All Forum Posts by: Keith Smith

@Kelly Conrad

Sounds great! As long as you know a little about the tenants. I would want to make sure the criteria before you was up to par with what you would require of potential tenants. A lot of horror stories from people inheriting tenants.

Also, sounds like the same property management company that has been managing them will continue to do so though. I think that's good if the management company is a solid company. That way, the tenants aren't having to get used to a new landlord. It's business as usual for them. You don't want to inherit tenants with bad management/ownership and then you have to "break them in" with how you manage and what you expect from them as tenants.

@Bridget Hallmark I've had the same thing recently. I assume a lot of it is because of my minimum criteria. I bet a lot of folks see it and know they wouldn't qualify.

@David Edwards I will say I got an Umbrella policy once I got my second rental. Right or wrong, I don't know, but that's when I realized I needed protection in this sue happy world. Also, the Umbrella policy will blanket not just your rental properties but your auto and home as well.

@David Edwards I have a million dollar umbrella policy on top of my 500k in liability. So 1.5 million in coverage. It literally costs me less than 200 dollars a year for the umbrella policy. I would shop it with multiple companies because you should easily be able to get a good price (I go through Zander insurance most of the time because they check multiple companies for the best price).  

Having an umbrella is extra protection because I have assets and equity in my rentals. I might not recommend an umbrella policy if you have nothing to take if that makes sense. Some people will buy a rental with very little money down and think they have to insure it like someone worth over 5 million dollars when technically they have a property the bank owns and no other assets.

Definitely make sure you let your insurance company know it's a rental so you'll have the right coverage.

@Brad E. That is your agents job. Your right, that is way off for that low of numbers. Sorry if your agent is a friend but sounds like either your agent isn't very good or didn't care to do much research because of the low numbers and low commission.

@Brad E. I wouldn't pay 11k over the appraisal value. Of course, sometimes appraisers aren't very good. When buying a property, especially using a loan, the agent should be there during the appraisal to make sure they know the comps in the area and to get you an appraisal that is right.

If you're getting a loan, the bank probably won't let you purchase it for anything over the appraisal. If you're paying cash, do the numbers still work even for 11k over? Maybe they do and it makes sense to move forward because the numbers work. That may be why the others are moving forward with their deals. They might not be running the numbers correct though so I wouldn't just assume it's worth it because they're buying it for a higher price.

Also, you're using an agent, he/she should be getting you the market value and suggesting what to offer. You're paying them for their service, I would let them do that and you analyze the rental numbers part of it. I trust my agent to run the comps and analyze what a property's market value is. I only trust myself when running the rental numbers.

Good luck!

@Ana Guzina I wouldn't do this deal. Your monthly amount does not include vacancy or repairs. So you're "hoping" you get current tenants out, raise rents and then get other tenants. Only then would you be in positive cash flow to cover vacancy and repairs. These two things are inevitable. You should factor in a percentage for both of these when analyzing a deal. Good luck!

@Lora H. interesting you only allow cats. I don't allow cats at all. The reason being is allergies. So many people have allergic reactions (big and small) to cats, I don't even think about allowing cats. If you had someone with allergies move in after someone with cats, you could run into trouble with your current tenant is they have trouble living there. It's not easy removing cast dander and hair. Especially if you have carpet. But the big problem is it getting in the duct work. Just something to think about

Good catch there @Rhondalette W. That is another thing pretty important. I always factor in property management costs even though I manage mine myself. What if something happens to me where I can't manage on my own or I just get tired of managing. I want to be sure my cash flow is still good even if I have to hire a management company.

@Jeremy K.  Since it sounds like your first rental, I would even be more inclined to make sure to include PM costs. Plenty of people find that they don't want to manage their own properties. Nothing wrong with that at all, just want to still be profitable if that route needs to be taken.

I definitely wouldn't hurt but I think you can learn a lot without having to do that if you didn't want to. It does help if you plan on writing a bunch of low-ball offers or not wanting to wait on a realtor to look at properties. It also gives you access to more information through the MLS. I currently invest without my license but these reasons are some that make me think I may get mine at some point. At the same time though, I like other people doing this work as I have a full time job as well.