All Forum Posts by: Jeff Tallard

Thank you for taking the time to read it Scott

I appreciate you taking the time to read it CJ

 This is a copy of an email I sent to a beginning real estate investor last week. It’s just some random thoughts on real estate investment based on my 35 years in the business.  During that time we have purchased over 200 properties. We currently own and manage 100 single-family homes and small apartment buildings in the University of Wisconsin campus area as well as several farm properties.  The following is intended for beginners but it’s possible seasoned investors may find an idea or two.      

 I guess the question is could you get a better return on equity in the house than what you're currently getting.   That is assuming you're not upside down.    Florida in the year 2016 had a net influx of 367,000 people.   They are all going to need a place to live.   Absent a significant black swan event, growth in Florida should continue.   Higher interest rates are the wildcard  but people are still going to want to be out of the cold and into the warmth in their retirement years.  Sorry I can't give you more information on that specific area of St. Petersburg. We have been in Sarasota which is growing like crazy. 

 I am trying to help my sister out and replace the roof on her house. Can anyone help me find a reputable roofer in Citrus County Florida near Beverly Hills Florida?   Thank you 

 I come across a lot of investors that are buying property with notes that adjust in 5 to 7 years.   They are currently borrowing in the low 4% range.   My question for these investors is; have you evaluated what your cash flow will look like if your mortgage rates rise substantially?  

Is it possible that if the economy weakens that your rent increases might not be what you projected?   

I would strongly encourage those with adjustable rate loans to take a serious look at how their investments might turn out if interest rates rise substantially and rents remain flat.  

It's a lot of work owning and managing investment real estate and you can put in a lot of time and not necessarily make any money if you don't get the proper financing in place.  Hoping that interest rates remain low is  speculating not investing.  

 In our early years when we had more adjustable rate loans we would shorten the amortizations wherever possible.  By paying down more principal it reduced the risk that higher interest-rates  presented.  

Just some food for thought.   

 I think if you find the right deal the decision is easier, you'll be inspired to exchange.   I don't think it's always a great idea to exchange just for the purpose of exchanging .  It all depends on the timing.  

We did a few exchanges at the top of the market  in the early 2000s and the properties showed almost no appreciation for seven years,  and actually went down in value after we bought them.  

It feels like we may be approaching another bubble if the bond market bursts and interest rates go up.  

There is also a strong possibility of another government shutdown this summer due to upcoming budget issues .  Things of that nature tend to rattle markets.

It might not be the worst idea to take some money off the table and sit back and wait. 

That being said, if you find a fantastic deal to exchange into you might be able to maintain the value of your building even if there is a correction. 

My 2 cents

 Instead of charging a late fee we offer a prompt payment discount  for rent that is postmarked by the due date.   If you want to use this method you simply inflate your rent by whatever amount you feel is fair at the beginning of the lease.  

You definitely need to check your local laws.  Some local laws are different than state laws.  

If tenants complain about the late fee I generally explain to them that I can't make my mortgage payments in a timely manner without the rent and that my bank charges me a late fee for late mortgage payments.  

 Also make sure you check your local laws to make sure it's legal to take the late fee out of the security deposit.  There was a time when that was not legal in Madison Wisconsin.   You had to go to court to collect the late fee.   That made it very inconvenient to enforce.

 That's another great read Reginald!!

Be patient and wait for the good deal to come to you.  If there's any doubt wait.   When the right deal comes along you'll barely be able to contain your enthusiasm. Let that be your barometer. Just keep looking,  focusing, working hard  and networking and  you'll find the right investment.