All Forum Posts by: Mike Makkar

Thanks @Percy N., fingers were quicker than the brain. I'd failed to read the actual content of @Jaren Woeppel. Just equated banks and lending.

Just to give one possible answer to the bookkeeping comment on having each renters deposit separate, I've researched big banks and community banks and noticed that online banking checking/savings products weren't too different from each other. Once sub-accounts are created everything else could be controlled from the rent collection system (I use cozy.co). If theres a change in the sub account to be ACH'ed, change it on Cozy. The bank sub accounts I maintain are 

1. AP: Taxes/Insurance

2. Security Deposits

3. AP: Principals Payables

4. AR: Rent Receivables <-- All rents get ACH'ed in here

5. Miscellaneous 

I used to have separate accounts for #4, based on the number of properties. It just got too overwhelming after a 3 properties. 

@Jaren Woeppel, There aren't necessarily banks that caters to landlords, since this is too narrow of a niche for multi-billion dollar banks to focus on. The ones I know who caters to this niche, are private money lenders who charge interest rates in the range of 8%+ just like hard money lenders and will turn a blind eye on tax reports and dti and look only at rent roll.

On the other hand, look for banks who understand the business of Real Estate. Most community banks and several credit unions do commercial loans like these. Within commercial loans, look for banks who finance real-estate collateral based loans. And within real-estate, most understand the buy/hold rental model for Single family that landlords focus on.

I have compiled a list of texas banks who specialize on SFR's and MF's. If you're interested, PM me and I can let you know.

@Mary Gallagher, welcome to BP, fellow planoite!

The first property is definitely unnerving! It took me 2 years to find my first property. Then it took me 5 months to get the next 8.

Besides MLS, i've had success with door knocking, hubzu.com and homesearch.com. Once you work the numbers and take the plunge into the first property, you'll start tweaking your style and grow comfortable at acquiring properties through very creative methods.

Also, network like crazy on here. I'm pleasantly surprised how many people are willing to help on here. 

@Mary Gallagher, welcome to BP, fellow planoite!

The first property is definitely unnerving! It took me 2 years to find my first property. Then it took me 5 months to get the next 8.

Besides MLS, i've had success with door knocking, hubzu.com and homesearch.com. Once you work the numbers and take the plunge into the first property, you'll start tweaking your style and grow comfortable at acquiring properties through very creative methods.

Also, network like crazy on here. I'm pleasantly surprised how many people are willing to help on here. 

@Jack B., There are several online tools that avoid landlords having to type information and do things mostly online. Tenants can put their information in, they give their credit card and when a credit report is generated, they choose to share the credit report and previous rental information back to the landlord. 

I personally use cozy.co, to screen tenants and initiate leases. Once the lease starts, I use their free system to automatically ACH the rent into my bank. Again, there are hundreds of systems like this. 

Only issues with cozy is 4-6 day gap of transferring the ACH; no way to record expenses and record backdate payments (its meant for an ACH method). But otherwise as a screening tool, its very streamlined.

@Jeremy Kuchenbecker, what @Jay Hinrichsexplained, happened to me as well.

I bought a owner occupied house a duplex which had multiple exemptions (homestead and 65yr+) all ended up being removed because it got transferred to me. Taxes doubled! And in Texas, 'dem 2% taxes hurts like hell.

So what did I do? During tax assessment season, I protested. Made a case that this was a rental property and it had more depreciation than normal. Took nearby comps of "wholesaled homes" as opposed to MLS homes and they listened to my case. Was able to bring it down by 25% to 30%. Not the previous tax value, but good enough to sleep a little better in the month of January. You may want to check with how your state/county works for protesting the assessment.

@Account Closed, while I don't want to discourage you from your first steps in Real Estate. However, real estate licensing for selling and real estate investing for cash flows and flips are two very orthogonal disciplines. Its common knowledge that Real Estate agents are not the best investors (evidence from experience and from the podcasts). The reason why is the former works in a retail environment persuading prospective home owners into beautiful and staged homes that may not make good investments. That is not to say, there are still good RE agents who caters to the investor crowd.

My recommendation is start analyzing some deals with Rentals returns and costs. You'll find that is the best learning exercising. Once you have a couple of investments under your belt, you can get your license (not for learning, but for networking and reducing your commissions)

My 2 cents! Good luck!

@Julia Brantley, your rental barely meets the 1% rule. Monthly rent is 1% of purchase price (1250/mo of 125k (not counting rehab expenses)). Overtime, the rent will go up and you'll cash flow better and your CoC% could edge towards the 10% range. This is a safe investment strategy you'll double your money in say 8-10 years or so.

The "advanced" users on BP get 20% returns with CoC because most go for the 1.5% to 2% of monthly rent. This gives them a gross cap rate of 11% to 15% and CoC% of 22% to 30%. This in turn allows them to double their money in 2.5 to 4 years. Its definitely more work and hence risk. May not be the best neighborhoods and could be the older homes with more capex expenses. But definitely choices for higher rate of returns.

Btw, nothing wrong with your strategy; my first property's cap rate was 9% (it was retail style property, 10 years old in A-class neighborhood). My last property's cap rate is16% (60 yr old property, B-class neighborhood). My next set of properties will be the latter. 

@Kalid Alogbi, I don't think this dude made it in real estate through good looks and charm

Don't let a bunch of folks discourage you. And it may not be looks either. New investors approach things differently and agents may want to work with seasoned investors. And as @Account Closedsaid, you're in bible belt country. Things may be different down there. Don't take it personally. Approach problems with rapport and deal technicals and how it benefits the other party. You'd be surprised how little they care about the buyer then. 

@Cailyn Aune, I didn't, by any means try to discourage you from using data. In fact, using data puts you into a better advantage than the person who doesn't use it and buys it on a whim. Just make sure not to get into analysis paralysis. 

Personally, I wouldn't use PM as the basis to identify the market. Use some of the 1% to 2% rental return fundamental to identify the market. Then figure out the PM pieces. You'd be surprised, you may not even need a PM in a good market, which was your point, right? There was another thread on profitable rental markets, where I answered on identifying good rental regions

https://www.biggerpockets.com/forums/311/topics/27...

But being in Washington, have you exhausted your own townships? I hear you can still find good deals in areas like Olympia and surroundings, i.e. sub-100k properties renting for 1250+ per month. I'm sure you or I personally wouldn't want to live there, but somebody who can't find a place would be happy to rent it for 1250 a month. 

btw, all of my properties are under 125k. My wife hates 'em! But she doesn't complain about the 12 to 15% return, :)