All Forum Posts by: David Jay

Before you consider an LLC make sure you are properly insured. I have a 5M liability umbrella to cover my properties. Cost is only $1k per year. Not sure I see a lot of value in an LLC with this level of protection. I guess it's like wearing a belt and suspenders. Certainly wouldn't rely solely on an LLC to protect me without carrying sufficient liability insurance first.

I live across the country from you and don't know your market. But I think the rent estimates you get online can't be relied on. You need to know and look at your local market. You need to compete with the properties that are available right now. When I market/develop a property I always start with the end in mind, what type of tenant do I want to attract. It looks like you're asking for a decent income ($72k/year) and at least fair credit. The house is large with only 1 1/2 baths. I'm not sure what the market is for that many bedrooms, with only one full bathroom. I don't know the floorplan, but would think you'd have the space to add another bath even if it takes it to 3 bedrooms. Let's say you could add a bath for $10k and increase the rent $250/month. Also add into the equation that the extra bath may attract a better quality tenant and less turnover. That $10k investment just made you $3k/year. That's a 30% return. Likely you could add a bath for less and increase rent even more boasting ROI further. To sum it up, know the local market, it can change quickly based on supply and demand, target the type of tenant that you're trying to attract, look at improvements that maximize your ROI.

My qualifications for a tenant are pretty simple. Pay the rent reliably on time, take care of the property, and no drama. It’s a plus, if you’re going to stay a while because turnover is always costly. The fact is that most people that tick those boxes are homeowners. Yet I’ve still managed to fill my properties with tenants that can tick those boxes and I think they like me, or at least the way I run my business. Unfortunately, it’s the ones that don’t tick those boxes that don’t like landlords, and the feeling is mutual,we don’t like them either. 

I only communicate initially by email. In my first email I list the financial qualifications and let them know I do background checks. 80-90% never respond to this email which is probably a good thing. 

If you haven’t noticed these are crazy times. The inventory is way down in a lot of places. The law of supply and demand is king and thinking you can just luck out and snag something below market is simply a stupid business plan. This is not an amateur market. If you want to succeed now you need a firm strategy to redevelop or value add. But if you’ve got cash, waiting a bit for things to play out and cool down may be a wise move. Can I guarantee things will cool down and drop, absolutely not. Do I think there’s a reasonable chance, yes, and in that case patience will be rewarded. 

I've been married to my soul mate for 39 years. When I branched out into real estate investing she wasn't interested. A few years into REI I was having beers with some buddies when one remarked that he was shocked that the other had gone out and bought a car without asking his wife. They turned and asked me if I'd do that. "A car, no we'd probably discuss it. But a house, no, if I see a deal I like I just write an offer." Don't put the cart before the horse. Find and nurture a relationship that works for both of you, build your competencies, everything else then falls into place.

I found the best way to get great tenants is to have a great product at a realistic price. I focus on A to B SFRs and remodel with laminates ot LVP, granite counters etc.....I’ve found if I put $20k in a house I’m usually getting about $3k a year in extra rent which is a 15% return. I’ve had no problems asking more then the same house down the block with stale carpet and old appliances. I find tenants that value cleanliness and style and are willing to pay for it. They generally treat the properties well, pay timely, and stay for a spell. The lower turn overs and lower hassles are worth the investment. I use smart move to screen. I don’t focus so much on credit score, there are good people with lower scores due to student loans, divorces and medical bills. I focus on job stability, current cash flows, and history of paying rent on time and treating property well. I’m OK with pets when the owners are responsible. 

I’m also a quickbooks user. It took a little tweaking to get it to work for the rentals, but once set up it works well. Also use it to invoice the rents and it’s easy for the tenants to send direct deposit. In the same cloud account I’m also able to track all my personal expenses. It’s hard to create financial freedom without understanding where the money goes. 

If you are a Nevada property owner and you fell like I do, I'd ask the you take a few minutes and write to Governor Sisolak and Attorney General Ford.  The Nevada eviction moratorium is slated to end June 30.  However, our  covid numbers are increasing and I expect that will be used as reason to extend it.  Don't get me wrong, I'm not mean spirited and would not evict a tenant who was open and earnest and made every effort to pay rent.  Rather, the moratorium has stripped us of our basic property rights.  Even when the lease has ended, tenants may stay since asking them to move is still considered a "no cause" eviction.  I know of owners that rented their homes with plans to move back into them and are now unable.  Likewise, if you want to sell you cannot really market your property with a tenant in place.  These are basic property rights that should be restored.  It's one thing if everyone was sheltering in place.  But Governor Sisolak has allowed casinos to open and I really feel our property rights should have been the first thing restored, not the last.  So if you have similar feelings please take the time to write the Governor and Attorney General.  It's easily accomplished by going to their websites.  Thanks   

Roommate situations aren't ideal.  You basically have three people to get to 3.6 times rent.  If one move out or loses their job they are struggling.  Jobs can be shaky right now and many places have evictions frozen. I try to make my amenities and price work to attract multiple applicants.  Are the brother and sister fairly young?  Perhaps they could have a parent so-sign. How stable are their jobs right now?