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All Forum Posts by: Eric Fernwood

Eric Fernwood has started 52 posts and replied 673 times.

Post: When do you know its time to buy?

Eric Fernwood
Agent
Posted
  • Real Estate Agent
  • Las Vegas, NV
  • Posts 697
  • Votes 1,475

@Mike H. 

How did you finance your 11th and onwards properties? The loan program for 11-20 houses went away this year and I have a few clients that are maxed at 10 properties now but want to buy more.

Thanks.

Post: Finding owners

Eric Fernwood
Agent
Posted
  • Real Estate Agent
  • Las Vegas, NV
  • Posts 697
  • Votes 1,475

Hello @Marvin T.,

I am a Realtor in Las Vegas who almost exclusively deals with remote investors so I probably have a biased perspective. But, below are my comments.

Several of my current clients started by attending seminars and attempting to track down the owners of potential properties. I asked why they chose this approach and usually heard something along the lines of: If they contacted the owner before the property was listed, they could negotiate a better price and thus generate a higher return. I can tell you from talking to several people who tried this that it is not an easy task and I know of no one who had good results. (It could be that the only people I talked to were the ones who had no success; others must have been successful with this technique or it would not remain such a discussed question.)

My additional comments are as follows:

* If you contact a person only considering selling, the phychology is backwards from what you want. They are in a position of having something you want and, since they were not yet ready to sell, will ask for a premium. Alternatively, a seller who has had a property on the market for a significant period of time is more likely to accept a discounted offer.

* I believe that what you pay for a property is less important than what you earn from it. (Know that I would never pay more than market value for a property.) However, I would not consider buying a rental property even at 20% below market if it would not generate a profit today.

* One of the advantages of the MLS, Craig's List, Zillow, etc. is that there are a large number of properties from which to choose. Attempting to contact individuals on the chance that they are willing to sell is not an efficient use of your time.

* If you can not buy profitable properties in your community using more efficient approaches, perhaps you should look in a different area.

Anyway, that is my 2¢'s.

Post: What do we gain by managing our own rental properties?

Eric Fernwood
Agent
Posted
  • Real Estate Agent
  • Las Vegas, NV
  • Posts 697
  • Votes 1,475

Hello @Brian Mathews

It depends on what you expect from a property manager. Before I continue, know that I am a Realtor in Las Vegas, and my business is almost exclusively with remote investors.

Most people think of property managers as someone who collects the rent after they buy a property. This is absolutely not the case. Property managers are a gold mine of information. Property managers know what rents and what doesn't because they deal with rental properties every day. If you talked to only one person about investment properties, talk to a good property manager.

Having owned over 20 properties and working almost full time with remote investors, one of the surest ways to fail is to manage the property yourself. I occasionally hear statements like, "I will manage the property myself to save the management fee." Don't do it, you will fail. For example, unless you have access to the right databases (you need several and they are not cheap) you can't even properly qualify a potential tenant (credit history is not the important factor). If the property manager does not save you far more than their fee, you are working with the wrong property manager.

When I first bought properties I managed them myself. I quickly learned some hard lessons:

* Tenants are extremely creative when it comes to why they are late this month with the rent. Also, you needed to be both firm and fair at the same time. Not a skill you learn in a few months.

* Cost management is critical if you want to maximize profitability. This includes preventive maintenance and remedial maintenance. Here again, tenants are very creative. One of my tenants called that there was a broken window at the property and wanted me to fix it. By this time I had enough experience to know what to do. I asked how the window was broken. He stated that there was a break-in. I expressed my sorry and asked about what items were taken. He stated that nothing was taken. I told him not to worry, that the window would be repaired as soon as I received the police report. A long silence followed my statement. I proceeded with, unless I have a police report, you have to pay for the broken window. But not to worry, I would call the police now and they would be out to make a report, gather finger prints and such. I explained that it was amazing what the police could do now. That even if the burglar scrubbed the window and all the broken pieces, it did not matter. The finger prints would still be there. About this time he decided to pay to have the window repaired.

* Evictions - No investor wants to believe that any tenant will even have to be evicted. Believe me, they do. I ended up having to take time from work to go to court on two evictions. I lost an entire day waiting for my case to be called.

There are several more reasons I could list but I believe that hiring a (good) property manager is the best way to save time, money, and effort. You can not afford to manage your own properties.

I hope this helps.