All Forum Posts by: Glenn McCrorey

@Thomas S. There are several reasons to rent to these companies.  I do not have to show the house to prospective tenants, no tenant screening, the rents come to my account electronically from the non profit, some even have maintenance people so I don't get bothered with minor repairs, and exceptionally low vacancy.  The first one I bought was in March of 2008 and have not had one day of vacancy since.  We have close to 40 that we rent to 7 different companies and I have only had one instance where they moved out.  The lesson from that was, don't buy in a small town because it's more difficult for the companies to back fill a vacancy.  The rents are in line with the market rate but I make my money on no vacancies or turnover.

@Nancy Roth  In my town, you can only have 5 unrelated people in a house.  I do have a few 5 person programs but most are 3 or 4.  I have one that has only two individuals but they have severe disabilities and require a great deal of constant care (this is the exception).  In  most "programs" as they are called the folks go somewhere during the day, they might take the bus or work at the grocery store, etc.  Others they are there most of the time except when the staff take them to appointments and activities.  There are no special requirements from the city to rent to these people or companies, just the normal registration.  In my town, a "group home" is defined as 6 or more individuals and that falls under separate rules, regulations, etc.  I do not have any of those.

@Nancy Roth   I rent almost exclusively to non profits companies that take care of individuals with special needs.  These companies (and some are for profit) get paid by Medicaid to provide "community based living services" for these individuals. The trick is to get the company paying the rent, not the individual. There are typically 3-5 individuals per house.  If someone moves out, your rent doesn't change.  If they damage the property the company is responsible to make repairs.  They tend to stay as long as you maintain the property and don't raise the rent too much.  It works well here in Iowa but the cost of living in the DC area might be prohibitive.  These individuals are on SSI disability, EBT (food stamps), housing and utility assistance, etc.  Even if the company pays their rent to you, they still have to pay to the company.  

I've had a mouse problem just a couple of times.  I buy those poison dispensers where the bait is in a plastic housing that the mice can get in but kids can't access the poison.  If you like these tenants otherwise, you could call an exterminator before things get worse.  If they are going to be drama queens maybe you could let them out of the lease if they want.  They will want their deposit back and if they claim rodent problems they are in a good position to get it.  I would just call an exterminator but that's me.

The bank I use in my town won't help you.  Ask other investors which banks they like in your area but as a rule, avoid banks you've heard of and look for local banks and credit unions.  

@Aquila Leon-Soon The bank I use in Cedar Rapids is Hiawatha Bank. They only loan locally. They are the most investor friendly bank in town. To find one like them in your area you should ask at a REI meeting, ask people that live close to you on BP, call small banks and credit unions, ask for the commercial loan dept then tell them you're an investor and ask about their terms. Once you find a good bank, stay with them and build a relationship.

I have thought about buying in Atlanta or Memphis through a TK company but when I look at the rent, cash flow, and return on investment ROI, I can do better buying right here in my town.

I do the BRRR when I can get a property that needs some work but has potential. Adding an egress window to a non conforming bedroom to make it a legal bedroom for example. I recently bought a house for 107K cash, put 19K in it (126K total) and it appraised for 145K. The bank I use lets me borrow 85% of the appraised value so I got a loan for 123K. It cash flows $400 a month after a property management fee (not counting repairs and vacancy). That might not seem like a lot but I only have 3K invested in it.

I do OK with TK properties but have never bought one through a 3rd party TK company. My best deals have been when I find a property that is a good candidate for BRRR. You don't have to buy run down properties to be successful if that is not your cup of tea.

Here's a link to an article about the Flip or Flop training/education events.  Very similar to the Rich Dad event I took in 2008 but could only could stomach the first 2 of the 3 days.  The instructor asked us to raise our credit card limits to buy more "training".

http://www.foxnews.com/entertainment/2016/10/26/buyers-claim-flip-or-flop-stars-classes-misleading.html

@Thomas S.  I rent almost exclusively to people with disabilities or to companies that provide services to those individuals.... long story short, what @Penny Clark said.

The VA funding fee is around 1% the first time you use it and it can be rolled into the balance. After the first time, the VA funding fee is more like 3%, fyi