All Forum Posts by: Levi F.

Knowledge is the key to sucess. Jumping in and learning later is the WORST approach in REI in my opinion. Understanding the "deal" is so critical in the begining, it really is do or die. Most quite after one or two "loser deals" without ever figuring out where they went wrong. You seem intelligent, you are on the right site, now learn. Property analysis is the A number one thing to understand. LLC's, LP's, CAP rates, proforma's, all that will come with time. Decide what your entry point is- Flipping, multi-family, single family, wholesailing..... and understand EXACTLY how to analize it. Gather your numbers, run a spreadsheet, then post it here and get opinions for FREE!

Buying a "LOSER" in the begining is diasterious to your business.

If you put the effort in to understand this business, you to will wonder why everyone's not doing it.

0 Votes

Originally posted by @Colin Reid:

The negative cashflow is a beginner's mistake, and a pretty cheap one. That will be corrected in short order.

The commercial financing is the kind of answer I was expecting. I figured the easy money would dry up at some point.

Thanks for the information!

I think about it like this...." every loser I buy costs me at least to winners, Every winner I buy gets me two more winners"

If you can avoid the losers, ESPECIALLY in the first 5 then your home free. At least that's how it has seemed for us. Learning the ability to truely evaluate properties is the single most important step. Practice practice practice! then post your numbers on BP and get some opinions.

The sky is truely the limit.

1 Vote

@Christopher Cruz

We finance when we can. We have a bank that we work with that gives us commercial loans on property as low as 8K. We know our strategy is to hold 6-10 years so we keep the terms short and at fixed rates between 5.57-6.25.

0 Votes

Originally posted by @Jay Hinrichs:

@Matt R. Matt some of my turn key guys go with large ceramic tile that they buy on the cheap... especially in markets like Vegas PHX.. orlando.

I got so sick of replacing carpet I did the same with a lot of my rentals were I could. Its amazing how we can own our own home get 5 to 15 years out of the carpet but our renters cant get hardly 6 months out of it and its all stained to hell its like its intentional

smooth flight tonight can't think of a better thing to be doing on a 6 hour flight but trolling BP... can't beleive I only found this site about a week ago :)

I totally agree! Tile kitchens and baths, laminate everywhere else but the bedrooms. We have some building that the floor were to spongy for tile and they got commercial grade vinyl.

1 Vote

Originally posted by @Sharad M.:

Originally posted by @Douglas Brundin:

@Joel Owens who says:
"I like to keep my life stress free. Low income tenants come with a lot of stress even with great systems in place. They generally have lower education, multiple jobs to stay afloat, constant charity assistance, lives have constant twists and turns which is unstable as a long term tenant. Cash flow is perceived higher but greater eviction and turn frequency with higher re-rent tenant costs per time with increased damage to the units."
My question to experienced sub30k investors: is he right? Is there lost rent due to higher turnovers, damaged units, etc? Or is that just a myth? Or is it the result of lax management and tenant screening?
My novice opinion is that Joel's comments can be mediated with strict tenant screening and detailed, systematic management. I've run through this with my attorney recently. If a tenant is damaging the property or is not paying on time, I can evict and lose only one month rent plus damages plus vacancy time. My attorney charges $600 including all fees. The rent would be around $500-600. I'd keep the one month security deposit. Net loss one to two months rent.

I also believe that careful tenant screening will weed out 80+% of the bad apples right from the start. So I'm assuming that 80+% of the time I'm likely to get a solid tenant. If I need to evict, that $1000 loss is the cost of doing business and I've already factored that into my profit and loss projections. I'm ASSUMING from the start that I'll need to evict someone once every two years. But....I'll also very likely rebound and get a solid tenant with the next one. It's a numbers game people.

Think about it. You buy a duplex house for 30k. You CAREFULLY screen tenants. You now have an 80% chance of earning $250/month (net) off each tenant without much trouble. That's $500/month net. That's a very conservative number. Let's say that every once and a while you will lose $1000. Does that mean that you shouldn't be in a business that earns you $500net /month or $6000+ a year for life? That makes absolutely no sense.

Am I missing something here?

My question to experienced sub30k investors: is he right? Is there lost rent due to higher turnovers, damaged units, etc? Or is that just a myth? Or is it the result of lax management and tenant screening?

My experience hasn't been what Joel is describing. My properties are more in $30-$40k price range all-in. Some more, some less, so to be fair to Joel, he might be talking about a completely different neighborhood from the one I invest in.

I haven't had high turnovers or damaged units. Once you accumulate a high number of units, you will always have some issues that you will deal with, but that's not because of the market I invest in, but more because of the volume.

I can not stress enough how important good management and tenant screening process is. For tenant screening, one of the very important things I do is:

I call the previous landlord listed on the application and ask the following question:

"Hi, my name is Sharad and I am with Max Properties. I had Joe apply for one of my rental units and he listed you as his supervisor. Can you please confirm that he works for you?"

If they say yes, they are automatically rejected.

It has worked very well for me.

I do the same thing when I call the employer and try to confirm their tenant history. If the employer confirms the tenant's rental history, the tenant is rejected.

@Sharad M.

I have a 4300sqft single family rented for $3000+/mo and a nice 1600sqft rent for $1300. Neither have had a vacancy or an issue sice they were rented 2+ years ago. I went and personally walked through them for the time since they were vacant last month and they look just as good, maybe better. One tennent even planted more palm trees around the pool. Since then I partnerned with a friend and have been scooping up low end rentals. Sure the vacancies are higher, and I don't have any new landscaping in the low rent multi-families. Yup, we've had a few damaged units. Do I regret buying......Heck no. We have developed a true 30+% ROI and that's fully managed. Our exceptional property manager has kept vacancy below 10%. I do think diversity is important and we hope to eventually move to commercial residential, and maybe NNN commercial, but right now big cashflow is our goal so we are using the tool that fits our budget.

1 Vote

@Liam Goble

Again, to my understanding you're spot on about the umbrella policy.

In my opinion having both is the way to grow. I say grow because LLCs can provide tax shelter and isolate YOU from your BUSINESS. The 10+ policy works like an umbrella policy inside your entity(LLC, LP, Trust, etc...) to protect properties from one another.

3 Votes

My understand is:

Personal umbrella policies protect assets NOT in and LLC or corp. There are 10+ policies for businesses owning 10 or more properties that act in the same way as a personal umbrella policy. So a personal umbrella would NOT cover any properties inside a corporation. That is why I was told it would be in my best interest to have both.

3 Votes

I'm no lawyer and I'm not very smart, so I hire people to advise me. I have 2 LLCs, 2 S-Corps, and I'm 49.5 owner in a Limited Partnership and carry 5 million umbrella.

It has been explained to me like this, "inside" and "outside" protection.

Outside- Protecting YOU and your personal assets from your property. LLCs, trusts, and Limited Partnerships can provide this protection. They can also provide protection from different businesses owned all or in part by you. Example: Accident happens and a lawsuit is judged against your LLC, only assets inside that LLC could be forfeited in settlement. That's why most investors limit there equity in each LLC

Inside protection- Protecting your Corporation or shares from you. Example: An accident at your residence results in a lawsuit judgement against YOU. If that judgement is more than the maximum coverage of your homeowners policy Your assests, shares, and corporations could be seized or awarded in judgement. A PULP (personal umbrella liability policy) would kick in over the maximum of your homeowners(or auto, RV, etc) insurance up to your umbrella policy limit.

4 Votes

duplex for 46K, 23k per unit. 2k rental prep

600/600 + all utilities

duplex for 8k

12k rehab rent prep

450/550 + ele. & gas

triplex 31.5k

fully rented

500/500/500 owner pays utilities

7 Votes

@Tami R.

Sorry to hijack your thread but I took away some great real life experiences in the process. I will definately stop with EBB. You all made excellent points and thanks for the shares.

0 Votes

All Forum Posts by: Levi F.

Levi F. has started 5 posts and replied 66 times.

Post: building my roadmap to 6 figure income and beyond

Post: Can It Really Be This Easy?

Post: Sub$30k - Property pictures

Post: Sub$30k - Property pictures

Post: Anyone out there specializing in under 30k properties?

Post: LLC or Umbrella Policy?

Post: LLC or Umbrella Policy?

Post: LLC or Umbrella Policy?

Post: Sub$30k - Property pictures

Post: Furnaces, mant.