All Forum Posts by: Chris London

@Maki Bick

-Beautiful home, unless there is something functionally wrong with the master shower & ceiling I don't see any updates that need to be made from the pics avail on Zillow. 

-$Rental rate of $2200 seems consistent on both rent-o-meter and Zillow. Subtract your $1640 piti payment, subtract $220 for management fees, subtract 5% for vacancy, 5% for repairs and 5% for CAPEX. That puts you around break-even on income & expense.

-Notes: The house is 21 years old so you will be due for a new roof soon-ish, check the date of your HVAC & hot water heater. Depending on the age these may add to your CAPEX costs. Zillow ad says appliances are new so that is good.

-I think the rent vs sell question is often best answered by the question, 'what would you do with the money'? If you are going to use it or invest it in something that will make you more money then do that. If you are going to put it in a savings account then don't do that.

@Renier Walters

You implied that the PM was the GC for several months of repairs. Is it possible there is something else in the contract that states this charge was for overseeing the project? 

Might be worth reviewing or asking them.

@Karthik Arun people often ask me what the next Cary/Apex is going to be.

Holly Springs announced this week that Amgen will be breaking ground on a $550M manufacturing facility. This is in addition to FujiFilm Diosynth Biotech.
If you look at the town's website and the future development there is little question HS is the next Cary/Apex. Link.

I was riding my road bike from Cary to Holly Springs this past Saturday and as I crossed over Old HWY-1 and took a left on Woods Creek Rd it was new home developments, one after the other, all with signs up saying. 'coming Fall 2022'. This is near 12 Oaks for anyone trying to look it up.

Certainly has my attention.

@Ben Lin This was my reply to a great tenant that asked if they could renew at the same rate this next term:

Thanks for the e-mail.

Property taxes and property insurance have gone up on this property.

The monthly rent would go up starting June 1st, 2022 from the current monthly rent of $1699 to $1799/mo.

You have been great as tenants and I appreciate your upkeep of the property and do hope you will stay.

Please let me know by March 31st if you would like to renew the lease for another year.

Sincerely,

@Amanda Eyler, in addition to collecting the rent 1st and then paying the owner (out of a trust fund) you are also going to want to create an owner reserve (in that same trust fund). One of the primary reasons you want the money to flow in this direction is bc you will be coordinating and responsible for paying bills such as maintenance & repairs, possibly HOA bills, possibly 1099 or W2 employee paychecks/commissions, and possibly utilities during a vacancy. The owner will expect the PM company to manage these payments and you do NOT want to be chasing owners for money owed. If they decide not to pay, you can be the one on the financial hook for their bills. How long you intend to keep those funds (15 days or 30 days) before distributing them to the owner is the question you should be considering. Owners will expect a 1099 tax form showing rental income at the start of the year so you will want to make sure you set up basic bookkeeping for this on day 1.

How to make a profit starts with your initial philosophy in your business plan. IMO PM companies fall in 1 of 2 categories. Either they attract a large number of clients with a very simple fee structure that is 1 size fits all (example, $X start-up fee & X% of rent collected). Or they offer an ala-cart service and make money by charging fees for each task the owner requires (for example, tenant placement fee, maintenance fee, etc).

While you are getting your license I would suggest building out your processes. Start with a business plan, build out your forms (leases, PMA, lease break doc, etc, there will be dozens of contracts and forms you will need) then build out your e-mail templates (Welcome letter, tenant response to maintenance letter, security deposit disposition letter, etc, we have close to 100 of these.) Are you going to use Microsoft Office or Google Docs? Are you going to send docs through docu-sign or another vendor? Lots of small ticky tacky things to do when you set up a PM business.

How well you set up the business and the initial processes you create will dictate your long-term success. 

-Good luck!

@Mel Park I personally would rather have that $10K or $50K earning money in an income-producing property (rental) paying me monthly cash flow vs putting the cash in undeveloped land for X years hoping it will appreciate. 

When you look outside the Triangle for example there is a tremendous amount of land in a 360-degree direction. We are not like many of the cities on the West Coast that have the ocean to the west and desert to the east making a finite amount of premium land.

Perhaps a hybrid approach could be to find a house on a very large lot where you get monthly cash flow (rent) with the intent to rezone or develop the land in the future. There's actually a beautiful house in S. Raleigh right now on acreage that fits this bill precisely. 

@Dolev Zaharony

Qualifying broker = BIC (broker in charge).

In order to qualify for BIC Eligible status, a broker must:

1. hold an active license;
2. have obtained at least two years of real estate brokerage experience equivalent to 40 hours per week within the previous five years;
3. submit the Request for BIC Eligible Status and/or BIC Designation form (REC 2.25); and
4. complete the 12-hour BIC Course within one year before submission of Form 2.25 or within 120 days after submission of Form 2.25.

In your previous comment, your attorney hit the nail on the head, you can't earn a commission/referral w/out a lic. 

@Dolev Zaharony: Here is the 2021 update from the NCREC.

@Mihal Coyle

Winston Salem: located in the Triad is considerably less expensive than Durham, typically has better cash flow, and much lower appreciation. While it's reported that WS saw over 14% home appreciation in '21, in previous years it's been well under 10%. 

The Triad is was recently announced to land Toyota's 1st lithium battery plant in North America which is one of many dozens of companies moving to North Carolina. 

Having moved to NC myself (from CA) I think it's important to share a quote from Toyota as to why so many companies are moving here: Toyota lists seven reasons why it chose North Carolina for its first battery plant: an extensive highway system, four international airports and two seaports, onsite rail, a diverse workforce, renewable energy availability, world-renowned education system, and strong government partnership at both the state and local levels.

Winston Salem long term rental example: 1183 Addision Ave. $125K, Estimated piti payment (based on 20% down at a 4.0% int rate): $560, Estimated rent $1300, vacancy, repair, cap x, management $325, estimated cashflow $415/mo.

Durham is located in Durham County in the 'Triangle'. It's possible to still find cash flow neutral or even slightly positive homes, however, IMO the reason to buy here is simple. Huge bets/speculation on home appreciation. Durham home prices appreciated as much as 30% in '21 (depending on what you read). I've said in some of my previous posts that Durham will be Austin in 5-10 years. You can still find SFH in excellent areas in the low $300K range.

Durham long-term rental example: 5022 Silhouette Dr. $335K, Estimated piti $1600/mo, Estimated Rent $2000, vacancy, repair, cap x management $500, estimated cashflow -$100/mo. Personally, I really like South Durham starting at North Hope Valley and anything south to Southpoint. With a short drive to UNC, Duke (2 of the largest employers in the state), Raleigh and RTP you can expect multiple qualified applicants on any decent property.

The one thing to consider in the Triangle is property tax rates. You're close to 2% in Chapel Hill, Around 1.3% in Durham but well under 1% in Apex, Cary, Holly Springs and other Wake County cities. When you do the math the difference in some of these property tax rates while still far under many other cities/states in this country can add an equivalent of a monthly HOA fee to your piti payment that never goes away.

Good luck

@Alexis F. What specifically are the tenant demands?