All Forum Posts by: Jason Monroe

I think it's been said on other posts, but perhaps should be said again  if your average rent is  below $1,000 and you're looking at raising the rent perhaps north of $100 that represents  a 10% change or better. The tenants may not accept an increase of that magnitude. Your cost estimates  should also include scenarios that  has you needing to turn over some number of units because the tenants have left as you look to increase the value of the property.

Without knowing more 

Www.landwatch.com is once place that you can find listings 

Someone once told me that for gas stations every 50k gallons pumped per month it's worth an additional 1 million dollars. 

better understanding the 5 year outlook for the city planning commission can be helpful they are going to put a stadium up near your lot that's pretty awesome and might create a special events revenue stream. 

You have not stated your goals so it's difficult to say anything of particular vote-worthiness. 

Have you ever seen an effective conversation between a 5 year old and an adult? Typicially the adult positions their body so they can have an eye to eye conversation with the young person. 

The tenant has in their own mind has the owner / landlord in a position of power over them. There is no need to remind them of this but to approach the situation with understanding and the need to create a win win. 

Moving creates anxiety thus helping the tenant deal with those anxiety / uncertainty scenarios can certainly help to create a win win. 

@Zachary Corum, @David Dachtera

A couple of years ago I had my first Uber applicant. I ultimately said no but here is a little why

- Didn't have 1099 information 

- You have to ask for their bank statements as I determined this applicant was ultimately feeding his checking account from his savings to stay liquid. 

Often times because of car requirements for these services folks have to go get new cars because a 600 credit score for a car loan is still sub prime and some of those loans will eat ones soul the rates are so high. Meaning their income is okay, but they are over leveraged so might have problems paying rent.

- Their savings should be adequate enough to pull them through any lull moments.

Like @Chris Mason said you ultimately want to establish a work performance pattern that would provide some kind of payment regularity. Then ensure they have some kind of savings to see them through any of those days they are sick, got a ticket, or their rider puked in their car and it has to be detailed TWICE.

@Adam Klugh  It might be best to ask the moderator to close comments on this thread. As it doesn't seem as though any new value would be generated for the community from this discussion. 

@Jayme Jahns, 

IRS rule 1031

https://www.irs.gov/uac/like-kind-exchanges-under-...

It allows for like kind exchanges in the future. That are tax deferred so you find a buyer who wants to buy yours that is willing to co-operate with a 1031 and a seller that is willing to work and then you move from one into another without needing to pay tax at that time. 

Buying out of state requires a ton of energy because in order to get comfortable you have to physically go to the area and walk the opportunities as people in 2% areas (Indianapolis) can potentially have less scruples and don't have a problem taking your money because your from the "RICH" west coast. Unless you work with a partner you trust on the ground.

Since your buying an older place how old is the roof?

What is the type and condition of some of the internals of the house (water heater, pipes, electrical system )  What is the useful life left for those items? Some of these things you can know before you have the inspector walk the property with you. 

Given the pictures that you have seen and the comps will you need to do a full turn if a tenant leaves? To move it to market rate ?

Older homes will often hold water better than you want so there will be some amount of rehab work and if you have taken a lot of money out of the deal that would pay  for those things already. Then you might have to build that into your cost model. 

how would you enforce a parking or other transit toll? 

@Arlen Chou,

There are a couple of questions that need to be addressed 

In order to get the building because "I'm poor". All of the banks I spoke with wanted to do a conforming loan meaning that for the million dollars I borrowed they wanted me to have 1 million dollars in assets. I didn't have that in addition to the down payment. Ultimately I got a bridge loan. In either case I had to take a bad deal so my interest rate is high. Increasing the income via tenant buy outs is a way to enhance the financials for the building for the purposes of obtaining a new loan.

So I would be increasing the income for the building and then I would be decreasing the payment through a lower interest rate for the building

Since I don't have a term sheet I can't tell you how much I would be saving, exactly but if it provides 1 - 2k off per month of savings

I would make the money back within 2 years

@Jeff Yates, what did you end up doing?

There are always properties like this that you could think about... 

https://www.redfin.com/CA/Gilroy/1st-St-95020/home...

So..... This isn't really a business plan because there is no operational side to it. There is also no marketing part to it. You also aren't calling out the verticals that you want to focus on. 

Read the 1001 ways to make money in real estate article that Brandon Turner wrote and identify a number of verticals that you would like to focus on. As you have called out Flips, SFR rentals, and Multifamily Rentals.

A successful real estate business will generally involve more than ONE person especially when your looking to operating in remote markets. 

If you're going to be raising money then an LLC isn't a bad idea but if it's a real estate business you need it to be in the state your operating in. Software and service companies can do well with the Delaware Corp situation.

Joint venture is a great way to get going in an area. If you're operating in remote markets someone will have to walk the deal to make sure that it's not a hole in the ground. 

1) Identify the verticals that you're interested in. 

2) Figure out how your going to fill your pipeline (lead sources ) 

3) you have some ideas on funding 

4) come up with some ways to underwrite the opportunities in the case so that you can manage your risk if there is a market correction or you find you don't know what you're doing on pricing

5) Who is going to execute on what parts of the plan 

6) When you exit who is going to stay in and who is getting paid and leaving

7) Repeat