby that's important to know today.  If you're in a flood zone it is necessary to know and factor in.  A flood or hurricane may not have harmed the property recently but has it historically? I want to know these things today when making a decision.  Good due diligence is much more than numbers.  The risk factor is oftentimes an important factor I consider when deciding on a property.  Appreciation and value add opportunities are also a factor though generally they don't change my offer.

It sounds like you have a great background for investing as well as assisting other real estate investors in buying suitable real estate.  The brokerage should be very glad to have you onboard.

I'm looking forward to your future posts as you share your success.  Good luck on your new adventure.

Quote from @Jerry Huerta:

 After 30 years, what advice would you give in real estate? 

Good due diligence habits are important when investing.  I personally walked and researched every property prior to investing to understand what I was buying, what could be done to add value and what I should expect in cash flow and appreciation.

Learning what makes a good investment for you is absolutely necessary.  There are a lot of ways to invest in RE and each requires building necessary skills.  

In my opinion a fully passive RE investment is the most risky because you give total control to others.  Reducing risk requires at least some time spent in research and involvement in a deal.

There are many other things you learn along the way as well.

I'm happy someone is buying in Detroit.  Personally I don't want to invest there myself for a variety of reasons.

Detroit was hit hard during the housing bubble.  I remember seeing homes that could be bought for 3,000 perhaps less.  Doesn't take much to increase greatly from there. 

Quote from @Caleb Brown:

Another category is the home that needs lot of work.  It might be overpriced or might be correctly priced but is not generally desirable because of the work involved.  A knowledgeable investor might see a beautiful opportunity hiding under a worn facade.  Knowing what you are capable of and/or having proper resources can lead to great deals in any market.  

I found plenty of deals on the MLS over the years. Probably the reason was, I wasn't looking for turnkey investments. I had one overall criteria and that was could I create additional value and could it pencil. There were newly listed properties that were worth looking at and most often properties that had been listed for awhile. One property I eventually bought listed at 400K, but wasn't worth that much in it's current condition I offered 300K and it sat for 2 months before they sold it to me.

I'm currently at 87%.  The remainder is primarily in annuities, bonds and cash related vehicles.  I have a very low risk tolerance for stock and many other market driven vehicles.  We do have a few other investments besides RE, but they are baby investments.

I'm very comfortable with my RE investments which have proven themselves over the last 30 years.