All Forum Posts by: James Carroll

Investors do have some choices .  The cost of the insurance should be related to the risk you assume.   Most admitted carriers ie State Farm Hartford and others offer plans that cover most contingencies .  You, however, can go to the Surplus market and for instance forgo coverage for your roof or water damage.  You can raise deductibles very high.  These risks you assume will reduce the cost markedly.  You must consider your ability to accept the loss though because you may be wrong!  I generally exclude the roofs and water damage and use a 5% deductible reducing the premium about 40%.  It is my opinion that the cost of replacing a roof and the likley hood of a total loss on the roof are over estimated.  I am able to spread the risk of the deductible over several properties.  I am aggressive about water intrusion on my rentals and most policies limit the coverage for a large event.  A caveat though, if you have a water fixture on the second floor and high dollar amenities like hard woods be sure you understand the risks.  Tenants do not take adequate caution to avoid second floor water  leakage.

As long as there are buyers below the current price there will not be a crash.  Price is also not a conspiracy it is caused by market forces .  In China it is a product of currency control.  If you are Chinese and have money there are limited investment opportunity's.  The Stock market small and volatile and they cannot take the money out of China.  The zombie cities will be used by the government. When they have sufficient water and power and sewage disposal the govt will put mfg in near one of the empty cities .  People will move from the relative poverty of the farm to the new cities and wallah a whole new economic sector will spring up. That is the advantage of central planning.

 I read all the time some broker analyst says "I have lots of buyers but the price is too high", that is ridiculous.  The price is a result of lots of potential buyers and the ones that feel the price is too high are not  buyers at this price.  One of the better sayings from the stock market is that " the market climbs a wall of worry".  You are worrying and are not a current buyer.

The value of an income stream which is what rental property is, goes up as interest rates decline.  Along with that actual rents have risen dramatically .  We should not be surprised at some decline.  New residential construction is higher, and has a smaller footprint.  While builders attempt to catch up assets will not decline.  Material and labor remain cheap.  In short our assets price has increased our rents have increased and the value of that is increased by the time value of money.  Set back enjoy the ride it is not over but may be turbulent. 

miss a month at $1200. it is $100.00 /Mo you could use to get a good tenant.  keep the cash flowing.

"Taxes are the price we pay to live in a civilized society".  The Tax rate is never !00 % so do not worry about tax going into an investment.  After the deal is done you can and should minimize your tax but do not plan your investments for tax.

Notice the move in $200,000-250,000 in Alief.  Looks like new highs.  Certainly Meyerland and Westbury have moved off the highs.

If you lose two months and then drop the rent, shame on you,  You already know you are selling coal in Newcastle.  Keep the cash flowing. Use the price to get a good tenant fast.  You could buy them a trip to Disney for another month's rent.

Learn to write an ad, put it in the market ( I use Green Sheet)with photos get several qualified renters (Most Important).  Look for the one that says, " I can't move in until next month because I must give Notice".. . while you are doing the make ready decide on the Applicant's that are qualified, let them see the house after Make Ready and not before, sign a Lease ( only crazy people don't).  A good tenant is worth pricing below the market I target $150. mo below) and provide a quality unit.  This is a good market to rent in. Insist on all the money paid prior to move in.  Make it clear the late and partial payments are not acceptable and say the work evict several times.  Say "I do not want to think about my tenant and whether he is going to pay on time and in full."          After twenty years of renting houses out I can get the unit turned in two weeks . The last time it was rented I held a deposit prior to my previous tenant leaving.     You will know if you are too low on rents if you get more calls than you can respond to.  If that happens rewrite and take more apps.  Same on the other side, if your not getting good calls and apps lower the rent and rewrite the add.  I run adds now just to see what is happening.   You can get two districts for four weeks for @$150.00 internet and photos are free.    I do not meet prospective tenants to show the houses.  They can see only through the windows and lock box entry.  I do not let anyone see the house until I have a qualified application. 

I have make all the mistakes I think,  I stole most of my operating system from many people.  There are books and courses. 

1. Never rent to friends or relatives

2. They will call and say " will you take cash today and let me move in tomorrow? Hang up. It is code for "I just got out of jail and robbed a filling station on the way here."  Always get prior landlord on phone and ask everything, many will give info..  If the tenant has not paid the rent current they will not pay you.

Good Luck

Decide what you can pay based on the return you desire and start making offers.  See all the rehabbers you can, many are not good at it and need to bail. Pick them up.

I am an economist so you shouldn't listen to me.  Barring Black Swans Wars Plagues the world's RE should slowly grind higher.  I am quoting someone else here, regarding Swans, when problems like the banking crisis happen. " they always destroy the money as that is the asset poor people hold, the rich have property."