All Forum Posts by: Eddie Werner

Hi Ron,

Your 75-80% LTV (loan to value) should be plenty. In my experience some banks are "faster and looser" than others. Ask around and make contacts at different banking institutions. If they know you personally and get to understand your business it will def. help. My business partner and I actually send our cash flow analysis spreadsheet to some bakers we know. This really helps them and also shows them how serious we are about maintaining a profitable rental. Just ask, the worst a bank could say is no.

I am getting close to purchasing my first SFH to begin my buy and hold investment strategy. My financing is in place and I have spent many months learning about different rental areas and analyzing the most probable cash flow scenarios.

The next step for me is to hire a PM company. I want to focus on investing and I have a 8-5 job so being a landlord with my current schedule would not be ideal.

In talking with PM companies it seems the norm for my area (Pittsburgh) is 10%. However, a number of PM companies also charge a months rent to fill a vacant property. Since the properties that fit my criteria are all owner occupied they would be filling each one, thus charging the full first months rent. This seems extremely high to me and kills my cash flow projections. Is this normal in your area and if so do you negotiate around it?

I am considering the same thing at the moment however I do not have any properties, yet. I have met with both CPAs and layers to discuss this question. What I have gathered is this:

Get a few properties under your belt before you form a LLC. From your post it seems you have some properties so I would set up a LLC. Since I am just starting out I will start a sole prop. with an umbrella insurance policy.

There is some cost associated with setting up and maintaining a LLC and if you don't have enough properties to cover this cost and your cash flow goals then you will just continue to eat away at your profits.

Start with sole prop and move to LLC when you have a handful of properties.

1. If you are knowledgeable on a certain subject write an ebook (just convert a word document to a PDF and there you have it!) Publish it and sell it on kdp.amazon.com. List it for under $2 so you get 30% royalty and Amazon gets 70%. I would rather sell 1,000 copies for $1.99 then 100 for $5.

2. Create a blog with adsense. If you get enough visitors clicking this is a very passive way to earn extra income. Nowadays you can set up a blog in under 10 minutes and install the adsense code in a few minutes as well. The only time it will require is the time to write the articles you want to publish on the blog itself.

3. Purchase stock of companies that have DRIPS (dividend reinvestment plans) This automatically uses the dividends you earn to purchase more stock. This is where compounding interest can really be impressive. The would look at AT&T (approx. 5% dividend), ETP (Energy Transfer Partners which has around 7% dividend), and Coca Cola or Pepsi, each is above a 3% dividend. Use these as examples when looking. Just go to a companies website and click the investor relations link. There should be more information there.

4. Purchase the rights to art work and sell copies of the prints. My sister does excellent pen and ink drawings. I give her a commission on my sales but this is really just making a copy of the original and selling it. Most of these tasks can even be done through companies online.

5. 401K. Yes this is for retirement but it is a great form of passive income for when you retire! So if you are not contributing or have a plan in place you should!

6. Start a small service company either power washing or washing/waxing boats or vehicles. Word will spread and neighbors will want the same service provided to them. Charge $200 to power wash a deck and hire someone to do it for $100. Then you get $100 and your worker get $100. Everyone is happy and all you had to do was make a phone call to set up the job.

7. Recycle. If you use aluminum cans or see craps of copper just turn them into cash by taking them to your local recycling center.

Whew.....I made it to 7. Hope that helps!

Since I am looking to purchase my first buy and hold rental property I was curious if anyone would share details about their first deal. How much was the property, CAP rate, Cash Flow before Taxes, etc? What were the three things you learned from your first deal? Many thanks!

Does anyone know if there is a set amount of money a landlord can charge for a tenant cancelling their lease early? I live in PA and need to cancel my lease. The current agreement states I must pay 3 months rent and any "coupons" that were used during the lease term. This equates to a lot of money. I am curious if there are laws relating to this matter.

Thanks for the responses. I would get it strictly to learn more about real estate. I am leaning toward just having an agent do the work for me so I can focus on investing.

Thanks everyone. I appreciate the help. A lot of the books I have read leave me asking more questions so I am looking forward to seeing what I can learn from your recommendations.

Do you believe there is a strong advantage in having a real estate license before I go about investing in real estate myself?

I am hoping some of you can recommend good books to start with regarding real estate investing and being a landlord. Most of the reviews of what I read online say the books are general and do not get into the more helpful details. If you can provide any recommended reading it would be greatly appreciated.