All Forum Posts by: Derek DeVerna

@Ryan Hamaker

I have had anxiety about every single deal that I have ever added to my personal portfolio. This seems like a somewhat natural occurrence given how much is at stake. At this point you have two options. 

1. Let fear/anxiety cripple you and pull out of the deal. 

2. Confront these feelings directly and close on the deal. 

The latter option encourages growth, while the former option encourages mediocrity. 

As humans we have an extraordinary ability to solve problems. In its simplest form this is all that real estate investing is. With enough effort and resourcefulness you have the ability to deal with any issue that crosses your path in this business. Trust your judgement. Confidence will build with repetition. 

@Erik B.

In Toledo the water must be billed to the owner of the building. In order to get around this we split bills in 1/4’s for 4 units, 1/2’s for duplexes, and 1 single bill for single family homes. This is in our lease agreement, which the tenant clearly understands/initials by before moving in.

1. Pay bill

2. Take photo of bill

3. Split bill accordingly

4. Send tenant photo of bill and corresponding amount to add to their next rent payment. We do not accept partial payments, as that limits our ability to evict if necessary.

This requires a little more effort each month as the bills come in. However, it is the only way we have been able to hold tenants accountable for their water usage. They simply were not calling us when their toilets were running constantly, as they had no incentive before being responsible for the actual bill.

As long as you are upfront and honest with your tenants about how this process works before you lease to them, then you will not have any issues. This has worked extremely well for us when it comes to increasing that bottom line.

Similarly, we also do this in multi family buildings with a singular gas bill. These two small adjustments will save you thousands of dollars per year. 

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $97,500
Cash invested: $45,300

I move to neighborhoods that I want to do more business in. There is simply no better way to learn an area. This is a duplex deal within 4 blocks of my home/brokerage that we acquired off the MLS after one of our out of state investors passed on the opportunity. We were able to rehab and stabilize both units within a two month period despite it being a disadvantageous time of year to list. This has been perhaps our smoothest deal to date.

What made you interested in investing in this type of deal?

Proximity to home/real estate brokerage.

How did you find this deal and how did you negotiate it?

MLS. I paid full list price.

How did you finance this deal?

Commercial lender financed 80% of the purchase price. I paid cash for the downpayment and rehab costs.

How did you add value to the deal?

I spent over $12,000 rehabbing both units.

What was the outcome?

Our team was able to stabilize both units within a two month period. $500+ Monthly Cashflow.

Lessons learned? Challenges?

Our having to run new LVP flooring throughout the entire upstairs due to the hardwoods not being economically salvageable caused us to go over budget. We are unable to rip all of the carpet up before closing on a deal so this should be expected sometimes. The amount was easily covered in our reserve fund budget for these type of "unexpected" issues that arise during rehab projects.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

My brokerage and rehab team are the most cost efficient in Toledo.

@Josh Raikin

You should not consider any Toledo deal that cashflows less than $300. The average cashflow in our brokerage portfolio is well over $500 per building. We always hit the 1% rule in this market and usually are closer to 2% without compromising on our strict neighborhood criteria. I would re-evaluate your process. 

@Michael Fitzgibbon

Add 25% to your rehab budget for your first 5 projects and then drop that amount down to 20% after those are complete.

@Pamela Gordon

Our current system was developed after being stood up on what seemed to be over 50% of scheduled appointments.

1. List property on Zillow

2. Reply to Zillow inquires via email with invites to a property’s weekly or bi weekly group showing time. You set this time based on your schedule. I’ve found early evenings or late afternoons to yield the most attendees.

3. If that group showing time does not work for a potential tenant, then we tell them about our private showing option. This involves their submitting a free application to show us that they’re qualified. This is a pdf sent and returned via email, which takes a competent person less than 5 minutes to fill out/send back.

4. Schedule private showing that works for our schedule with a qualified applicant that has submitted a free application.

5. Text confirm private showing times with prospective tenant 1-2 hours before scheduled appointment time. Do not show up to appointments that are not confirmed.

This system is far from perfect and continues to evolve. With this being said, it also helps us fill multiple vacancies per month while remaining relatively efficient with our time.

It is refreshing to see someone as young as yourself interested in taking control of their financial future. I would advise consuming as much content on personal finance and real estate investing as you possibly can without feeling burned out. The Bigger Pockets Podcasts are a phenomenal resource that are 100% free. Books or audiobooks (my personal preference) do have small costs associated with them. However, these costs are next to nothing when compared to value they provide and income they help produce. I would start with these three and consume them in this order. 

The Richest Man in Babylon - George S Clason 
Rich Dad Poor Dad - Robert T Kiyosaki
Set For Life - Scott Trench 

The ideas in these books helped me become financially free at 26 years old. They are an incredibly powerful tool and I make sure to reread them once every year or so. If you are able to familiarize yourself with this type of content regularly, then you are setting yourself up for tremendous success given your age. 

There are a world of roles for a realtor to fill even with an off market transaction. Contract negotiation/formulation, title company coordination, pulling comparable sales reports from their local Multiple Listing Service, rent estimation (if a rental property), neighborhood information (more important for out of state investors), and an honest/informed second opinion. If your realtor is truly interested in the success of your real estate investing business, then it will not matter whether he or she is collecting a commission on the deal. 

This is my first post on the BP Forums in well over a year and a half. Within this span of time I have only listened to one single BP Podcast (Episode 477) and reread one single book on real estate (Set For Life). This is incredibly contrary to my first 4 years in the business, where I almost exclusively consumed Bigger Pockets material and real estate audiobooks. 

One would think that this sincere lack of involvement would transpire into less production. However, the complete opposite is true. The past year and a half has undoubtedly been the most fruitful/enjoyable portion of my career in the business. 

When reflecting on how this could be possible I was only able to arrive at one conclusion - I had been over consuming real estate material to the point of burning myself out. Pumping the brakes on real estate content allowed me to feel more refreshed on a day-to-day basis, and thus work much more efficiently.  

Has anyone else experienced a similar feeling of burnout? 

If so, then what was your strategy for combating this feeling? 

If not, then how do you manage to keep things fresh/burnout free? 

@Christopher B. The goal is to literally acquire as many of these 4 family types of buildings as possible for both, myself, and my clients. My plan is to then begin purchasing mixed use properties on West Sylvania Avenue that are currently sitting vacant. Ideally something with a storefront/retail space on the first level and apartments above. Renting the apartments should more than cover any mortgage and allow the small business (coffee shop, pizza joint, or tattoo parlor) to operate without having to worry about covering rent. I firmly believe that this community is craving a legitimate downtown with legitimate businesses. There is no reason those buildings on W Sylvania should simply be sitting vacant. Its not good for you, its not good for me, and more importantly - its not good for Toledo.