All Forum Posts by: Jeff Ronningen

@Brian Olencki Did you know prior to closing that rents were not paid? If so you willingly took this on. How was rent proration handled at closing? The seller should have credited rent prorated to day of closing based on units being occupied and under lease. If not that’s a red flag and possibly could have opened the doir to negotiate concessions from seller. The occupants waiting to take it up with seller is a diversion. Follow through with the eviction.

@Jordan Akins Listen to the old man. With his experience he should be a wealth of knowledge.

@David Medina David, most of us have made mistakes and they’re often expensive. Work on digging yourself out, but while you’re doing that work on becoming an expert. Become an expert on the RE market in your target areas. Become an expert at structuring deals for investors. Try your hand at wholesaling. These things require effort but can be done without spending money.

@David Medina Start looking at 2-4 families and running numbers to familiarize yourself. You’ll need this knowledge whether you pitch investors or house hack. Wholesaling seems very challenging. I’ve never done it but I’ve investigated it and talked to wholesalers. I suspect a high percentage of people who try it are not successful. As a full time professional with a family, I question if you’re in the best position to make it work. But you can try without investing a lot. In my opinion you should house hack. It has a high probability of being successful and it can be relatively passive. You didn’t answer whether you own a house, I’m assuming you don’t. The biggest question is why don’t you have funds to invest? Pharmacists are well paid. Maybe you need to go “ Dave Ramsey” on your finances. I believe yOu can purchase a 2-4 unit multi family with less than 5% down and finance closing costs with an FHA loan owner-occupied.

@Giovanni Partida. I recommend accounting and finance classes. If you work a job while going to school or during the summers, do something related to being a REI. Like carpentry or rehab work.

@Carson Kesner That’s where this business becomes an art. You need to determine the proper balance between what you invest, your strategy with the property, and the return you can reasonably generate. This will be a learning experience. Don’t kid yourself by expecting a best case scenario with the numbers. Do your research and you’ll figure out the best plan.

@Angela Smith. This is excellent advice. A trusted friend of mine has a saying.....”happy wife, happy life”.....and of course the converse is true also. You’ve done well building your business to this point, it’s time for some of the returns to trickle into your household. Also, what your wife says is upsetting her may not be the whole story. Are you paying less attention to her than you used to? Does she come home from work to an empty house and no dinner plans? Does the rental business intrude on weekends? When’s the last time the two of you went on a date? Your business is doing fine and as you said it can take care of itself. You need to take care of business at home.

Assuming you qualify and you don’t own property currently, there are loan programs you can utilize with low down payment as an owner occupant. You need to research and talk to lenders. FHA loans used to only require 3% down on first $25K and 5% of the balance, and you can finance closing costs. There are creative ways to have the seller contribute back a few thousand at closing for closing costs or repairs/improvements. These programs work for buildings with up to 4 rental units. If you want to jump start, look for a 4 family even if you have to tolerate less than ideal living conditions. At closing you’ll be credited back security deposits and pro-rated rents for existing tenants.

Many lessons learned and often lessons aren’t cheap. Your biggest and costliest mistake was not recognizing that prorated rents and security deposits were not credited to you at closing. I would stop the closing in its tracks immediately upon recognizing that. Always ask for the settlement statement prior to the closing so you can review. Study the statement and make sure you understand it. Despite your prior real estate purchases your miss of deposits and rent indicates you have some work to do here. Study your prior settlement statements and make sure you understand every number on it. No one else is going to look out for and care about your money more than you. Always write into your offer that the seller is to provide copies of current leases. Since you don’t have them, notify your tenants and inform them the seller hasn’t produced leases. Furthermore tell the tenants you will assume they are all MTM with no security deposit unless they can provide documentation which proves otherwise. I’ve had sellers fail to provide leases before, not a huge deal unless falsified rent amounts were provided. But you should do your own analysis of market rent anyway. Not having keys is a nuisance. But getting the locks replaced and new keys isn’t expensive and it’s not a bad idea. The seller apparently doesn’t run a tight ship so who knows how many sets of keys are out there. You want a secure building. You should not have paid the water bill for usage prior to purchase of the building. Let the water company go after the previous owner. Switch utilities to your name the day of the closing. Your real estate agent and title company are embarrassments to their profession. Unless they take action to make you whole, I would never use them again. Despite these issues hopefully the property is a good investment. After some time has gone by the cost of these mistakes will seem smaller and you’ll have a good story to tell.

I agree with other’s statements that your expectation of 8-12% may be too high. Take your time and do your homework. You said she’s retired but you didn’t state her age or investment horizon. You also dIdn’t state whether she’s got other income. These are important considerations. Over time the stock market has good returns for long term investors, but there are dips along the way. The money will last as long as you don’t touch the principle.