All Forum Posts by: John Morgan

@Anthony Wick

225k, 130k, 125k, 100k, and 48k. 

1993, 2007, 1959, 1959, and 1958

I wasn’t prepared for 3 foundations shifting causing cracks and stuck doors all at about the same time..but that’s normal for the Dallas area. The house I bought for 48k had a known foundation problem. I got that house for 50k under market value because it needed some work and didn’t have an HVAC system etc..just window units. I got them all about 15k under market value so I factored in repairs when I made offers on them. I was just hoping I could get a few years out of them before they all fell apart. 

Solo

@Jordy Train

I’m going to still stick with 50k cash reserves for all six of my rentals. I cash flow about 3k/month total combined with them right now. So usually if I have a maintenance issue I have plenty of cash to cover the expense. Last summer was just pure bad luck. 

@Anthony Wick

I live in North Texas where foundations are a problem. I had 4 out of my 5 Texas properties have doors that wouldn’t shut and cracks in walls last July. That cost me 19k in foundation repairs. Had to repair interior wall cracks and new paint to three of them for 6k. Then I had four HVAC units go out within a few weeks of the foundations being repaired. And of course I’m on vacation when a couple of my ACs went out! That was another 18k. Two of these homes were really old and needed an updated electrical box to handle the new HVAC units properly which cost $3,500. Needed a new roof on one which cost me 5.5k. Siding rotted out on one so had to replace that with new outside paint which was 4K. Plumbing leak under foundation slab was $1,800. Water leak on another cost me $1,200. Water leak found on another cost me 3k which included new floors. Had to remodel a bathroom due to plumbing leak. And do major sheet rock on one unit that had water damage and had to repair burned up walls in the garage due to my tenant’s dryer catching on fire. 

All this happened over a few months. I thought 50k cash in the bank would be a decent reserve for my 6 rentals. I was wrong. I needed 70k for these random repairs over just a few months. Ouch. But I also feel I had an anomaly of bad luck over a short period of time. This seemed to be a little extreme. But as Kevin O’Leary always says, “Poop happens” so be prepared. I hope things calm down this year and I can build up my cash reserve. I had to take out a no interest loan for 18 months to pay for some of this. And needless to say, my wife who hates me being involved in real estate hasn’t been happy with my investment in real estate so far. Haha. I’ve only been doing it for four years. I’m determined it’ll get better!

I only have 6 SFRs and got torched last summer on random things breaking. My rule of thumb was to have 10k for each property sitting in savings for the unexpected. I only had 50k and was getting cocky since everything had been running smooth for awhile. However, I had 70k worth of unexpected things breaking on my properties within a 5 month period. I got caught with my pants down and burned through all my 50k cash in what felt like a nano second. My advice is to have at least 10k per property! If you don’t, just make sure you have easy access to borrow some coin to pay off the unexpected. And trust me, Murphy will show up on you once in awhile and you better be ready to pay up.

So I filed my first eviction with the JP last week and they are serving my tenant and his girlfriend an eviction court date in a couple weeks. It cost me $197 to do this. I should have done this months ago. I tried working with these tenants and let them slide on rent A LOT. So here’s my question. They just told me they would be out in 7 days. They asked if I filed and I said yes. The court date is 3 days after they say they’re leaving. Should I drop the case if they’re out completely this weekend when they say they will be? Or continue and go to court so they have an eviction on their record so other future land lords are warned about them? Is there a chance I could get back rent they owe me? Has anyone had any luck getting paid back rent later on after winning the court case? I assume a judge can’t make them pay me. Do some go through collection agencies to try and get back rent? Or do I bite the bullet and drop the court hearing so I don’t have to wait additional days to legally get my property back?

I assume if it gets bad, I might have to drop rent 10-20%. If I can stomach that for a few years then I feel that I’m ok with real estate investing. Hopefully that won’t happen, but I plan for the worst and hope I have enough income to offset some tenants losing their jobs and having to evict and turn over some properties in bad times.

It took me 20 years to be one. I never made much at my job, but I was frugal and invested every extra penny I had. I slowly bought stocks over time and seemed to double my portfolio every 7 years due to compound interest and dollar cost averaging. I got into the real estate game late (4 years ago), but already have about 600k in equity built up with it so far. Wish I would have started investing in real estate 20 years ago! The key for me is to go for base hits, not home runs. Delayed gratification is what it’s all about. You don’t need a to drive an expensive car and eat out twice a week. Drive a beater and eat in as much as possible. Oh yeah, and clip coupons and only eat out at buy one get one free restaurants until you’re well on your way toward that first million.

I’ve kept them all. I did sell one foreclosure I bought for 60k then sold it for 100k a year later. Did a 1031 on it. I’m more of a buy and hold investor. Passive income works for me. I aim for base hits vs home runs a lot of people try for recklessly. 

@Rahul Handa

I'm bringing in about $2,900/month after all expenses off 6 SFRs. Two are paid off. The other four are on 15 year loans. Prices range from 100k to 225k. My cheaper properties have a much higher ROI. Good luck! Once they're all paid off, I estimate they'll bring in an average of 1k/month. Not bad..not great. But it adds up with more and more properties under your belt.