All Forum Posts by: Ray S.

Some other things to consider....Your plan requires personal liability, no offset for repairs during occupancy or after tenant moves out. Capex is different. You should always guess at appreciation, as it shapes best exit or hold strategy, and for loans you take over that may be several years old need to consider princpal paydown. Also ROI needs to not have a component in it that requires services in it such as property management. So have to deduct that also.

I was on the Rich board in Houston and also help run the Alamo Reia. I think active association in a REIA is a good thing. The charter associations like Rich are required to act like an association and can lose their national charter if they don't provide the kinds of things that trade associations would typically provide. Different groups have their own agenda, some are in the best interest of their members and others are recruiting members for other reasons. I am not familiar with that particular group but if it is a group that only promotes wholesaling, i would keep looking. Wholesaling in my opinion is not Real Estate Investing, its a Real Estate Job. Done right it can be a very high paying job, though.

If you buy from a real plumbing supply house a lot less. I don't mean the big package houses.

We pay 300 for wh and about 4 hours labor.  So anything over 500 is a good payday for the plumber.  Repair  parts are 50 to 75.  Most plumbers and electricians don't know how to troubleshoot.  If you know your stuff a couple hours plus time to get them.

Their license is more important to them than shaking you down.  I used to have an hvac license in Texas and would do anything to resolve customer problems before having someone report me for breaking the rules.  That's their Achilles heel.  There is no question they can call code enforcement.  You don't need those guys in your hair.  Besides not knowing who they know downtown, you will always lose.

You are now in Damage control mode.

I would call them, ask them for their license number and their insurance carrier.  I would explain to them that if their threats were to cost me any money, I want to make sure I get their information correct when I file a complaint with the city and state and I will need to know their insurance company when I make a claim to their insurance company for lost rents.  They are required to provide you their license number.  You will be amazed how good this strategy works.

Bill I think why so many people have responded is because you are basically asking what makes a great tenant, but also want specific advice..  By the way if anybody disagrees with me remember they are wrong and I am  right!

1. What makes a great Tenant.  2. What should i do? (after 64 post I will work with what you presented.

1.  Great Tenant.  

a. Good Property.  The landlord does't determine rent.  The market does.  Your either right or wrong on your price.  Being right is the only choice.  This is normally easy to figure out.  If you buy the wrong kind of properties or price your product wrong the market will vote with their feet.  The highest cost in renting property is TURNOVER, this includes - Your Time Lost, Lost Rent, Rehab cost, Relet cost.  Turnover is UNACCEPTABLE.

b. Great Tenant.  A great tenant is one who never moves, never dies and pays rent on time ,who if after a couple generations are still renting from you.n Who leaves the property in better condition than they got it. They never call you unless its to invite you to a party or wish you happy christmas. (I have had 3 tenants die on me over the years, but to be fair one of them we still rent to their children so i will give them a pass on that one)

All This may sound ridiculous but my first tenant I had was for 27.5 years and the only reason it wasn't longer is because that's how long i owned the property.  Okay so some of that was luck but if luck has anything to do with this, then you are extraordinarily unlucky.  

c. Qualifying.  Stable work history.  Stable Income. Stable residence history. Will her mom cosign for her(people that know her back her up?), is her car or her house clean,  Resources.  Roots in community.  Knows how to fix stuff.  Tries to be honest, Has a hard time moving.  Doesn't have bad habits. i pull credit reports because i am looking for these traits. I can see these things and match them with the application.  Notice i didn't say anything about credit score.

Some things that may have contributed to my luck on my first tenants was they had good STABLE income, had roots in the community, mom lived across the street.  Were very respectful people. House was in an area short on rentals with high demand.  BTW pathological liars and fools also appear very honest and will look you in the eyes.  Being convincing and looking you in the eyes is not a good test.  Also in what makes a perfect tenant i didn't say anything about pets, smokers and credit score.

So some thinking here.  If, my tenant has a hard time moving across the street when that house gets fixed up and is cheaper in rent,  what would my tenant look like.  High credit score, no that makes it easier, smokes? hum maybe the landlord doesnt want them, or maybe pets, new carpet?  Since my rentals are pet proof maybe my superior product gives me an advantage?  This is a two hour conversation and this response is too long but...

2. What would I do.  

a.  Great Tenant.  Can your prospect fix things?  Do they know more about the tenant laws than you do.  Remember Attorneys are not a protected class, would you rent to them? A property manager that knows the tenant code better than me is probably not a great prospect.  Is she involved in a drug business, does she sell drugs to get people high and in the evenings hangs out with people that have bad habits? Does she have verifiable income?  Job stability?  resources so when things go bad? People that will stand behind her(references and cosignors).

b Great Product.  Is your house fixed right, does it compete well in the market, is it priced right, are you in the right market?  As a competitor how do you rate?   All these things matter because maybe you should be doing a wrap or changing your product or selling etc.  I know this sounds stupid but about 30 years ago I went to a Jack Miller seminar and owned a few rentals at that time.  Not only did i realize i was doing a lot of things wrong I came back and started buying different kinds of houses and vetting prospects differently and renting to different people.

c.  Marketing.  This is a horrible time to rent.  Our phones don't ring this time of the year.  Okay so much for the excuses now what are you doing in marketing?  Do you have it listed, do you have adds running in all good papers?  are you posting on platforms regularly - Craigslist, facebook, zillow, etc?  Do you have a sign at the end of the street, in the yard, do you have information sheet in the window?  Have you done "every door direct" to apartments with the same rent level. You need more prospects?  Time to get to work.  Since i routinely do  these things wrong and then do them right for awhile, I know it makes a difference.  

d.  Approve Current prospect, based on what you have said up to this point, NO.

Yall probably know but property taxes are generally 2.5% to 3 annually. This has to be paid. Watch out for HOA normally 200 to 800 per year, but occasionally much higher, and very rare hoa transfer fee can be 1% of purchase cost.

Hi Jason I would not use a lease unless it was written specifically for your state by people who are involved heavily into leasing.  For Example here in Houston, Tx the good leases are TAR lease and the HAA lease.  Michigan has some very specific rules about tenant laws that change yearly and your lease has to take them into consideration or you're toast.  Beware of the poison pill, for example in the TAR lease in buried in it they say if you are not a texas realtor then this lease is null and void, so naturally you would won't to line out that provision.  I also recommend joining your local association that specializes in renting property.

Hi Blayne, I am not sure Houston is where l would go, but if you are then we might be able to help you. One of the best subdivisions around UofH is Eastwood, one of my partners has a 4 plex under contract and its in that subdivision. Not sure it will qualify for VA and you should already be talking to a lender that specializes in VA loans, Getting 4 plexes in the right areas of Houston at the right price is no easy task. We are very active investors and property managers in the Houston area and I will be glad to help you.

One suggestion is, at least in my experience, few things in RE investing turn out the way you expect they do so narrow down your horizon and focus on "Next Steps".  Its like chess your 7th or 8th move really doesn't matter much since as soon as your opponent (reality) makes it's next move, all of your other moves will become moot.

As a buyer of houses in the Houston Marktet for the last 30 years it is the hardest right now to get good deals and for a noob its extremely easy to make a fatal mistake. Also asking for the team members is overrated. If I was looking for team members the only people i would be focused on now are realtors, VA lender and getting dialed in to the local investor groups and boards to find deals. I have 5 to 10 properties a day come in my inbox from wholesalers.

We almost went with Appfolio.  Apparently their accounting software is pretty robust.  But their startup fee was so high it put the risk on us.   If it turns out their accounting wasn't good enough and we had to stay with quickbooks then it kind of defeats the purpose of running two accounting packages.  

Another complaint with them is that when we decided not to take the risk with them, they now call us every couple weeks and nag us.  They have called us over 10 times so far.  I think a better model is to get rid of aggressive sales staff.  Make a low barrier for entry and then blow away your competition with quality of product.  They could even qualify their customers, for example people with over a hundred properties arent the kind that play around.  This is their avatar,   help your potential customers and not put the risk all on them.