All Forum Posts by: Account Closed

 When I get an appraisal, or hire an accountant of CPA I always tell them, "I WANT THE BENEFIT OF DOUBT" for whichever scenario is in my favor. There is absolutely nothing wrong with asking for the benefit of doubt.

The same statement applies to the interview process when renting a house or apartment. Suppose, you have 10 applicants and every applicant has perfect credit and every other concern is identical. Then, it is 100% legal to weed out 9 of the applicants because you have doubt about 9 applicants and you give one applicant the benefit of any doubt.

I do not discriminate. I do avoid renting to applicants when they open their mouth and blurt out crap. I had a black woman fill out an application and the following day she called on the phone and started talking crap telling me something like my apartment unit was god's house and god doesn't discern color and everyone is entitled to live ion god's house. I considered that her statement was her pulling out her race card and a threat. I record every conversation  in my office, on my phone and I store every recording on an external hard drive in case some clown sues me.

I currently have a freak applicant who calls and threatens to sue me almost every day. The reason I won't rent to him is because in my 50+ years of renting apartments I never had an applicant ask for the name of my insurance company, how much the property was insured for, whether or not the apartment building was in an LLC, whether or not we had a business license with the city and he asked a few more weird questions that raised red flags. So, for people like him about 6 months ago I purchased my wife a 2nd cell phone she keeps with her and that phone has boldbeast recorder on it and we put every recording, text messages and pictures on an external hard drive.

Incidentally, I took a strong prescription pain pill about 7 hours ago and I am higher then a kite. So, don't pay attention to anything I write. I can't even proof-read what I wrote.                                

You have to do the math. A few weeks ago, I sent a tenant in Long Beach California a Notice To Terminate Tenancy. I gave her 90 days to move. She is currently paying $1400 per month for a 2-bedroom unit and I can easily get $2100 per month. That is an $8400 per year increase in gross income, or $84,000 in 10 years and that is how you need to do the math.

I don't have to remodel the unit, but it has a 1960's kitchen and bathroom and I like to re-wire the units with an upgraded electric panel, 110-volt smoke detectors and I always install an 18,000 btu air conditioner through a wall (not in a window. The cost to remodel the unit will be about $30,000 plus I will lose 3 months of rent = 34,500, but I will still be ahead by $54,000 in 10 years and then ahead more than $84,000 every other 10 years.

The tenant called me and told me that the city of Long Beach is in the process of passing some rent control buillsh...t where if a landlord wants a tenant to move so the landlord can remodel an apartment the landlord has to pay the tenant $4500 and the city put a freeze on evicting tenants to remodel until the new rent control b.s. is finalized. I am super angry because I don't believe the city council should have the power to meddle in people's business affairs and the $4500 is like getting a $4500 traffic ticket, or some sort of court-ordered fine when landlords are not doing anything bad. The city of Long Beach also passed an ordinance where grocery stores had to give their employees a 25% pay raise for hazardous pay due to the virus.

I don't believe there is such a thing as a mentor.

Post numbers for the properties you are looking at.

 I agree! I never heard of a buyer asking for 5 years of records. Personally, I never asked for records to see what the vacancy rate is because I (you) need to know what the market is like before you buy since the vacancy rate is totally different depending on who and how the property is managed and the vacancy rate tends to fluctuate during different periods throughout the year. Maybe you ticked the seller off by asking for 5 years.

We do ask the three years of records to confirm the expenses and income to verify the asking price for the property, but, again, many sellers had the Proforma mindset where they put an asking price on the property for what you (the buyer) can increase the rents to.

Dump the property and take a loss if you have to! Just my wild guess. I paid cash for 28 homes in Las Vegas and paid only 30 cents on the dollar for the homes during the 2008 - 2010 bubble pop and was getting $1100 to $1600 for each single-family home. That is a lot more than you are getting. I did not have to pay any mortgages and had to pay only the property taxes and insurance, but the tenants were destroying the homes faster than I could clean and paint them. So, I gave my children 6 of the homes and sold all but two. I re-invested the money in California where I paid $291,000 per unit, but I will be way ahead in profits in less than 10 years and very happy to get rid of my long-distance rental units.

You need to do the math and $800 per month is not enough money with the exception of when properties appreciate in value, but I always think of properties as being Blue Chip, or junk. The Blue Chip properties cost more, upfront, the they usually appreciate in value faster and the big money is earned from appreciation and not from collecting rents.

I was involved heavily in real estate starting when I was 15-years old in Massachusetts. I left Mass. in 1968 and when I sold a tri-pex in Holyoke Mass. about 5 years ago for something like $190,000. I think we purchased the property in about 1967 for about $90,000, Then, I spent about $100,000 remodeling the units, rented the units for only $450 to $550 per month and when you stretch out the appreciation over a 50-year period it comes out to about $2,000 per year and when you deduct the $100,000 for remodeling I made 0% percent per year and that is not good. My point is; properties are cheaper in many states like Massachusetts, Idaho and Ohio and from the way I see the numbers the properties have not increased, significantly, for many years and if this trend remains the same then those cheap properties are bad investments. You need appreciation to get past collecting low rents and to beat inflation.

We have a high percent of problems when renting to gay men, gay women and when renting to just about everyone tenant when they share the unit and share paying the rents. We have a high percent of gay men and women who have relationship problems and they break up and want to break their leases. We get many gay tenants who want to break up and then come to us to see if we can evict their ex-lovers.

The best tenants are always single men. They move in, stay for many years and never complain about anything. Singe women complain about so many things I still get amazed about what they complain about. Families with 1 or 2 children always stay for a long time. We tend to have a higher percent of problems with teenagers when their parents are trashy and their teenagers run amuck bringing trashy friends to the rental units doing their drugs and trashing the property.

As someone just posted, focus on multi-units where you can often get a 4-plex for almost the same price as a house. The huge difference is a 4-plex increases in value when you raise rents and a house does not.

Post the numbers for what you just purchase and lets have a look to see if you could have made an investment where you could get more bang for your buck and that is what is most-important. There is no glory in owning a bunch of single-family homes that generate minimal profits.

Call other property management companies and get opinions.

I've owned (still own) several businesses more than 50 years and I've always been amazed in regards to how long it takes other business owners to either make a decision to fire someone, or business owners are too squeamish and can't fire someone. For myself, I look at the dollars and cents and when someone working for me can't produce, or someone can produce better then I am a cold-hearted business owner and the health of my business is very critical. Otherwise, if you lose a few dollars here and a few dollars there then your empire can come crashing down like a set of dominos.

Your PM may be doing a great job and you need to get his (or her) side of the story. PM's have their hands tied in many ways so they are paralyzed. PM's don't have the latitude to make decisions like you would if you was a hands-on owner. I did quite a bit of research for rental units in the Cleveland area (I am in Los Angeles) and I find that the rents in Cleveland are something like only $850 for a 2-bedroom home or apartment and $850 is not a lot of money in today's world where the cost for materials and repairs has almost doubled in the past few years. 

One serious problem with hiring PM's is you don't pay them enough money to manage your property like a hands-on owner. I am guessing that the average PM does not earn much more than $20 to $25 per hour for each property they manage and even if you are paying them 8% (they usually charge 6% to 8%) then the PM is is earning $68 per month for managing an $850 per month unit. If you break that $68 down by the exact number of hours a PM spends collecting rents, doing the books, dealing with you, dealing with your maintenance issues and deducting their operating expenses ho far does $68 really go and how many hours can a PM dedicate to you for a whopping $68.

I know PM's charge additional fees for re-renting units, advertising and maybe they charge 5% to 10% for handling contractors for maintenance, but I would never work for those peanuts.

One more serious problems PM's have is the have to be highly motivated to manage your property so their clients accounts are 'in the green' at the end of the year. Otherwise, if their clients' accounts are 'in the red' then they would lose all their accounts. So, to keep the account 'in the green' PM's defer a lot of maintenance and cut a lot of costs that are counter-productive for keeping properties in pristine condition.

I think the way you communicate with a PM is super critical and I always believe the best way to speak with your current PM is to ask many questions and hear their side and try not to speak like you are totally unhappy with their service. Then, if you don't like the answers you hear and you find a better PM then make the switch without hesitation, but when interviewing everyone for every type of service everyone puts on their best game face.

I managed 28 single-family homes in Las Vegas (280 miles from Los Angeles) all by myself without a PM. Then, for the last two years I owned the homes I hired a PM and the company was very organized and tried their best, but since it takes 45 minutes to get from one side of Las Vegas to the other and since my homes were spread throughout every area in the city the PM did not get paid enough money to do frequent inspections and every tenant destroyed every home. The average cost to clean every home was not a penny less than $6,000 and a few were close to $12,000. So, I gave my children 6 of the homes and sold all but two. I am a firm believer in investing only the areas I can be hands-on and currently don't have one PM even though I still own a few homes in Idaho and Las Vegas. I can manage from a distance just as well as a PM. Especially, since PM's don't do frequent inspections for cleanliness and destruction of the properties.

If you want a mentor or want to join a master mind group check out Michael Blank's spreadsheet, his videos with his spreadsheet for syndicating and he charges $129, youtube videos and he recommends some good mentors and mastermind groups. These people won't 'beat around the bush' and you will get straight answers. I get about 1 or 2 emails from Michael Blank every day with videos and assume he upsells, or whatever, but I don't have time to pay attention to what he does or is offering and syndicating is not on the top of my list. 

I do admire Ms. Barker since if you search Amanda Barker on the internet she has put in years of hard work toward education and appears to be great with using social media.

I may come across as being negative about many things, but for every person who is successful with any type of business e.g. real estate, stocks, construction, or retail there are thousands of people who fail big time because they get inspired to start a business, pumped up, think they can part the Red Sea, walk on water and they drown.

I can tell you how I became filthy rich in one sentence and leave out the 10,000 facets you don't have a clue about and you don't even know what to ask about. Some people's brains have the ability to process information so they can see and predict a clear path that will reach their target and a high percent of people can't see the forest through the trees (if I made any sense). An investor can be great at finding a property, do the math correctly and find investors with tons of cash, but that investor (General Partner) can also be braindead when it comes to managing the properties, handling the rehab, dealing with tenants and rent increase and there goes a lifetime of some investors' savings.

I am not negative about syndicating. I am super cautious when it comes to allowing someone else to have full control of my money. A syndicator doing a great job earning profits for his limited partners, today, may easily take on too many projects and his (or her) empire comes crashing down like a set of dominos and that is why "The Devil Is In The Details".

Pay the $129 for Michael Blank's syndicating spreadsheet and he has some decent videos about syndicating. I believe he has many videos and maybe a course about syndicating from A to Z and maybe you can find some of them on youtube.

Look for the podcast on BP by Cho. I met with him a few times when he was starting his first syndicated deal, was working on partnering with him and at the same time I was having serious Vertigo spells that sent me to the emergency room several times. So, I did not partner with him and about 1 year later he made a podcast on BP stating he had syndicated about 1,000 units. He is an Average Joe, but he also has that special ability to see and project a clear path to reach his target.

If you are serious about syndicating, pay an attorney $300 to $500 for a consultation so you understand clearly the laws, how to set up your syndicate, what the Placement Memorandum is and how you want to structure your syndicate in regards to what percent you want to promise your limited partners. For myself, it is difficult to look for a property to syndicate if I don't know how much I want to promise my limited partners because then I can't put the correct numbers into all the properties I am assessing when looking for the property that will give the highest return.