All Forum Posts by: Joe P.

@Terry Lao, I hate to say it, but your view on things is extremely binary.

Take your original post..."So in reality, if Bigger Pockets is helping everyone on this website with sharing knowledge and experience, then doesn't everyone win? Not really, 90% of the people on Bigger Pockets never take action."

I view knowledge and experience as success. The more knowledge and experience you have, the better. Lets say you are a "losing" bid on a single property. Losing on that property may not be the end of the world, because it gave you insight into the process, and perhaps your next property is a win. Or, what if the person who wins the bid comes to find out the foundation on that property needs a complete overhaul. Are they now a "loser" because of this?

Your view is so binary that all you're doing is applying a macro result into a singular micro scenario, but then saying that micro scenario applies to everything. But it doesn't take into account the intangible things you don't see on paper, like time, livelihood, knowledge, experience, etc.

Following this myself. I've used Craigslist and Zillow/Trulia. One property I have up currently has been there for exactly 1 week, and I've received about 50 e-mails/inquiries as a result; but I've only shown the property 3 times.

This is because a lot of people are tire kickers, and if you get past tire kickers, some people don't meet the income requirements, find something else, are lazy, etc. I don't want to waste my time showing the property to 50 people over the course of a week who probably couldn't live there anyway.

@Michele B. took the words right out of my mouth. Why does only one property cash flow, and if the goal is to replace a salary, how do those non-cash flowing properties help meet that goal?

Quick story on me, I became an accidental/on-purpose landlord with my first home purchase. I rented out my bachelor pad after my wife and I purchased our "forever home" and it never cash flowed. For me, it was about having a property that would gain traction in the market. But the property would never do that because of its design and limitations, so in order to make money, I'd have to either create more space/more bedrooms, or wait for the area to improve. Neither happened, I sold it, and found a property that should net me cash flow return of 8-10% per year, conservatively. It isn't a home run, but it cash flows even at a conservative underwriting level.

Being unsure of your next move is never OK, in my opinion. It tells me that your plan isn't set, so you're a wayward ship right now. I was in that rut for a couple of years, so learn from my mistake. Set the goal(s), and then compare your current spot to your goals and find the gap. Once I did that, it became clear my bachelor pad was never going to cash flow, and I was better selling it, taking the proceeds, and buying something that will cash flow.

Also compare your goals to your area -- I live in Philadelphia where unless you get properties at a discount, or off-market, you are buying at a premium, and are banking on major appreciations in the regional real estate market (which in Philly, can happen on a block-to-block basis) which are not a given. Thus investing locally for me only makes sense if its in line with my goal of cash flow, to help bring me closer to the next property.

If your goal is cash flow to retire, you've got 66% of your business giving you the middle finger on that goal right now. Figure out how to make it profitable, or dump it.

@Alexander Felice with another great post.

And what you perceive as someone losing, might be someone winning. An old home in need of a rehab at a discounted rate to you is a major win. But to the seller, it might be a burden on their finances, their lives, or a memory they no longer wish to have. Unloading it for them is the success, even its modest or nil on the financial side.

We all have our wants and desires and they are not (and should not) all be linked to JUST financial. Some of us see having financial success as freedom, and in some cases, that's true. But to me having financial success as "freedom" isn't actually free; it's going to take investment, some level of failure (I'm sure), patience from my family, patience from me, and trading one "job" for another, where eventually (hopefully) I can quit my day job and run my investment business full time. But I'll still be working.

Its an interesting thought you put up, and if the ONLY game was real estate to make money, and it was a zero-sum game, then yes, you'd be right. But the theory doesn't make it out of a textbook.

@Christopher Petersen yeah, it might. Nuclear war could also hamper your rental efforts.

You bring up a fair macro concern, but the old adage applies -- diversify. If you have a bunch of rentals in a town where not a single soul is under the age of 70, I might be concerned about your ability to maintain rental success. But that's not realistic, obviously.

I'm more concerned about politics and how that is affecting home prices, and rental markets, and the possibility of a collapse everyone has been talking about for years. But if that happens, enter the market, build your cash flows, save like crazy, and then invest when the market floods with properties selling at pennies on the dollar because there is so much inventory.

Maybe its naive of me, but if someone asked me if I was concerned about what you're concerned about, I'd give them a very strange look. I'm concerned about my properties flooding, my tenants wiping feces on the wall, my tenants losing their job, my properties spontaneously combusting...but not that.

 
Well given I am just starting with my second ever rental, I have been having tenants put in an application with me, and then I sent them a link to the $40 TransUnion SmartMove portal for a background check. If they go through with that, I figure at that point they're ready to proceed or else wouldn't put any money in.

Put it this way, personally, I'm not going to pay for someone to do a background check on me to rent their place unless I'm serious about proceeding. I certainly feel better about paying a company $40 to do a check on me versus say, $900 in rent money, before signing anything. Not knocking your procedure, just asking about it since I haven't heard of it yet.

The deposit that I'm looking for is first/last/security via cashier's check upon signing the lease. No check, no lease.

@Wesley W. I read through your process a few times and I've got to say, very impressive. It looks very similar to what I am doing, although the deposit "contract to hold" is something that I haven't considered -- to me it looks like a man scorned; did someone agree to sign a lease and back out, and that's why you've got that in?

I'm biased, but I love Pennsport. I think it has the makings of a stable neighborhood, good access to 95/76, an anchor or two of stores (e.g. Ikea, Target, Acme, Lowes) and a waterfront that'll eventually, hopefully, develop. However I could see it just staying a stable, blue-collar neighborhood. Nothing wrong with that, but it won't explode like Grad Hosp, Passyunk, or or PB. Although lower Moyamensing might be a great place to invest as I see some 400k townhomes going up in the 3rd/4th area above Snyder.

Passyunk is already there, so to speak. Grays Ferry might take awhile but could be good given its proximity to the Schuylkill and 76, as well as the hospitals. I could see a lot of entry level folks working in those hospitals/universities being forced to go South due to rising rents in West Philly (by 30th Street and beyond) so Grays Ferry would be the natural progression to remain close and have reasonable rents.

@Josiah Kay thanks for your input! I'm a big process guy myself as my background is IT operations, so I will look into MS Flow. I already checked out the website and I love the idea of its automated functionality. Thanks for turning me onto it! I also placed my rental on Zillow and I hope that improves the exposure/applications.

@Peter M. thanks for that info, I really like the idea of e-mailing the application so they fill it out ahead of time. Do you find that good tenants are the ones who follow up frequently, do what they say they want to do, etc.? I have a prospective tenant who keeps telling me they need to move ASAP, so I sent them an application link and they're dragging their feet. Little things like that make me wonder if I ask them to keep the place clean, or if they are late on their payment, will they drag their feet too?

And questions for both of you -- do you charge people an application fee? And do you use TransUnion SmartHome or any other screening? I'm trying to strike the right balance of someone not wasting time but also not overcharging for an application -> if I charge $25 for the application and TUSH charges $40 for the background screening, i could see an applicant shying away from that kind of entry "fee" or being genuinely upset if they aren't chosen from the get-go.

Hi all - finally hit the ground running and closed on my second (first real investment property) property on Friday, and have been trying to get a tenant into one of the units (other unit is occupied) ASAP.

Here is my process, and I'm sure ready for some advice and/or tweaks you would recommend. The property is in a C/B area -- its very blue collar but also would attract likely more tenants with cash/bad credit versus tenants with cash/good credit.

1.  Placed ad on Craigslist

2.  Received e-mails from prospects, responded with minimum income requirements, our required deposit, and that we will execute full background check/check references.

3.  (Assuming agreement with #2) show property, with paper application on site.

4.  If they pass rudimentary check on paper application, initiate them with my 3rd party (TransUnion SmartMove) for full background check.

I think doing #2 is saving me from showing the property, unnecessarily, to people who would not qualify. Do you all agree? I've had 15 e-mails in 48 hours, but have only had one person make it to actually visiting and putting in an application.

I'm a BIG guy on having the right processes, so I'm curious to see if others are doing things differently, or if there should be changes to my process. What I want to avoid, which is what I dealt with with my first property, is showing it to everyone who wanted to see it, getting a ton of applications, but then not having any actual interest from there.