All Forum Posts by: Daniel Hankins

I do finally have a small local bank working on getting the refi done, but the bank is overwhelmed with PPP, so it is slow going.

I have spent the last 4 years learning how to buy, renovate, and then rent out worn out properties (Bigger Pockets was the biggest early source of knowledge). When I first started I was working a normal full time W2 job to cover the costs of operation. After the 3rd completed property I finally transitioned to full time effort in my own business. I was just competent enough to start doing handyman work to substitute my W2 work. Now I am finished with my 7th property, right when all this **** hit the fan, and just shy of refinancing through the bank to recoup all my investment. Without getting too into the weeds, my schedule C has been just barely into the negative the last three years, mainly because I put in a majority sweat equity instead of paying myself. Because of this I don't qualify for any of the PPP support, even though my cash stream from handyman work has dried up. I live in KS and they don't offer unemployment for self employed either. So aside from the very first IDL option, that is only going to give $1000 per head (just me), there are no options. Plus I haven't seen or heard anything from that application through the SBA.

Now back to the struggle on getting my property refinanced. Most banks are overwhelmed by their load of dealing with all the PPP, plus with interest so low, I don't think they really want to loan me money on my property. Luckily all my properties are rented out, and I only have 1 tenant who lost about 25% of their income, so I am getting most of my rent roll. Even without my normal handyman income, I am lucky enough to have a wife who is a nurse, and there has been no shortage of emergency contracts across the US, and even one that she worked on an island close to Aruba. She deserves her own full post to tell the story of the various contracts, especially the one operated primarily through FEMA. It was a complete **** show and it was devastating to have an inside look into how so much tax money is wasted due to incompetent management. Sorry, got off track, but the point is she has made more money this year then the entirety of last years normal nurse income. Even with that, the banks don't want to use that income for guarantor use, and they want us to wait until she gets back to normal employment.

The pointless part of all of this, and please take this as a reason not to feel sorry for me, we will make all of this work without support from big banks, and some small banks. This only escalates my plan to just remove the banks as middle men and just create my own private platform to get investors etc. I just want to add to the anger that CEOs making millions, got millions of dollars in support that should have gone to people like me, and others who are in even worse shape. I am just lucky to have a wife in a specific career that made it all work out.

Real estate investing can print money if you run it effectively, and I am going to prove that it makes more money than a family needs. I am only ever going to pay myself a salary that provides enough to live the way I live now. I don't need a big fancy house or a brand new sports car. I don't need to buy an NBA team. Instead I am going to put every extra dollar I don't need back into the community around me, and slowly take more and more business from the banks that only care about their bottom dollar. It is complete and utter ******** how much power money has over everyone. I know that won't change in my lifetime, but I am going to live to be 300 years old, either through science, or through legacy. The focus on that mindset, and the understanding that money is just another tool, and is no different from the hammer that helped me build my own personal foundation.

If you read all of this, I want to apologize for the rambling nature, and poor punctuation (I really like commas). I also want to thank you for your time reading through, and I hope even one person will have a new perspective on some of the faults with our current version of capitalism. We are all capable of seeing the obvious problems around us. There are two types of people in this world, those that will do something about those problems, and those that assume that someone else will. I will be part of the group that does everything I can to increase my circle of influence and do something about it.

@Marc Winter - I appreciate the encouragement and feedback. I will try and repost smaller chunks in the future. I am still playing with the best way to organize everything. A shorter explanation of what I am trying to accomplish (still long, but the basic idea is in the first paragraph): 

The Good Neighbor Association

**Elevator Pitch:**The Good Neighbor Association (GNA) is a nonprofit property management company that focuses on the community, and being a good neighbor, over profits. The basic principles of the “Good Neighbor Association” is to lead by example, to do things the right and economical way, and be the change we all agree needs to happen. The broad plan can be broken down into three primary functions. First, I want to provide an education path to teach my own tenants how to be good neighbors, and give them employment opportunities through that process. Second, I want to leverage those tenants to accomplish as many of the needs of the surrounding neighbors as possible, including the process of buying their property when the time comes. Third, I want to tie the whole process together in an extremely detailed and transparent lending portfolio that lets me and investors remove the banks as middle men, and keep the profits in our communities, instead of going to the CEO’s already getting paid tens of millions.

What

The Good Neighbor association is like a university that teaches the basics to living as a responsible, mindful neighbor. "Tuition" and housing are rolled into one payment that includes the management budget to cover the cost of managing a personal residence effectively. Through the coursework of maintaining their own property, managing residents will learn all the skills necessary to be a professional property manager. They will gain ownership of the individual residence in the same manner someone gains ownership of a home through traditional amortized accounting, while also building a savings budget for repairs and maintenance. The more effectively they manage the place they are living, the more value they will get in return when it is time to move out. Those that enjoy the work involved with property management will also have access to consistent work provided by the university, with pay starting at $12/ hr and going as high as $21/ hr. The end hope is to help all the students create their own businesses that allow them to charge what they feel they are worth, while also doing something that is personally fulfilling. Even if that work is unrelated to property management, the skills gained are transferable to nearly anything else one could imagine.

The Good Neighbor Association is a beacon of Community support, that ensures no one is living below a minimum standard of human decency. The GNA will leverage the students from the university to provide cost effective support for residents who are beginning to age out of the ability to keep their homes in minimum shape. Additionally there is a program that allows residents to exchange their equity in the home to cover some of the ongoing cost to maintain their residence. The program will allow the homeowner and the GNA to split the profits that would normally go to a bank to accomplish the same process as home equity lines of credit, but also provide the actual process of how to effectively use that money to maintain the home. Effectively the system lets the homeowner use property value appreciation instead of paying interest directly. At the end of the process there is a built in process that helps the resident move and manage the sale of the property for the maximum value, including removing the normal realtor fees and closing costs associated with the traditional home sale process.

The Good Neighbor Association is a transparent investment platform that allows anyone to invest in the humans and communities around us. There are investment options ranging from one year to thirty years, and the returns are competitive to the other traditional investing options. Investors will be able to see exactly what their money is spent on in as much detail as they care to dive into. There will be a web portfolio for each investment that will record and tell the unique story of each individual residence. Investors will be able to support the education and training of productive Good Neighbors, all while beautifying the communities they live in.

There are two types of people in this world. People who see problems, and people who choose to try and fix them. How many of us walk past trash that is in our direct path, but instead of picking it up, just assume that someone else will. “Not my circus, not my monkeys.” I put my decade into retail, and I first heard some of this philosophy in sales training. It made sense then and it makes sense now, but back then it was being used in the worst way. All the management pyramid above me cared about was pulling levers to make sure we made more profit then last year. I’m sure I am not alone in witnessing reorganization every 2 to 3 years, but the end results were always focused on cutting out the human “waste” and maximizing what could be done with less people for the same hourly wages. I mean this in the nicest way, but **** that operating model. We, the people who made our CEO’s millions, deserve the praise and appropriate compensation for busting our asses 40 to 80 hours a week, so that they could go play golf and write it off as a business meeting.I chose a few years back to convert my time to fixing the problems that I care most about, instead of helping build up the people who treat 80% of us as an expendable resource. I may still only be a small grain of sand in this time and place in our universe, but I will no longer let myself be willfully ignorant as to what I am contributing my effort into building. That being said, I am going to keep sharing and allow myself to be vulnerable in sharing my vision for the future. People can take it or leave it. The trolls will continue to have their fun, but they usually end up helping me in my effort to be an optimistic stoic, and I take pity on the lives that had to be experienced to make trolls find joy in others misery.. Pessimists (realists, if you prefer), what parts of the world around you make you lose faith in humanity, and why does it have to be that way, just because that’s the way it has always been?Through this post, I am not looking for investors or buyers, or a pat on the back. I want discussion and change. I have worked on this daily for nearly 3 years, and have shared with friends and family to fine tune over the last year or so. Now it is time to get thoughts from outside my own little bubble. I have posted parts of this before, and get a little conversation here and there. Today I am posting more technical “how” instead of the “what”, but feel free to look up previous posts for more info. If I get no traction today, I can guarantee I will edit some more and try again in the near future. Humanity is on the brink of greatness, and all we need to do is shift our mindset for what we use all of our hard work to accomplish.If this is inappropriate for this forum, I apologize for not conveying this in a way that matters to you, but I argue that the underlying ideas can be converted into anything you put your mind to.

Sorry for formatting errors from pasting from google drive.

1. Find houses that are falling behind on repair and maintenance.
   1. Bike and walk dogs through the current neighborhood.
   2. Recently widowed homeowners are a good candidate.
   3. Find a small amount of time to donate to helping neighbors do easy projects.
      1. Use this time as an opportunity to learn what they need, what support they have, long term goals, etc.
      2. Create community events to take care of the properties that are farthest behind.
   4. Create an actual govt program to be more productive with govt owned properties.
      1. Instead of selling the property to an investor, fix the property with the specific intent of providing housing for some form of underserved population.
      2. This is the reasoning behind structuring as a non-profit.
      3. If created correctly might be a great way to scale by using other “flippers” as partners. Maybe have some sort of special qualification to show that all of their properties meet or exceed a specific checklist of predetermined updates to the property.
2. “Buy” the property from the homeowner at current market price, but let them continue to live there and offer continued support to get the house up to common standards, and keep it that way.
   1. Establish minimum standards referencing those used to obtain FHA lending.
   2. Probably worth a professional home inspection if it has been more than 6 years since the last.
      1. Build a step by step scope of work and schedule that brings the house up to common standards.
      2. Schedule “check-up” walk throughs after year 1, year 3, and every 3 years after that.
   3. Ideally the resident of the property will carry the note, or a combination of a smaller loan from a bank to cover a chunk of cash if needed.
      1. Establish the purchase price at the beginning of the relationship based on current market value. Allow portions of the renovation expenses to be paid for by the GNA in exchange for a principal payment towards the purchase of the home. (Current Trial)
      2. The resident holds the note with no interest until they are ready to move.
      3. Once equity hits 30%, offer to get investor financing to get a lump sum payment, and revert to renting for the cost of operation.
   4. Create a crowdfunded investment portfolio to fund the different stages of the process.
      1. Allow any dollar amount to be invested. Market towards the best mix of smart investing, and providing humanitarian services for the communities we live in.
      2. Match or beat 1 year CD returns for a bank. Look into options to rollover into amortized payback or growth.
      3. Offer long term retirement funds that look similar to mortgage amortization schedules.
      4. Explore options to donate portions of the interest gained to provide community support to help rehab homes with people who need help, but can’t afford it.
      5. Create regularly updated, highly visual progress reports for the various remodel/ renovation projects. This would be a great marketing tool to make this investing option more appealing than traditional investing. It would be cool to mount project cameras that create a time lapse of each process. Bonus if it can be turned into an educational how-to guide.
3. The resident can either pay out of pocket for any work needing to be done, or they can let the GNA cover it in exchange for direct principal payments off the original market price purchase.
   1. Make a simple guide to what needs to be done on a regular basis, and establish a plan for what the resident can handle, vs what the GNA provides.
   2. Create synergy with kids and grandkids to accomplish common/ regular tasks.
      1. Opportunity for daycare/ day camp, or even homeschool type services.
      2. Opportunity for future continued business partners to take over living on the residence.
   3. Preferred scenario, resident pays for material and professional labor, and the GNA provides cheaper labor for easy tasks etc.
      1. Residents may pay part of the labor cost, but ideally if the GNA has cash to pay internal employees, then those costs get applied as principal payments.
      2. Explore options that let GNA employees trade time for ownership of that specific property, instead of traditional pay, or use it as an overtime bonus.
   4. Find ways to incorporate local artists and craftsmen, and make unique projects that incorporate the story of the house as told by the resident. Every resident should leave behind part of their story and history.
      1. Add an inspiration page to the website.
      2. Would even be fun to do DIY projects with the resident directly.
4. Offer additional services as needed, including healthcare support, social support, general errands etc.
   1. Leverage nursing friends to create a home health care wing of the company.
   2. Explore research on the use of therapy animals, and incorporate into services.
   3. Create events that promote group interactions across the various tenants within the GNA community.
      1. Team sports
      2. Regular cookouts
      3. Team building
   4. Find ways to focus on any positive impacts for children in the home.
      1. Look into unique tutoring or home schooling business ventures.
      2. Provide ride services to ensure kids get to school.
      3. Offer daycare services.
      4. Create a unique fund matching opportunity to promote investment in an early fund for either graduation or retirement.
5. When a resident is ready to move, offer support in other available properties within the GNA, or moving services to their desired location.
   1. Build a department to assist in everything moving related, including processing procedures for personal belongings that may not fit in the new location.
   2. Explore the idea of a “Brick and Mortar” operation to deal with accumulation of household items that is an inevitable part of the entire process. Try to avoid throwing everything away.
6. The resident can collect monthly payments until the property is purchased in full by the GNA, or can cash out and a traditional loan will be sought for GNA to finish the purchase.
   1. If there is an “owner carry” deal currently established, then subtract the remaining rehab costs as a principal payment.
   2. If the GNA is simply purchasing the property, then it needs to fall into “70% rule”.
      1. Purchase price = 70%ARV - Est rehab
      2. This option typically leaves less money for the original homeowner, when compared to the “owner carry” structure.
   3. Allow for equity transfer to other properties in the GNA portfolio.
      1. This option might allow for the lowest cost to process everything,
7. Bring every aspect of the property up to common standards.
   1. “If you are going to do it, do it right.”
   2. Be creative and conscious of everything that is salvageable.
      1. Refinish and sell/ donate old fixtures.
      2. Repair over replace if possible. Keep tabs on new age techniques (resin, etc.)
8. Hire a live in manager resident that will gain ownership of the property through proper management and monthly dues that cover repair budgets, taxes, insurance, amortized purchase of the property, and management support from the GNA.
   1. GNA marketing: Looking for an apprentice steward for this property, and a partner in the long term equity to be gained from the property. In exchange it is possible to get a reduction in rent for those who are able to effectively self manage the property, as well as additional opportunities to make hourly wages as high as $21 an hour. I want someone who is interested in developing themselves as well as the property and I want to provide all the tools necessary to enhance the ability of the steward to start their own business.
   2. (Alternate) -Good Neighbor University: Use all of the accumulated knowledge, guides, and trackers to teach new highschool graduates how to renovate and maintain a home, how to manage the entire accounting process (both personally and the business of their property). They can still complete all the general education classes at a local community college. The GNA will provide a property to be used as their housing, and as a job. The scope of work can be full renovation of their own property, management of their property, and additional work across the GNA. Their monthly housing dues will cover the operating costs and create a repair budget to help them appropriately manage their property. In exchange they will gain partnered ownership (equity) in the property. Pay scale will follow the $12, $15, $18 per hour scale described elsewhere in the plan.
      1. Additionally might be able to offer employee benefits including healthcare, retirement support, and technical training.
      2. Target market might be easier to access by creating a “Flip to Own” process. Might also be wise to target the younger generation before they get too far into a career or college path.
   3. Household income must be 3 times the “Monthly Operation Payment”.
      1. Create unique opportunities to create income from excess space in a property (vacation/air bnb, temp housing for travel nurse, students, etc.)
      2. Residents may choose to use roommates to meet this requirement.
   4. Pet owners buy all the flooring instead of a pet deposit. If they don’t need replaced, might offer to dump it back into the built up repair fund on moving out.
   5. Instead of a traditional deposit, the new resident can spend up to .1% market value on initial property upgrades, finishes, etc. This is applied as a direct principal payment.
      1. Good test to see how easy they are to work with on household projects.
      2. This gets an early vested interest in the property, which is the primary principal of this plan.
   6. Require reading “7 Habits of Highly Effective People”
      1. Must create a habit of reading for 15 minutes every day until the book is done.
      2. This helps lay groundwork to understand much of the management process expected. Many of the guides follow these principles, and the new resident will be required to complete several activities derived from the book.
   7. Legal structure will likely mirror that of a “Rent to Own” plan.
      1. Create legal contract that establishes the tenant purchasing the property from the GNA at the current market price. The GNA will carry the note and establish unique guidelines that dictate the “Monthly Operating Payment”, and the procedures when the tenant wishes to move out of the property. This will also spell out all the rules and regulations to continue to qualify/ avoid eviction.
      2. Instead of using fear of eviction as a means to keep tenants in line, create a cultural shift to address underlying problems instead. We don’t need to help people dig a deeper hole when they are already in trouble. We should instead work together to build a solution that ensures the moral support needed to get to a better place in life.I think the way the whole organization is structured will also provide another sense of accountability towards each other.
      3. Create a “Flip to Own” plan that lets future tenants be more involved with the initial renovation between occupants.
   8. Create a transparent “Monthly Operation Payment” that includes:
      1. An investment buy in (market value amortized over 30 years @ current market rate + .3%).
      2. Taxes & insurance (will also need renters insurance).
      3. Utilities (goal is to have a history of avgs, but will be paid as billed).
      4. Any cost associated with labor support for “Property Stewardship Guide” (basic cleaning and lawn care).
      5. Repairs and Maintenance budget (.1% market value, any expense related to maintaining current market value/ rent ready condition).
      6. Capital Expenditures- Major repair budget (.1% market value, any expense related to increasing market value and capital expenditures).
      7. Good neighbor assistance dues (.1% market value, covers accounting costs and assistance access).
   9. Create an app that makes monthly property management an easy habit.
      1. Pull information from Property Stewardship Guide
      2. It keeps track of all the costs that determine the monthly payment, including utilities.
      3. It has a checklist of that months maintenance tasks, based on the standards of the GNA, that ensures the most effective life of the property.
      4. Have a portal to submit rent payments, using paypal or similar services.
      5. Build in an option to apply employee wages from the GNA as rent payments.
      6. Have a profile page with all the important dates and documents.
   10. Leverage these managing residents to build a coalition of labor support for the rest of the properties under the GNA umbrella.
   11. If they are all employees of the GNA non profit, then we can distribute benefits including healthcare, retirement savings, etc.
   12. Create a rolling pay scale:
   13. Offer work in exchange for equity ownership in other projects.
9. When the current managing resident is ready to move, they can either cash out remaining repair budgets and equity, or leave their equity in and share the profits with GNA equal to their equity share.
   1. The managing resident will partner in the process of getting the house back to full market standards.
      1. Use the stockpiled repair budgets to fix their respective categories.
      2. Use built up equity if repair budgets don’t cover that cost.
      3. The remaining repair budgets will be applied as a direct principal payment.
   2. If the managing resident wants to cash out, then the GNA will buy back the property at the current market price.
      1. Both parties will pay their traditional closing costs if applicable.
   3. If the managing resident wants to remain an equity partner, then the title is changed to reflect that business relationship, and the managing resident receives monthly payments equal to their share of rental profits or interest payments of the next resident.
      1. Previous managing residents must create and manage their own LLC.
      2. If the previous resident has more than 50% ownership in the property, then they are in charge of managing the property.
      3. The monthly payment for the previous residents equity will be equal to their percentage of ownership times either the interest earned from the next resident’s purchase, or from the profits if it is run as a traditional rental.

Goal/ Elevator Pitch: Establish a non-profit organization (The Good Neighbor Association, GNA for short) that creates a community of Resident Neighbor Associates (RNAs) , that work together to ensure a minimum standard of living and home maintenance. The GNA will setup a network of health, financial, and social services. By treating RNAs as employees, we can tap into existing employer/ employee benefit structures used by many companies. The GNA will provide guides and services necessary to maintain the established community living standards. The GNA will manage the process of leveraging RNAs with excess time, to fulfill the community needs of the RNAs with excess money and accrued equity. The GNA will setup and manage the process that allows residents to gain equity into their individual property over time by simply managing the property to the established standards and paying their monthly operating costs. There will also be a process that allows residents to exchange their equity with the GNA to cover costs they might not otherwise be able to afford.

@Ann North I really appreciate the feedback. I have been struggling to find people to talk to about the finer details, and it's encouraging to get some positive response. Most people think it would be impossible to make this work both financially and legally, and I definitely agree that it is intricate and complicated and I have a lot of questions to iron out. I would argue that buying a home is complicated. I'm just doing the same thing, but with training wheels. Do you have any marketing advice, or a quick summary of how you understand this plan? That might help me figure out how to better explain the plan, or help me condense the explanation. 

Currently my short summary is: I want to offer a partnership in running the business of this property. You pay market rent and self maintain the property to the standard I have mapped out, and I will apply a portion of your rent towards an ownership stake in the properties equity. I have detailed guides to help make property management a breeze, and I also have many different services available for those with less time. 

@Dillyn Davidson Saurdiff @Kelvin Tam

I do see some parody in the "scheme" from that management company. I have looked into the various versions of rent to own structures, but I want to make something even a little more unique than anything I have seen yet. I have a lot of irons in the fire right now, and I haven't had much time to put into research quite yet. I have done some brainstorming with an old mentor and maybe this last correspondence might better summarize what I am trying to accomplish. It is kind of a long read, so don't feel obligated, but I truly appreciate any constructive criticism. 

I can definitely sympathize with playing catch up. I have to schedule a day each month specifically dedicated to catching up on emails, accounting, and trying to update the website. Unfortunately it usually turns into a multi day affair.

I want to clarify a deeper explanation of my goals and priorities with this idea. I haven’t quite convinced myself to look into a non profit version, but ultimately my goals are to provide a unique investment opportunity for my tenants, that is focused more on their financial future and the care of the home, then the bottom line profits for my company. In the long run, when the house is paid off, it will easily be very cash flow positive, even if I am sharing that cash flow with someone else. In the short term I am really more focused on not losing money, but I am fine with just breaking even ( I would at least like enough to cover my time needed for management). In the short term I am more interested in building a relationship with my tenants, and I truly want to get to know their story. I want to find a way to take my life experiences and see if there is anything I can do to impact their life in a positive way, and a good way to start building that relationship, is to be their training wheels into real estate investing. I would also be interested in helping them pursue any career or business interests they might be passionate about.

I guess to zoom out and highlight a broader company value, or more of a personal value. I want my role in my company to help potentially facilitate a bunch of other small businesses to spawn off the needs I create while scaling my business. I am already struggling to find enough time in the day to accomplish everything I want, and I want to free up more of my time to pursue and cultivate other ideas I have piling up. I have to work on the right mix of simply hiring other established professionals to do some things, but I am curious to explore helping other entrepreneurs start their own business to accomplish my tasks that can be done for $15/hr.

-Can I screen for tenants that will fit my specific business model?

-In essence, every tenant becomes a small business owner and I am the guiding business plan on how to manage the property correctly. At the very least they are gaining valuable life skills that may not have been presented to them before (a whole other topic I would love to explore). Best case scenario, they find a passion of their own and are able to grow beyond my ability to be of service. My bet is, no matter the outcome, this type of relationship between myself and the people in my properties, will only lead to positive outcomes in regards to the upkeep effort from my tenants and potentially other unforeseen benefits.

-Your points/ perks suggestion is similar to other ideas I have for dealing with tax and legal issues. I think the best way to explain the process starts by changing how I label the process. Maybe it is better explained as renting a house, while also putting money into an investment fund. If the tenant can run the property to my standards, laid out in advance, a portion of their monthly rent will go into an investment bucket that follows the same amortization path/ timeline a home loan would. When they are ready to move they can pay the costs to have the property refinanced to cash out their equity (if I have the cash on hand, I can save them money and collect a reduced closing fee for myself instead of dealing with a refinance through a bank. The other option is for them to convert that bucket into an investment purchase of x percent of the property income. I am pretty sure there is a simple form I can mail every year for investment returns, etc.

-Maybe the way to combat dealing with the expense part of the equation, is to with hold entitled profits until entitled expenses have been satisfied. Funds can also be pulled from left over 10% repairs fund (explained later) from when tenant was living there.

-For tax purposes all repairs, maintenance, etc will be paid by my company. If the tenant has any out of pocket expenses paid to me for their half, I understand I will have to count as income. This is one of the areas with cons for both me and the tenant. They don’t get to claim any depreciation or mortgage interest on taxes, and I have to claim the income.

-I need to add to my previous email some additional numbers I should have explained and possibly included in the explanation. In order for a house to be financially feasible, according to common rule of thumb economics, rent needs to cover; commercial loan (if applicable), taxes, insurance (tenants still need renters insurance), 10% of rent for management (the money I need to cover my time to manage the property), 10% of rent for minor repairs, 10% for major repairs, 5% for average vacancy. Then what is left over is the cash flow. My thought process for not including the major and minor repair savings, is because ideally I have already replaced all of the major long life common home expenses (roof, appliances, heating and air, etc). By the time the warranties are ending, the house will have enough equity or be paid off. Also the agreement with splitting common repairs 50/50 with the tenant reduces my need to take extra money monthly. This is an area I am still unsure of the best solution, and this is probably the area for the most legal headache. Other options include making them pay the 10% for minor repairs that goes into a bucket for me to pull from first when something needs to be done (keep in mind they are only paying half cost). If those funds aren’t enough to cover the cost, then the tenant has to cover that out of pocket. What ever funds aren’t used, roll over for future use, or can be claimed if they cash out. Once they aren’t living there (no longer making payments towards more ownership), that bucket will slowly get used up based on their percent of ownership. Maybe this requirement changes based on creditworthiness etc.

-If for some reason a tenant can't come up with funds, or can't keep up with qualifications, I would probably just pause their amortization schedule and apply their current monthly principal payment towards satisfying that shortage. Once the tenant gets caught back up I resume the amortization schedule.

-I can’t offer this to a second tenant, while the first has an ownership stake, and I still don’t know how I stand on capping ownership at 50%

-I haven’t found the perfect solution for every possible outcome, and I might just have to assume a little risk because of the uniqueness of some of my ideas. Again this is where I emphasize humanity over profits. A good example to share my view: If I had a tenant who damaged a house (honestly for almost any reason), and the tenant didn’t have the funds to pay for repairs, it is most likely that I wouldn’t pursue damages in court regardless. I have a stable enough community in my life financially that I would rather assume the monetary loss, instead of worrying about setting my tenant down a deeper hole of debt. Even if someone is malicious, I believe they will learn a better lesson in life if I forgive them instead of dragging them through a legal battle that will only make their life more difficult.

Hopefully this different perspective will spark more insight I can pull from you. I really appreciate your feedback. It really helps me work through this whole process. It is all quite complicated and needs to be written out so I can think about it, re read, and adjust. Even if all of this is found to be unfeasible, I think it would be worth creating a property management app that gave points to tenants for completing checklists of routine home maintenance in exchange for points, like you mentioned. I usually give my tenants a Christmas discount any way, so this might be the perfect way to leverage that. The app should let tenants upload a picture of the completed task to verify completion. The app should take payments and allow submitting repair requests, etc. with pictures.

Thanks again.

PS: If you are interested in seeing pictures of my projects, I am also interested in constructive criticism for my website too. www.vandvwoodcrafts.com

I am always thinking of ways I can run my rental business that is unique and deeply impactful for my tenants. I have a handful of ideas that I am interested in researching, but right now I am focused on creating a system that will help make my tenants feel more invested in the property and give them some of the benefits of home ownership. I think we are approaching a time where there is a shift in attitude about purchasing a home vs renting. Some of this is caused by student debt and other financial strains, and some is caused by a lack of faith or knowledge in the home buying/ owning system. I am especially concerned with the financial intelligence of my generation and future generations. That being said, here is what I have so far:

Basics

-Instead of a deposit, applicant will pay for a professional inspection (will be a great tool to snapshot property condition, and is a normal process when buying a house)

-I should fix anything that FHA loan would require, or rental code

-Because there is no deposit, customer doesn’t start accumulating equity for 1 yr (undecided)

-Monthly payments go towards purchase price of the property (Amortized over 30?)

-Payments will be at market rent values

-Payments need to cover: my mortgage, taxes, insurance, 10% management fee, my minimum desired profit ($200)

-As long as tenant is living there, it is treated like a rent to own

-They will be responsible for all utilities.

-They will be responsible for completion of the “Yearly Maintenance Checklist”.

-They will be responsible for half the cost of upgrades and repairs to the house.

-They will be 100% responsible for own fault damages.

-Once the tenant has decided to move on, convert the percentage of purchase price paid off, into a percent share in the profit from the investment property(not to exceed 50% ownership).

-Might also offer some sort of equity back option if they pay for refinance etc.

-Might allow ownership to exceed 50% if they are still living in the property.

-Once they no longer live there, they will be responsible for repair costs equal to their percent ownership.

Questions to research

-Can I help establish/ effect tenants credit score?

-What is the best tax set up for everyone?

-What legal protections do I need in place?

-Should I pay profits monthly, quarterly, or yearly?

-What is the best way to amortize their equity accrual like a 30 year loan?

-Should I let them make extra payments directly to principal?

Typically my houses are completely rehabbed before being rented out.