All Forum Posts by: Jason L.

Don't underestimate the impact of what market you are in will play to. Generally closer to water = more risk.

Check out Kin Insurance. They're particular about which houses they will underwrite (they insured 2 of my Florida houses but refused the other one), but the ones they do are cheaper than all other quotes I have gotten.

How exactly are you getting your property tax reassessed (or maybe more specifically why are you so confident it's going to go down after you fixed the place up)? I'm UC on a duplex not far from yours right now and the taxes are really high compared to some of the others I've looked at. I have just underwritten the higher amount, but if there is anyway to get them lowered then I'd obviously be thrilled.

For rent or as a primary?

I own a townhouse as my primary. I bought it because I wanted a quick commute to my job (obviously got laid off due to COVID so that decision didn't age well) and I live in a very expensive city in South Florida where townhomes are 20% cheaper than SFHs. So for the latter point, that is obviously a plus for investing. 

However the major downside is HOAs. An HOA is like having a landlord on a house you own, except they're way more useless than any landlord I've ever had. They literally do nothing productive (okay I guess they sign the checks to the landscapers), yet feel entitled to send warning letters about the dumbest things. More importantly from an investing perspective, HOAs are cash flow killers. My HOA costs $300/month, which somehow is only average for my area. HOAs also often have covenants to prevent you from renting the house or at least prevent you from doing it for the first 12-24 months.

So this is all stuff you need to consider. I'd say it's practical as a primary for a few years, but the HOAs will often make them cumbersome if buying them strictly as a rental.

I cooled down after I read some of the responses, said my piece to them, and we've moved on. I'm sure I overreacted a bit to think firing them was the right move. They promised to turn the pictures around into a listing by Monday night, and I know that's ultimately the best they could have done under the new circumstances.

I guess where I was frustrated was knowing they took 4 days to get the turn quote out to me at the beginning of the month, forgot to schedule the picture guy this week, and then just had a very "oh well" attitude about it. That's legitimately 8 days that were lost to the ether. Felt like there was no urgency. That's what I was most mad about. I'm empathetic to having to oversee multiple units during a pandemic and listen to nagging owners (like me!), but forgetting to schedule the picture guy and then just shrugging off 4 extra days is not protecting the owner's investment (which is in fact the mission statement of the PM company). To them it's inconsequential; "just a few extra days". To the owner it's quantifiable -- $50 per day in lost rent for 4 days equals $200 lost.

And I am a former Yankee living in Florida, so I guess I can relate to your response :)

I just bought a property in a new market and hired a property management company for the first time there. The turn of the unit was not a big scope of work -- about $1000 of mostly general cosmetic items. They got keys on August 1st, didn't actually start work until the 6th, and finished work yesterday the 13th. The turn itself in 8 days seemed high end of reasonable, yet reasonable nonetheless. However, when you add in the first 6 days of nothing happening then it feels too long. Very little urgency from them.

In spite of all the work finally being done yesterday, I'm now being told their picture guy is out of office today and doesn't work weekends, so he's not going out until Monday, the 17th, at which point it will take them 2 more days to get the pictures to their marketing person. So all-in-all, it's going to have taken them 19 days from the day they got keys just to get a listing up.

I feel like this is an unacceptable amount of time to have wasted on a simple turn. I'm seriously considering taking them off the unit and hiring one of the other companies I interviewed to do the rest, but I also know the transfer would only cause further delays, so I'd prefer not to. Do you guys feel this took too long? What would you do from here?

The 1% rule is easier to find before a market takes off as opposed to after it's been booming for years (Tampa, Orlando, and Jacksonville have been rocketships for quite awhile) because in general, rental rates will lag behind home prices (note: this also works the other way, where when home prices go down rents won't go down as quickly). Take for instance, I bought a house in Tampa in 2015 versus what it would take to buy that same house now:

2015: $65k purchase + $25k rehab = $90k all in; $1125 rent; 1.3% Rent to Value

2020: Appraised for $140k a few months ago; market rent $1250; 0.9% Rent to Value

So if you are buying in Florida today, it's probably more because you would like the continued upward trajectory of the state's home values more so than maximizing the immediate cash on cash return.

I would do it only if you'd like to go into being a sales agent full time. When I first started looking for my first house, I had the same thought as you to get my license to help make things easier than having to call a realtor. Here I am 6 years later in 2020, I've used that license to buy 2 only houses (1 in 2015 and 1 in 2019) but could've just as easily not. Realistically, I never bought MLS access (super pricey) and can find all the info I need using open resources (Zillow, etc).

The worst part is that every 2 years they send me one of these continuing education courses I have to take to renew the license, and even though I know I'm probably not going to use it again, I can't force myself to not take the course because I don't want to give up on the 56 hours I wasted the first time. I'm trapped in the sunk cost fallacy!

I own a duplex that I am kicking the tires on refinancing. There aren't a lot of apples to apples comps in that area for other duplexes that have sold in the last year. I'm wondering if that meant they might use single family homes as comps? 

For example, the duplex is a 2/1 house with a 1/1 mother in law suite in the back (legally zoned for multi). Do you think an appraiser would just use a 3/2 SFH as a comp or might they just use some sort of gross rent multiplier?

It's not just you. I've had the same issue the last few months as well. My favorite story was meeting a realtor from BP in another state telling me to fly out to come look at houses with him, I did it, and then he forgot I was coming and lined up nothing for us to see. Literally spent $500 on a weekend flight & accommodations just to get a free coffee from his office vending machine.

More recently had another realtor who sent me one house to look at back in February, I bid 15% over the asking price (yes, in cash), and while we still didn't get it, this realtor has still not sent me another listing to this day. Maybe this realtor was just a really sore loser on that other house?

It probably is just a bad sample of realtors you and I are dealing with because obviously real estate transactions do take place all the time. However, there is definitely this contingent out there whose idea of sales technique is "here's a broad MLS alert -- don't call me unless you need me to sign the commission check".

I'm confident there is still value to be had from great realtors. Just need to keep at it.

Nice job, @Art Mimnaugh. There's always intrinsic value in goodwill.

Curious what you'd think of my situation. I personally have 3 tenants, all of whom are coming due in June, and I was debating if there was something I could do to show the working class tenants a level of compassion (all 3 of my tenants are current on rent but I fear the next few months in Florida will cause more changes). The idea I had was to just forego rent increases on this cycle, as I can do without the 1-2% increase for a year, but I do fear what Nathan said. I love your idea to just buy them something small instead as an olive branch while keeping business as usual, but I fear given the timeline of my immediate renewals I think it would be too transparent for me to buy them a ham and then a week later offer a renewal. What do you think?

I wrote the word "fear" three times in that paragraph  ¯\_(ツ)_/¯