All Forum Posts by: Dominick Johnson

 Most PM's are lazy and just use the same vendors regardless of price. Not assuming that you handle things that way, but investors know this is common practice with PMs. Nobody cares about a property as much as the person who owns it. Safe bet that a hired PM would have stopped at the second bid for $8k and given me that price.

Good point! I should have specified "always" to mean until you vet a vendor that you have used and like, or enough time has passed. You don't expect to replace HVAC systems on a property for 15+ years, so really you are only getting bids every 15 years at most. Vendors won't remember you and be annoyed by that. If the HVAC needs replaced on another property, use the vendor that you previously used and liked.

 Agreed. Once I find a trusted vendor that I've vetted, used, and like, I stick with them and have good relationships. This was my first time replacing HVAC systems on my properties. The company I use for annual maintenance tune-ups bid it at $13k, hence why I got multiple bids. When it's a first time major repair, I get 3 bids if it's not an urgent situation.

Last week I was reminded why I made it standard practice to always get at least 3 bids for major repairs. The ac in one of our properties had a leak in the line. Both the ac and furnace worked fine but were 30 years old when I purchased the house, so I expected to replace them soon. Rather than patch the leak, I elected to replace them now rather than later. I had four bids for a new ac, furnace, and coil: $13,000, $8,000, $6,000, and $5,400. Wanted to share for reference what to expect to spend in the Midwest on replacing HVAC units. 

I could either drain my cap ex, repair, and vacancy accounts on this property, or use half my profit on it for the year. Much better than two years had I gone with the first two high bids. It’s worth the time and hassle, get at least 3 bids on all major repairs. 

You only have payments due if you use money from the line of credit. $700 is a pretty high interest only payment, so his line of credit is likely maxed out (hence he can no longer draw from it). Hopefully the HELOC is in the first lien position and there is not a mortgage payment on top of it. The interest only payments are just treading water and not lowering the principal at all unless he pays more than the $700 monthly.

Banks don't care what you are spending the HELOC on after you are approved. You get a checkbook and a debit card and spend it like you would any other checking/savings account. Call a bank and ask to schedule a meeting with a loan officer for a HELOC.

With the HELOC.

I use apartments.com. It has credit/background checks and sends a nice report. Cost is around $30 that the applicant pays and they can use it for other applications for 30 days. We also have our tenants make rent payments through apartments.com which has no fees and deposits into our bank account. It's super convenient for us keeping the application, screening, and payments all in the same place.

$300 non-refundable pet fee

$50 per pet/month - limit 2 pets

Equals an extra $1500/year in most of my leases. I've never had anyone balk at the price. Most people view their pets like children, and if you have a big backyard that is fenced-in, your property will stand out against all the others that don't appeal to pets. For that reason, I only buy SFH that have good backyards.

Thanks all for the feedback, it has been helpful. I should add that the services aren't just for REI, they include financial advising and accounting for my wife's realtor business which is s-corp.