All Forum Posts by: Corey Conklin

Insurance and property taxes are a huge concern! I'm seeing massive bumps in my taxes and insurance that aren't cooling off (15-30% increases every year). I have reached out to several insurance companies trying to shop numbers and have met with the county a few times to argue these outrageous taxes but even that isn't enough to keep these costs under control. 

@Addison Amorosi I've used TurboTenant for my small portfolio. It's super easy to use. You can do everything you need for free or pay a small yearly fee and get a lot of great features. 

If you can pay cash I would go that route as it offers you a lot of flexibility.

If you decide to lock up a 90k down payment, closing costs and rehab costs your going to have close to 150k in the deal with virtually no way to get your money back for a few years with the current numbers. If you are good with that and want to play the longer game its not going to hurt you.

But if you aren't paying with cash because you don't want your money locked up in a deal the above logic doesn't seem to meet your goals.

What does the ARV look like once you get the updates completed and rents raised to market value? If you think you'll see a good increase it may be worth it to pay with cash to buy (you could leverage this with your offer and potentially get a better purchase price) and get the rehab done. Work on getting the rents raised in the next few years and do a cash out refi. Hopefully you get most or all of your money back in less than 2 years with the value add work you did. Sure you will have a larger chunk of money locked up in the short term but you will see it returned way faster than going the traditional route. Not to mention you will also see a positive cash flow in the 2 years that you are doing value add work without having to pay a mortgage.

Just thought I would offer another way to look at it. Good luck and hopefully you find a way to make it work!

@Sofia Duque There is some critical information left out needed to make this decision. 

Is $900/month rent upcharge reasonable or at market rate? Have you thoroughly vetted the new tenant?

If the answer is 'no' to these questions I would be cautious. When I get people that say something similar to the following I find it a major red flag and always proceed with extra caution.

"I'll pay $XXX over what your are currently asking"

"I have cash in hand"

"I'll pay 3 months, 6 months, full year rent in advance"

These are often tactics that historically bad tenants use to get your guard down so you don't do your due diligence. 

My philosophy is to always try to retain tenants who have proven to be a good tenant. You should let your current tenant know that they are well below market rent and that you need to raise the rent. If what you are asking is reasonable they will more than likely stay.

At the end of the day you get to choose how you want to do business. If you are focused on making maximum profit then that's what you do. I would caution that numbers on a spreadsheet aren't always how you determine maximum profitability. As a landlord you are in the people business. If you treat people like dirt, you often get mud on your face.

CoC requirements for me are different for each property. It was hit on in a few comments but you have to look at the overall risk of the property.

Is it a class A property in a great location? A class C property in a higher crime neighborhood? Or somewhere in between? Identify the risk class and then you can assign the CoC numbers you want to see. A class A property may be good at a 4% CoC return but a class C property may not make sense at a 25% CoC return.

Unfortunately there isn't a 'magic' number for returns that span all asset classes, you'll need to make sure you are educated on the asset class in which you want to purchase. 

@Brady Mullen Great post!

I'm big on managing my own risk. If I screw up, I will live with it, learn from it, and move on. Real estate is great because it gives me full control of my investment strategy. There is risk involved but it is all worth it to me. As I've learned more about REI, my risk has gone down exponentially, therefore adding to my overall return rate.

All it takes is work. If you don't want to do the work I would recommend finding another investment strategy. 

@Adam Peralto Welcome to the world of real estate investing!

There is a lot to learn but it's not as scary as you may think. I would keep reading the forums here on BP and learn from as many people as you can, network with people, and keep taking action. Define why you want to invest in real estate, come up with a plan, and start executing the plan.

You'll make mistakes along the way but that's part of it so don't sweat it. 

Quote from @Christine G.:

Quote from @Nathan Gesner:

You can withhold payment if they failed to perform. Ask them for an itemized list of charges and evidence that work was performed. If they can't prove the work was done, don't pay them.

 I have asked for an itemized bill but he has not given me one.

i had a lawyer review the contract and actually turns out I don't owe him anything. No marketing fees, no late fees and no initial $500 fee since it wasn't even checked off. 

he is threatening to send me to collections and to put a lien on my property. I'm really confused about the lien part because he hadn't done any work on my property... In fact he doesn't even have the keys to my property in order to get access to it so not sure what he's referring to. Both my lawyer and I were confused by this 

I wouldn't pay the bill. I also wouldn't lose sleep over his threat to lien. First he has to take action, which it seems like he is not very good at doing. But if he does, you have a pretty good case to get it removed. 

Filing a lien is different from state to state but I'm sure it's going to cost him a couple hundred dollars just to file the lien. I don't see him spending the money to file the lien.

I'd call his bluff and see what happens.

@Joe S. Health is your wealth! 

I've buried more people in my family than I would have liked to and it's all due to poor health choices. On my mom's death bed she made me promise her one thing, take care of my health. She made poor health decisions and paid for those choices with her life. I was spiraling down at the time with poor food choices, heavy alcohol consumption, and a very stressful work environment. With in the matter of 3 months of her death I switch jobs, started doing CrossFit (insert your jokes here), cut back on alcohol and made substantial changes in my food choices and haven't looked back since.

Health isn't a 30 day fad diet. It's stacking up good habits until it's no longer something you 'have' to do, it's something you WANT to do. Don't get me wrong, there are times I slip and miss a work out, or have too many beers, or eat a whole pizza. You need to understand that it happens and to get back on track.

As far as activity goes, you need to find what you enjoy doing - bike, walk, weight train, martial arts, etc. as you'll have a hard time sticking to it if you don't enjoy it. For me the activity part is easy, the nutrition part can get really hard. Preparing high quality, whole foods takes a lot of time and effort and with a busy life it's easy to revert to something quick and easy (which is normally not as healthy). Thankfully my wife is a rock star on the nutrition piece.

Just like it's good to have great people hold you accountable in your RE journey it's just as important to find a group of people that will hold you accountable with your health. 

@Sarah Bilbro I would suggest you start with understanding why you want to get into real estate.

Are you doing it because you saw others do it and get rich, so now you want to do it? 

Do you have a passion for finding deals, construction, design, or some other skill needed for real estate?

How will your real estate journey effect your current business and lifestyle?

I can say that everyone has a different reason that they got into real estate and I think it's critical to understand your why. Start asking yourself questions about why you want to do this and understand it will take work. Its often left out of the BP podcast how much work goes into building their RE portfolios. It's not as easy as buying a property and hiring a PM to take care of it for you.

You aren't a fool for thinking you can find success in REI, it can be had. You only become a fool if you think that you can put in minimum effort and expect maximum return.

I wasn't exactly sure why I wanted in RE other than I was sick of the so called financial advisors that manage your money taking a good fee to manage your money with poor results. I had a background in construction and management so I felt comfortable managing the business.

I put a ton of work into my 2nd rental property and it put a lot of strain on my life. It almost made me get out of REI. When the eventual tenant and her mother came and toured the place I'll never forget how happy her mother was when she saw the house, it almost brought her to tears. In my area there are a ton of slumlords and really awful houses so they were ecstatic when they saw the house. All of the hard work I put in gave someone a safe place to live, that made everything my family and I went through worth it.

This experience gave me my 'why'. When I'm going through the hard times of REI I reflect on that moment and it brings clarity to why I'm doing it.