All Forum Posts by: Cara Lonsdale

#1 Tip : Put Relationships before Revenues. 

Just a couple years into my business, I was contacted by a couple from NJ.  They wanted to retire in Sun City, AZ and wanted me to help them.  They were a small sale, and took FOREVER to make a decision and complete the process (I bet I walked dozens of properties for them).  I spent countless hours on the phone with them, explaining paperwork, the process, and coordinating their relocation here with them.  It was ALOT of work, and the commission didn't even come close to covering my time and efforts.  However, I wanted to help them out.  They didn't have anyone else here, and it tugged on my heart strings, so I did everything I could to walk them through to a successful closing and move here to their new home.  

A few months later, I got a call from the wife's sister.  She wanted to move here too to be close to her sister.  She also had a house to sell in California (so I got to pick up a referral as well).  A year later, I got a call from the sister's daughter.  They were moving here too, now that their mother was here.  A few months after that, I got a call from a gentleman that knew the sisters from Church.  He was looking to buy a new home.  And so on, and so on, and so on, it has gone on for over 20 years and counting.

The point is that putting relationships before revenues can be more valuable than any ad, or marketing piece someone can receive from you.  Their loyalty, their top of mind awareness of you, and their memory of your contribution to their experience (that they share with everyone they know) will make a far bigger impression on your wallet than a magnet on their fridge with your name on it. 

I would check with your state's processes for eviction proceedings during COVID.  Some states (like AZ where I am), require the Tenant to prove that they have applied for various COVID related financial aid in order to avoid eviction proceedings.  If you know what the Tenant can and can't get away with, that helps.

Also, I would suggest looking into Government backed rental programs like Section 8.  These are government backed rental payments.  You may lose the Tenant's portion of the rental rate if they decide to stop paying, but at least you will have the government's portion, which is usually the lion's share of the rent.

Lastly, I would make sure that your Tenant screening process is fine tuned.  In general, people with good credit don't usually want to put that at risk with a Landlord that can report late payments and delinquencies.  Of course, anything can happen to anyone at any given time (health, job loss, etc), however, you have the highest chance of success with a Tenant who cares about their credit, and that is usually reflected in their score and report.  Consider adding an addendum to your lease paperwork that has the Tenant acknowledge that you report payment history to the credit bureaus including late and missed payments, and any delinquencies.

Low ball offers almost never yield the best result compared to a smart pricing strategy.  In most cases, the lowball offer will end up higher (after negotiations) that a well strategized priced offer.  You wanted a profit, and that is fair.  However, Sellers always know when they are being fleeced, and they get angry about it, and often will retaliate with a higher counter than they normally would have responded with, because they are mad at the notion of someone trying to take advantage.
My guess is (and this could be biased because I am a Realtor) that your agent didn't want you to just throw low numbers at the Seller, that might upset them, but rather come up with a smart pricing strategy for obtaining the price you think is fair, and the Seller can live with.  As it seems to have turned out, your agent must've had some kind of wisdom as what she told you seemed to be mirrored by the listing agent when they told you nothing under $20Ks would be considered.

If you put the time/work into the front end of it in the way of prep, it could be reasonable to expect that you would not have to invest alot of time into managing the units from a daily standpoint.  This will include properly screening the Tenants, having a solid security deposit, and having a home warranty and/or handyman contact at the ready, for repairs that come along throughout the month. 
I often encourage investors who want to try self-management, to create a property binder for Tenants that live in each property with "How To" instructions for submitting claims into the home warranty, and contacting the handyman directly for small repairs.  I would also suggest vetting an emergency plumber for those midnight leaks that always seem to happen at some point in an investor's ownership of real estate.  You don't want to get that call at 2am, however, you don't want the tenant calling just anyone either.  Better to manage the points of contact than to allow the Tenants to run up charges for you to deal with because they couldn't get ahold of you in the middle of the night.
For submitting rent payments, there are many electronic and/or automatic options so that you don't have to collect rent checks.  
Everything is smooth as long as the Tenant pays rent.  IF the Tenant fails to pay rent, be sure to have an attorney who handles evictions on your vendor list so that they are on the ready to process any of those needed evictions.
Of course, if there is any damage to the units upon move-out, that would take up time.
Mostly, the time consuming items occur when things go sideways.  Again, I would refer to my first paragraph about getting set up for success so that you can avoid the negative side of management.

You would need to verify your state laws as it pertains to that. In AZ (where I am located), you could offer an option for them to buy out the remainder of the lease or a portion, as negotiated.

Originally posted by @Sheree Scheufele:

@Cara Lonsdale

Thank you so much! I like how you ended it.. makes total sense.. now, 1 more thing.. we have decided we want to sell that property soon.. does that change anything in your opinion? Not letting her leave before April, but potentially selling it before April?

If you want to sell it, and you don't want to wait until the Tenant is out in April, then it sounds like you could negotiate with the Tenant that if she is agreeable to keeping the place clean and cooperating with showings, then she could vacate upon the close of escrow, if that is sooner than her lease term.  Alternatively, you could allow her out of her lease when she wanted out, and that would give you time to clean the place up and do any repairs that are needed to prepare it before you sell.  Again, if you have other tenants, you need to be careful about what you are allowing at one property that you aren't allowing at others.  This practice can open you up to litigation if a Tenant thinks you are being selective in your enforcement of your lease policies.

Originally posted by @Ron S.:

Originally posted by @Cara Lonsdale:

Sometimes that only applies to a property that actually completes the Trustee sale/Foreclosure process. If you are in pre-foreclosure, you are still dealing with the Servicer, not FHA.  So, this is probably being handled as a short sale.  Plan on 30-120 days to complete the sale.  If there are other moving parts like water damage, be sure the lender will take their time to evaluate.  Their goal is to find the highest net to Lender.  If they think they will get more for the property at Trustee sale/Foreclosure, they will let it go there, and not accept any offers ahead of time.

That's not true. you are always dealing with FHA, in preforeclosure or not. They (FHA) approve the net, they approve the short sale, etc.

Are you talking about FHA OWNED homes? Or FHA insured homes? Perhaps I can clarify what I was talking about....FHA insures loans. Lenders have the opportunity to offer loans with smaller than normal down payments because FHA insures them in case of default. When there is a default, the lender submits a claim to FHA for the loss.

You are correct in that FHA sets limits and processes. However, the funding lender is the one that approves or rejects the offer, per the FHA guidelines.

Here is a good article that explains the short sale process on an FHA insured loan.

FHA Insured Short Sale Process

I’m sorry you had a bad experience. Mine was not the same. With my business credit, I was able to grow to a place where I could buy a car on business credit and take out loans, none of which were reported on my personal credit, but all of which were obtained on my business credit established. 

Rather than argue, why not tell the original poster what you would suggest that they do to build business credit for themselves. 

Originally posted by @Mike S.:

@Cara Lonsdale

I have opened business credit card under EIN with them for a C Corp that is a different person for tax purpose and they still required an SSN of the officer.

I would suggest that you listen to getfundable,com podcast. There was a few months ago an entire episode on business credit card. The book is also very interesting and will give you another look at the credit reporting ecosystem.

Maybe you applied for a different type of card.  Their Spark Card for business allows you to add employees, set spending limits for them and other business services  it is set up with EIN  

Anyway, my goal was not to become the ambassador for Capital One  it was to suggest another quick way for someone to establish business credit in order to build on the ability to obtain business credit for other funding opportunities like the original poster was looking to achieve.

Originally posted by @Mike S.:

@Cara Lonsdale

Capital one is not a business credit card. They call it business but it is reported on your Personal credit report and will destroy it.

Real business credit card can be obtained from some major bank like Chase or Wells Fargo.

You can get second rate business credit reporting with Home Depot (but be careful as they also issue personal credit card under the name of the business).

That is not accurate.  Capital One issues business credit cards using only a tax ID #  if you give them a social security #, then they will also report to your personal credit profile  

The key is to not provide that info and only use the tax ID  

Capital One is not the only bank to do this, but they are one of the easiest to obtain.