All Forum Posts by: James H.

My approach is to save all rent profits after initially aquiring and leasing a property until I have the equivelant of 6 months gross rent. That is enough reserves to cover just about anything that would happen at that particular house. Then, if something needs to be repaired or replaced, it is my option to use cash or credit. Cash is very nice to have on hand and it can save you a lot of money.

Besides, how will you know if you have "access" to equity? What if lending pracitices change in 6 months and certain products are not available. Or maybe they are but the fees and interest rates kill you deal. Or it will take two weeks to get teh credit while you have a gaping hole in your roof, or whatever that can't wait.

BESIDES, besides, what kind of trouble are you trying to get into by not having 6 moths reserves but still buying more properties? If you read a thread on BP about the number one reason why investors fail, you will see that many, many failures are due to lack of cash reserves. Better to be a little conservative and moderately successful than a little aggressive and a miserable failure.

By ensuring 6 months cash reserves, you do slow down the process of acquirng many properties when starting out, but you will be less likely to fail, and in the end you should be better off (more wealthy) and have a lot less stress to show for it.

Bienes, it sounds like the two that are there are reasonable people. I think if you treat them with respect they will direct their anger at their deadbeat room mate and not be trashing your place. I am very interested in learning how this turns out for you.

Some sites that do not have mobile apps still work fine when browsing with a smart phone. Have you tried googlig and/or browsing your website with your own smart phone (assuming you use one) yet? It might be fine the way it is.

Why couldn't you just account for the percentage you pay the contractor as an expense when you file your taxes using a 1099 or other appropriate tax form?

Just run down and get a permit? Haha! No, seriously, it really depends on your municipality. Since there is roughed-in plumbing and electric, you may want to see if that was permitted and inspected, or in the process? If not, they could make you tear it out and start over. Not telling you they will for sure, just saying it could happen.

When it comes to marketing, cast your net wide and fast. I don't care if you are in RE or not. I say this because I noticed you were waiting to list your property on CL until your buyer's list people had some time (even though only a small amount of time). I would put the add on CL first thing so that add can be doing work while I call the investors. If a deal is a little better than good, it will move right off CL. Calling 65 people is NOTHING. Make no mistake, no matter what you are trying to sell, you need to make as many "touches" as possible.

If you can find a way to access the Spanish speaking market, you might be readily surprised how many more people than you thought have 25K waiting to buy a house.

You might expect her to give a better deal based on a now established ongoing relationship. But you would think she would offer this on her own accord if she was interested in your relationship. PM fees in my area are 75% first month,s rent and about 10% gross month's rent per month for monthly management. I would expect to pay similar leasing rates (for the first month) to an agent.

There is a philosophy that it is not in a RE agent's interest to do a good job screening because the more turn over you have the more leases they write (theoretically). I don't know how true this is, but I would think they would NOT put the same emphasis on screening as someone who has more financial interest in retaining the tenant long term. That person being YOU.

I may not handle the operation side of my properties forever, but since it is my business, I at least want to know how to do each aspect of it competently. Otherwise, I would always be, to some degree, at the mercy of someone else. Knowing how to do things myself enables me to just fire someone and do the task myself in a pinch. Plus I have a basis for evaluating service I am getting.

one month rent = 550
one year taxes = 630
Fort Worth Texas
SFH

one month rent = 550
one year taxes = 630
Fort Worth Texas

When someone (usually new to the forum) says that they are going to save money by self managing and doing repairs, there is an automatic "is your time free?" question shot right back.

I agree with Mitch about otherwise wasted time and I use it for myself. But that philosophy individualizes an investor's analysis such that it is not applicable to larger scale investing. For those of us looking into growing our scale, we have to loose this mindset (eventually) and include the full operation costs. At what number of units you would need to change I can't say. I'm sure that would depend on sevaral variable external forces and personal goal factors.

On the other hand, there are two sides to real estate: investing and business. Providing the funds for the rental unit and colleting the profits is the investing side. Providing the time for management and maintenance is the business side.

If you pay a "business" 15 percent to manage your properties, do you think they are doinig it to break even? NO WAY! So, yes, if you do operate your rental management and maintenance businesses, you do come out more profitable than just investing in your properties since you now have two things going on. You have to know what profit margin the operations side generates before you "discount" that from your 50% expense. This is an independent analysis from the "50%" analysis. If you had seperate LLC's you might NOT dscount your profits from operations, but rather set up a different "income" stream. I'm not sure on the last part!

Also, if you are rehabbing units, there needs to be some accounting for the improvements as a positive effect on expenses. If you have a new roof or new HVAC system as part of your improvements and you plan on selling before these items require replacing, you should reduce the replacement cost effects of these items, still leaving some accounting for unforeseen events.

The biggest proponents of the 50% rule will most all tell you it is not a perfect rule, but a benchmark to work from.