All Forum Posts by: Jeff Mauerman

@Heshel Mangel, My primary residence is on septic, and it works fine for my family, but I would shy away from a rental property with a septic system. Septic is a balanced biological ecosystem which relies on a healthy population of bacteria, and it is very easy to mess that up. If your tenants are flushing baby wipes, feminine products, chlorine, lye-based drain cleaners, or anything else that can mess up the system’s biology, it can cost you. If your drain field fails, it can be a very costly repair (as referenced in prior posts). If you live in a high dollar market, it might be worth it, but that is something you would need to figure out the economics of.

@Robert Biggerstaff, A friend of ours has been a property owner in the east San Francisco Bay Area for several decades. He has an interesting strategy for finding long term tenants, which is to charge an unusually large security deposit, but have the monthly rent lower than the average for the area. This ensures that the tenants have been financially responsible enough to have some cash on hand, and they want to stay because of the slightly lower rent. They’re also incentivized not to damage the property because they do not want to lose their large security deposit.

Obviously this would not work for all markets, but it has been a very effective strategy for him.

Want to say hello to the BiggerPockets crowd.

I have been enjoying the podcast and the forums, lots of great information out there.

About 15 years ago, when I lived in California, I saw potential for real estate investment in the Midwest - I even flew out and toured through several states. At the time, I had no idea how to set up a system for long-distance investing so never pulled the trigger.

Now that I live in the Midwest, I am interested in building a real estate portfolio to help with retirement and to leave a legacy for my kids. Based on my study the last several months, single-family (Or small multi family, if the opportunity arose) looks like a niche I would fit best in, at least to start.

We were hit hard in the recession, and are just now again at a point where we could look at investing. In short, I have the body and the mind of an older investor, and the wallet of a younger investor. :-)

I have not run across a lot of other folks from West Michigan here. There are a number of markets within easy reach of me that look good on paper, and I wondered if the BiggerPockets community has any advice about how I should educate myself before purchasing my first property. What are the things you wish you knew before purchasing your first single family rental?

Thanks in advance, look forward to getting to know the folks here.

@Mark Fries, thanks for the detailed explanation. My situation is such that I will need to factor in more vacancy, capex at 5%, and management fees. That explains the difference between our numbers. Great strategies looking for places that don’t need kitchens and using gently used HVAC.

I’m new here, so please forgive an ignorant question. Wondering about @Mark Fries numbers - I have access to a market with similarly priced and valued C properties (and comparable rents), but my calculations show $250-$350 per door maximum with a cash on cash return of just under 12%, assuming 50% expense roll. How do you keep your operating expenses low enough that you are making such a huge profit per door? Appreciate any info, you are having inspiring success!