All Forum Posts by: Dave Poeppelmeier

I agree, there could not be a worse topic. I have new investors calling me wanting to by 20 units their first year with unrealistic expectations due to podcasts like this. Yes, they say "outliers" in the request, but that's exactly what it is: the exception, not the rule. 

3 leg parlay with Cavs to cover, Over on Spida points and Allen rebounds. Doesn't matter what game. You're welcome. 

Quote from @Jeremy Horton:

Doesn't Cleveland have a declining population? Hasn't it been that way for awhile?

That's my hang-up. I hear a lot about it, I'm sure there's some positives I don't know about, I'm sure there's some success and I'm sure there's some horror stories too. What gets me is the housing is cheap and there's a ton of renters. 

The macro data from some brief research I did awhile back didn't look good. 

In fact, Columbus looked a lot better. If I'm moving to Ohio, why do I move to Cleveland over Columbus? Columbus had an increasing population...there must be a reason more people are moving there...

I mean Cleveland is what, the 2nd poorest city in the nation. The poverty rate is like 30%. 

I'm not trying to be argumentative here, just playing devils advocate. Why should I invest in a city that's losing population and is one of the poorest in the nation?

Jeremy, this is what people that aren't from the Midwest/Great Lakes/"Rust Belt" don't realize: Even though you'll still have "declining population", it doesn't mean that Cleveland is a cesspool. Cleveland has trendy and up and coming neighborhoods, a fantastic restaurant scene, 3 major league sports franchises, and is doing well in general. The Rust Belt will continue to have declining populations because in the heyday of Manufacturing, the Rust Belt was the Mecca of employment. Ask anyone in Detroit about the cultural significance of the Motown Era when Detroit was hopping with the Auto industry. Same thing in Cleveland/Akron/Youngstown: people were flocking to these area for well paying jobs in Steel and Manufacturing. The population is going to continue to decline because people from that era, who stuck around, are literally passing away. Otherwise, if someone is worried about poverty and war zones... don't invest in those neighborhoods! If investors want cash flow, you go to cities like Cleveland, Cincinnati, Toledo, Akron, Dayton (making sure I get all the keywords in for everyone). I understand appreciation is a great way to build wealth, and there are A and B class areas of any Midwest city were, if that's what you're looking for, you can do at a MUCH lower point of entry than the coastal cities. You can invest for appreciation in Columbus, too. Columbus is absolutely the crown jewel of Ohio: Great economy, state government, literally limitless expansion potential as it's surrounded by cornfields, high property values. But, you're not going to cash flow well around there in general, because the secret has been out for a while. That's why investors looking to invest in Ohio (landlord-friendly state for the most part), are looking at the "declining population" areas as places to buy great properties that meet their cash-flow investment criteria. 

Bottom line: Sometimes the macro data doesn't tell the whole story. 

@Zachary Stein First of all, congrats on purchasing your first Rental Property! Most people don't ever get to that point, and get stuck in Analysis Paralysis. However, it seems you have a little catch-up to do, since these are very basic processes in RE. I would suggest looking in the BP Rookie Podcast and Real Estate Podcast for episodes regarding managing a rental property to give you some more guidance. There's also tons of articles and posts on here with great advice, and it's all free!

To get to your question, I agree with Joseph and Will. Asking for First and Last Month's rent is outdated I feel, and I remember even as a young professional there was an apartment that I wanted to rent, and they asked for first, last, and security deposit, and there was no way I had that much free cash available. A local RE attorney can definitely help you know what your local rules and regulations are regarding rent collection, deposits, etc... but you can also get this information for free (along with leases) at a local REIA or Investors group. It's good to have an attorney in your back pocket for when you will eventually need them, but this kind of stuff is what the RE community is for!

Again, congrats on your purchase, and best of luck to you. 

Keep It Simple Stupid, that's all

I agree with @Mel Adams, I think you're limiting yourself to a very small demographic with this strategy. Regarding student housing in general, every college is different: both metro and college towns. You need to find out what the housing culture at the college is, in that do students stay in houses over the summer? If they do, then use the KISS method and simply rent long term to students. If they don't, and 9 month leases are the norm, then yes you could go STR/MTR for those few months, but then you're furnishing, storing the furnishings during the other 9 months, etc. If you have multiple units and happen to have a vacancy (which rarely happens in student housing during the school year), then just eat the income loss and move on. Some students come back from internships and need a place in the spring, but not commonly. I don't feel it's worth the squeeze to try to MTR/STR something if your main strategy is LTR for student housing.

Not necessarily. If you're going to do electronic payments, have them start that way. Otherwise, yes, you can get a book of receipts on Amazon, Staples, etc. 

Here for all of your posts! Love the straight shooting advice. Carry on. 

@Karim Kane fantastic idea. On paper it's a no-brainer, but it's not a decision that should be taken lightly as it could turn South on you really quick. Like @Dave Skow said, you need to partner up/get a cosigner (would a parent or family member be willing to cosign on a loan for you?) or look at non-conventional financing. If you can get a cosigner on an FHA loan, and the house doesn't need tons of work, then that would be the easiest option. Otherwise, you can look at DSCR loans and treat it like an investment property, but I don't know if the house hacking idea would work. This would also require a much larger 20-25% down payment, which is also a bummer. Bottom line is talk to lenders and see what your options are. If you can get the lending figured out and have your roommates cover the cost of your mortgage, that's a great start. The other thing you have to consider is having money if the furnace goes out, there's a roof leak, etc. Again, if you have some kind of financial backstop with family that can help you out if something comes up that would be great, but if you don't, you need to plan for that. If you can get it all figured out, you are getting a HUGE jump start on your investment career. Good luck!

@Timothy Burns Some solid advice on here. One thing I would suggest is if this is going to be your long term plan, is set it up correctly from the start. 

1. Set up a business checking account for your daily funds and a business savings for your Security Deposits. Keep everything separate from your personal funds. 

2. Since you're house hacking, it would seem like a very blurry line on if you need an LLC or not. Just have a nice big Umbrella Insurance Policy in case someone falls down your steps and the hand rail was loose or something. Once you move on to your next house, put your current house in an LLC. Talk to an attorney for official legal advice.

3. Tenantbackgroundcheck.com worked for me initially, and if you use Zillow they have a pretty simple application/background check system that should work. 

4. Start getting used to a property management app and running your room rentals like a business. Lots of them do allow ACH transfers for rent, but if you're going to accept cash, make sure you give them a paper receipt (and keep a copy) or have them go directly to your bank and put the cash in there so you never touch it. 

Best of luck, you're doing great so far!