All Forum Posts by: Jody Sperling

I worked for a large insurance company for years, and our directors always told us to refrain from putting things in writing. It's easier to litigate when there are written texts. So, yes, it is fishy, but not uncommon.

Why not take this opportunity to switch your banking to a local institution? You have far more options on loan and line of credit products, and many local banks keep your loans in house which means they're far more concerned about working with quality customers and tend to treat you with far greater respect?

I switched away from Wells Fargo several years back, and I can't tell you how much my banking experience has improved.

In most cases, the security deposit is discretionary, though you must document well if you withhold any deposit funds, why you withheld. In your case, the damages sound like normal wear and tear, and it would, in my opinion, be unethical to withhold the money. Carpet is notoriously short-lived. Nail holes in the walls are part of the tenant making the property a home and should be expected.

It may stink to refund that money, but remember that people talk, and it's easier than you think to get a bad reputation as that landlord who takes people's security deposits. You don't want that, but you do want your current tenants to recommend you when they meet someone who's looking for property. It will pay dividends in the future.

@Mike Hasson, I knew the roof needed to be replaced, but wasn't prepared for the perfect storm of spiking lumber costs and hidden labor. The house had seven layers of roofing on it. We could see three. All that extra labor and waste added up. Four 40-yard dumpsters to get rid off the rubble!

I enjoy living in this town, and I've told my friends and family (who strangely seem slightly fascinated with the notion that I am so stupid that I will go bankrupt and have to repent for evangelizing about the amazing opportunities to those who invest in real estate) that this house was a failed investment, but that failure means I'll break even and end up living cost-free for two years.

That's one of the many things I love about real estate. Often failure for us means we don't make as much money as we thought we would. Failure for most other people means losing money. (Also, the fence would be pricy, and it's hard to part with that money because in general it won't add to the selling value of the property, but sometimes a person has to do what a person has to do!)

We bought an old house in rural Nebraska, about an hour north of Omaha. Finding contractors hasn't been an issue. The price was extremely good—or so we thought—at just $31,000. Right away, though, we got smacked with a $38,000 roof because the last several owners had chosen instead of fixing the roof to just add more layers on top of a roof that had already been leaking for at least five years.

The moral of the story is, foundations aren't the only extreme capital expense. But the moral beneath the moral is, when you do buy rural, property doesn't appreciate like it tends to in metropolitan communities. While I understand your point of view that you're not as worried about selling price, it's worth it to know that whatever you buy probably has a hard cap for how much you can put into it and expect to get out, and that cap is a lot smaller than buying and doing a slow live-in flip in the city.

A few other details that matter to me, and I wished I'd known. Splurge on a good water system. Hard water in rural communities, whether it's municipal or well water is hard on appliances, bad on cloths, unenjoyable to drink, and a hazard to boil. Budget for good filtration! And lastly, if you have a pet and need a fence, just go ahead and get that fence. So many people out here in the boonies just let their German Shepards and Shnoodles run free. It's a recipe for WWF Doggy Takedown.

Best of luck!

Everyone has a different risk tolerance, so bear that in mind and choose your path based on yours. I will say your questions sketch a risk tolerance that to me is extreme in both directions.

1. The BiggerPockets lease agreements have undoubtably held up in court. SO many people use them that if they didn't, we'd know it loud and clear. Don't invest an unnecessary $1900.

2. View your properties as a business. Rent at market price. You'll get the best candidate pool for the vacancy. Yes, you may be able to go high, but if you miss a week, two weeks, or even a month trying to fish for more rent, the cost of vacancy will out-weight getting it filled quickly at the lower, competitive pricing.

3a. Your expectations are way too high. There's typically a reason folks are renting and marginal credit scores and low cash-on-hand are among the top three. If a renter can come up with three-months worth of cost, they can probably afford to buy a starter home. Moreover, you'll want to look at local laws if you ask for 2-months deposit, as that may not be legal, but even if it is, you'll extremely limit your tenant pool by requesting that much money. It's unnecessary if you find good renters anyway.

3b. You should never have issues if you aim for 650 or higher, especially because the most important elements of a tenant are going to be employment history and eviction history. As long as your tenant has a history of strong employment and no evictions, with a decent credit score, you'll likely be okay. I do focus on previous rent experience too. But if you want a 740 credit score, you'd decline me! I simply move too fast for banks, and I'm smart with debt, so if I can ride an interest-free credit card balance for 18 months, you bet I will. But that all hurts my credit score, which is hovering around 700. That said, I've never missed a payment, failed to pay in full, or put myself in a position of debt where I can't afford to pay off in full.

Be smart, but don't get greedy. Best of luck!

Until interest rates exceed 8%, I don't really care much what they are. I'd rather have as little of my own money in a deal as possible, so if my only choices were 20% or 25%, I'd choose 20%, but honestly, I try to find ways to keep all my money out of the deal, period.

I'll borrow so I can offer cash on a property and get it at a cheaper price so that when I refinance, even though they keep "25%" equity in the house, the refinance is on a higher value than what I paid. On my most recent purchase that meant the only cost I actually paid with my money was $5,500 for repairs. Now, the price of rent is only $200 more than the mortgage on a 15-year note, but I'm out of pocket so little money, it's well worth not cash flowing.

I might not take a deal like that if cash flow was my top priority, but honestly, I'm not thinking much about interest rates so long as the numbers come out to me not losing money.

95% location. If the price is right, I'll buy just about anything, but I've defined my neighborhood, and that's where I buy property. People will argue the pros and cons of this method, but it's the most important element of the business. If you know your location, you know your renter, and if you know your renter, you reduce the risk of poor tenants, and if you reduce the risk of poor tenants, you keep the cost of owning property to its lowest.

To my 19-year-old self, I'd say, buy and hold, every chance you get.

If you can get the duplex under contract, it's a great purchase. All you'd have to do to build a comfortable income is buy one duplex every year for five years that repeated the soundness of the one you're considering now and you'd have a monthly cash flow of $6,000 with a robust savings for repair and maintenance.

You'd also have somewhere in the neighborhood of a half-million-dollar net worth, and all this without considering other sources of income like a W-2 or working spouse. Best of luck!

We've got people in Omaha and Lincoln that do very well with STR. You just have to keep the properties closer to the urban center, whereas in some more geographically desirable places you can get out into the burbs and be just fine.

You also want to connect with a real estate agent who's very familiar with the urban location to avoid the pockets of rougher neighborhoods. Not that the travelers will immediately know when they book, but because negative reviews kill STR.

Kansas City would be great too, if the prices haven't already skyrocketed. Best of luck!