All Forum Posts by: Chris London

@Tyler Miles, 

I get a baseline idea from the property's previous history, rent-o-meter and zillow as well as AppFolio (PM software). However, the reality is most potential tenants look in earnest over the course of a week. For this reason, you need to look at your competition during that week that you are marketing the property.

I only use a few filters. For example, if I'm renting an SFH 3/2 1400sqft I'll go to a rental website and use the filter for: 'home type', 'city' & 'pets'. Then I'll see what's currently avail and how what I have stacks up.

Finally, don't put much stock in metrics like 'views' or even generic e-mails from potential tenants that ask if the property is still available. The majority never reply back anyway. The metric I use is showings and qualified applications. If you receive more than several + qualified applications over a weekend then you have possibly priced the home too low.

You might also consider stating the city you are renting in your post. You might get more specific feedback from BP-ers in that market and what they are seeing.

Best of luck

-C

@Pavel Gritsai

The Triangle is a great area for properties with excellent appreciation value while still often remaining cash flow positive. Below are 2 examples that popped up in my feed today that, depending on your cash flow expectations I think are good buy-and-hold deals. Keep in mind these are pretty generic examples of what you can regularly find on the MLS in this area.

1) 315 E Earp St. Holly Springs, 27540: List Price $280K. Rental Price $1800/mo+.New roof/HWH/fenced yard. No HOA. This one has been on the market for 10 days.

2) 832 Shackleton Rd. Apex, 27502: List Price $339K. Rental Price $2K/mo. New roof/HVAC/fenced yard, No HOA. This one is 1st day on market and will likely sell for over LP. Less cash flow if any but near downtown Apex and has excellent appreciation value over the next 24 months as Apex booms.

@Jonathan Rojas In NC to be an active broker you will need to hang your license with a BIC that has a firm license. This can be an online/virtual company (there are now plenty). This can be a brick-and-mortar company like a Keller Williams. Or you can find a BIC w/ a firm license that is a one-person show and ask to work directly with them. You can negotiate whatever deal you can work out (like maybe you only give them a small % of your commission in exchange for value you provide back to them). There, unfortunately, is not an option of passing the exam, getting your license and collecting sales commission on your own.

Do this for 2 years and you can be eligible to apply for your own firm license and be your own 1 person show. See the NCREC website for details or feel free to DM me.

Keep in mind a few things in regard to your bullet points:

1) Finding deals before others: The MLS updates almost instantly on Zillow/ Redfin etc. So, no timing advantage. You also have to pay for MLS access. The biggest benefit as an agent of the MLS in regard to buying your own properties is that you can see the agent notes, you can receive updates through 'showing time' and you can use the official Realtor forms (Offer to purchase and contract 2-T) that make an offer look better than non-agents who write their offers on less familiar forms they find on the internet. You are more likely to find off-market deals through a wholesaler or your local RIA.

2) Touring homes on your schedule. Yes, this is a big benefit IMO. You need to pay for the SentriKey app to be able to access many lockboxes.

3) Make commission. Yep, this aspect changes everything! It's a lot easier to find deals that work when you get a 2.4 +/-% commission check at the end. 

4) One thing to note is the annual fees for being an active real estate agent. You can expect to spend north of $1K between some of the fees I mentioned above as well as continuing education and association fees. After you take that 90-hour class and work so hard to get your license if you are not making a lot more than these fees in income you will find yourself in a predicament between paying the fees to stay active or going inactive. It's a lot of work and many find the NC exam particularly challenging so make sure you ask lots of questions before you begin. Good luck!

@Scott Calafiore,

MLS data below shows signs of a cooling w. the decrease in % of selling price vs list price. As we head into the holiday (Thanksgiving is 10 weeks away) I think you may see houses sell for list price and DD back to a reasonable 1-2%. Meanwhile, there hasn't been a cooling of rental prices in this area as we continue to have a shortage of rentals.

@Jason Malabute as a fellow Los Angeleno (the not-so-hard streets of Brentwood) now residential property manager and investor in the Triangle, Durham is the opportunity zone. The geography is much different than So Cal and as others have mentioned you really can't parse out areas by zip code like you can in LA.

I think you need to work backward in your investment purchase and know that the rental sweet spot last year was $1500/mo and in the past 6 months has grown to $1700/mo. This means to generate the largest number of qualified applicants and limit vacancy you should look for properties where the purchase price supports these numbers. These are solid B-class properties with a tremendous amount of appreciation upside.

South Durham (everything from North Hope Valley to just south of Southpoint mall) is where the largest contingency of renters want to be. South Durham gives central access to RTP (RTP-Research Triangle Park is where the largest Tech and Pharma employers have campuses and over 50K+ people work). S. Durham gives easy freeway access when one spouse works in Raleigh and one works in Durham (or Chapel Hill). Apple is moving into RTP (w/ a temporary set up at the MetLife bldg in Cary) and Google will be in Downtown Durham with plans for a permanent campus elsewhere, but likely RTP. South Durham did not establish as quickly as Raleigh so the prices are still more affordable and as an investor, you have much more price elasticity (appreciation) in the market than you do in Raliegh. South Durham is densely populated with 2/3 bedroom houses and townhouses many built in the 1990s and later. You can easily find turnkey properties on the MLS ranging from $250K to $350K that you can rent between $1500 and $2200/mo.

Feel free to message me if you have any specific questions.

@Scarlett Tao My advice is to listen to your PM and let them follow their process. 

You said the initial applicants didn't have jobs or savings? So how were they going to pay rent?

Seattle is one of the top 5 least landlord-friendly states in the nation, I'd be as belt and suspenders about my applicants as possible.

@Nathan Hann I realize your question was best practices for cash for keys and you were not asking if you should or not but based on what you have written I don't think this option should be on the table.

1. Give 30 days' written notice
2. Have a cold beer to drink after they verbally assault you.
3. If they are still there after 30 days start the eviction process (have another cold beer waiting).
4. If they trash the place take what you can from the security deposit and take them to small claims court for the rest. Alternatively, think of the cash you were going to pay them as cash you can use if they trash the place.

@Danny Ondik multiple quotes are always the best way to get a better deal. Regarding multi-property lawn care discounts? I think you would have to ask each service provider you get a quote from. If your area warrants it you might change your lease to have the tenants mow the lawn. Finally, as a residential PM I have cheap guys who mow some of my lawns but they are independent service providers and we have found them just by talking to a lot of people. 

I think if I were selling a house I'd at least flush the toilet :)

There are mold remediation companies that can test and/or address the mold for you. If you don't mind getting your hands dirty you may be able to remediate a lot of that yourself with either bleach & antimicrobial. Don't use the $10 test kit from the hardware store (it doesn't work well).

@Chow Ahmed as far as investor restrictions, some new construction has this to help maintain the community property value and often is in force for the 1st year.  I know of very few existing (not new construction) communities that have these restrictions. 

The area you are referencing, while a great one, is far too limiting IMO. While I realize you are targeting the radius right around RTP, I can tell you 1st hand that employees from the major corporations (IBM, Lenovo, Apple, Cisco, Pfizer, Biogen, etc) expand and are heavily concentrated in South Durham, all of Morrisville, all of Cary, Apex, Holly Springs, Fuquay Varina (yes, even the 'Quay") & North & West Raleigh. Chapel Hill also, but as an investor, I'm not a fan of their higher property tax. At the very least, as far as an upscale townhouse, I'd suggest adding S. Durham, Morrisville, and West Cary to your list. You will get as many UNC & Duke Residents & Fellows to apply in Durham for a July 1st occupancy as you will tech & pharma employees.

Price Compression: 2020 the rental sweet spot in the Triangle was between $1200-$1600. Since Jan of this year the number of out of state, sight unseen applications has been tremendous. I've had properties priced 20% over LY prices and received multiple out-of-state (NY, NJ, MA, CA) applications. So, while the sweet spot this year seems to be more of a moving target most of the $2.2K range properties that people are asking for a larger sqft properties w/ 4 bedrooms. Not having seen the specific new construction you're looking at I can't comment on if you can ask $2.2K but I will say your funnel of potentially qualified applicants would not be as big as I'd like to see. 

Feel free to DM me w. any questions