All Forum Posts by: John Myers

That is not the approach I would take,  especially in a rising interest rate environment.  

I would take them to court and represent myself.  You likely won't get any money, but you might get a judgement against them.  The judgement will follow them for a while, 7 years in our state.  It will make thier life difficult and they cannot buy a house in NM until the judgement is satisfied.

I would give them some of their rent back.  I tell my tenants that they are responsible until the end of the lease.  I will try to find a new tenant if they want to break the lease early.  I ask them to look for a new tenant also.  You might want to see if there are any laws in your state/locality regarding your situation.

You will need to check with local, county and state governments.  A great place to start is to call zoning and ask them if you can do this. in addition, check with the county and state.   Additionally, If the home is loctated in a home owners assoctiation, check with them.

A couple of thoughts about risk mitigation. First, make sure you notify your insurance company that you are using your house as a short term rental. Sounds obvious but some don't do this. Second, get a lot of medical and liability insurance. Third, carry an umbrella polciy with $3 million of liability or more. You may want to hold your rental in a LLC.

Risk mitigation is a must.  You work hard to get where you are and can lose it fast!

I am not an isurance sales person, but you have to find ways to protect yourself!

Amazing, you see bad pictures all the time.  It makes no sense.

This is one of the worst I have seen.  LOL!!

You are getting lots of great advice. I manage all my own properties and it is pretty easy. The number one issue is to get great tenants. Great tenants = great life! Bad tenants = life sucks.

You are operating a business when owning rental properties. Take it seriously and operate it as a business. If tenants are late on rent, then inform them immediately (according to the laws in your state). Evict them if they don't pay, do not procrastinate. If they can't pay this month's rent, they will probably never catch up. This is true in most cases. You don't want to get stuck with a tenant that has not paid in several months.

Make sure your tenants have enough money to pay rent. Credit scores are important, income is important. However, how much money do they have after they pay all their monthly bills? I make sure they have a debt to income ratio of 50%. Many people make a ton of money, however they spend 1.5 tons of money. There are plenty of ways to screen tenants online. Fine one that works for you.

Having good contractors is a must, sounds like you got that covered.

This is a great question and one we all probably ask ourselves.

I was in a similar position (not a million dollars) when I started investing in 2010. My strategy was to buy as many houses as I could using mortgages. I put down enough for a positive cash flow. Once I had the number of properties I wanted, my strategy shifted. I used the snowball approach and paid off 7 homes in about 10 years.

My goal at the time was to set myself up for large cash flow in the future. Look at your goals and take the appropriate strategy.

Good luck!

Personally, I think the rental market will remain strong and rents will continue to increase (not as much as in the past 2 or 3 years). WE are becoming a rental nation for many reasons including large hedge funds purchasing homes. They are pushing first time home buyers out of the market. In my area, there is a shortage of houses and rentals. As the deterioration of the economy will push more people into the rental market.

I started buying rentals in 2009 when the economy was crashing and many homes were being foreclosed upon. The economy was terrible and rents kept going up. All the foreclosures and short sales created more renters.

In addition, there are millions of people crossing our southern border and moving to the US. All people need a place to live, food to eat, water to drink, medical care, and some need schooling. This migration will create a huge demand for all the items above.

Homes are so expensive and interest rates are high, this is pricing many would-be home buyers out of the market and forcing them to rent.

Finally, all these forces point in the same direction, increasing rents. Home prices may decline ( I believe there will be a short term decline in prices) or crash (I don't think this will happen). I am not concerned about home prices as much as I am about rents. The one big risk is that governments may implement rent controls in areas that do not have rent controls, this would be a game changer.  I am in this for the long haul.

Of course, the real estate market is local and it is critical to evaluate your location!

The big uncertainty here seems to be the cost of the rehab.  I recommend you find a contractor to price out the repairs as you plan. ie some portion over several years.  After you get the estimate, increase it by a contingency factor that you think is appropriate.  Probably at least 20% or more, this will help cover the unknowns and inflation.

The contractor may charge you to prepare an estimate, however look at cost of the estimate like an insurance policy.  It is critical to get all your numbers right.

Finally, this will be very time consuming on your part.  Make sure you have the time and patience to take on a project like this!