All Forum Posts by: Ke Nan Wang

Feel like so many ways to skin the animal.

We do 30 day notice, 2 months rent penalty. FL state law actually give the tenant three options if it's not in the lease, they can either find a suitable replacement, pay early termination fee, or landlord find a replacement and charge back. 

Our lease has early termination fee only because that's the most profitable way to the landlord. So far with us it's about 50/50 success rate. If people resist to pay or can't afford to pay, then we offer them the other two options. But the last thing we want is to have a tenant stays in the property who doesn't want to stay. 

This is from the NE Florida market. For my own new constructions, the cost is pretty simple: Property tax, insurance premium, property management, then depend on how we marketed the property, if we marketed it as a premium property, we would take care of the lawn service and pest control. If we marketed it as a value property, then the tenant took care of lawn and pest control. New construction shouldn't have any maintenance at all. Other than that, the rest would be debt services depend on how we financed the deal. 

For older houses, we would plan for capital expenses and they can add up quickly so depend on the age of roof, major appliances and HVAC, water heater, etc. When were those items replaced? Do we need to upgrade electrical/plumbing? Without major capital expenses, we were budgeting about $150 per month per unit for routine maintenance services. 

Vacancy and turnover cost that should be 8% of gross rent and this in our market is average. We have always done better than the average with our properties and services. 

So far we have been good with using those expenses for our analysis. 

Quote from @Bruce Lynn:

I don't know much about Corpus, but I am in an apartment deal there and it is probably my worst performing asset.  Tough tenants, our insurance cost has probably doubled in past 2 years as well.  In my talks with other investors since Covid we often talk about different markets in Texas and what they were like.  For example people in Dallas seemed in general to pay rent.  Lots of people in Houston didn't.  Too often I think people think Texas is one big market, but I think each of the big cities is really different, with different people, different mindsets, different mentalities.

Most of my attorney friends here say Sub2 is very tough. If you change ownership of the property, note gets called. People always tell you if the note is current it doesn't get called, but most lenders don't like name changes because their credit risk changes. Maybe their ability to sell the note changes. Lots of crazy things going on with lenders right now and their collateral. What may have been fine 10 years ago, may not be fine with them today or their regulators auditing their assets. If you don't then how do you get insurance in your name? Typically you can't get insurance on a property you don't own. So be sure to talk with your own board certified Texas real estate attorney to see what their views are on Sub2 and talk with your local Texas insurance agent about getting insurance. Don't let anyone talk you out of either one of these very vital steps to success. People will tell you all kinds of lies to part you from your hard earned money. People will tell you they've run all their docs thru an attorney, but NOT your attorney. That they're using promulgated forms or whatever BS they tell you. Trust only the attorney and insurance agent you hire directly yourself.

I don't trust Zillow for any #s, especially in Texas.  Remember the lost something like $1billion of investor money in 2-3 years buying houses, so they probably aren't that good at estimating values in my opinion.

The other real trick I see with Sub2 these days is how to bridge the gap between loan value and retail pricing? Almost no one does 2nd liens on these, which leaves you paying cash?

Not saying don't do it, but be prepared to put you own financing on it, and make sure the deal still works at 8-9% interest if your Sub2 Financing disappears at some point.

Thank you so much for the feedback. You have made many great points and helped me understand the landscape in Texas a little more. Would love to connect with you if I’m looking for future deals in Texas. I’m a Realtor in St. Augustine FL and would love the opportunity to help if you have anyone interested in real estate here. 

Quote from @Bruce Lynn:

Welcome to Texas

Are you buying cash or financing?

Are you wanting to buy 25 duplexes, or one development with 25-50 units?

Are you planning to take these down yourself or have partners participate.

Personally I would probably stay away from almost anything around Corpus.  Insurance rates will probably eat you alive right now.  

Houston seems to be struggling some.  Rents seem to be stagnating.   You may be able to pick up properties at a discount in Huston right now, but from what I see they are very asset management intensive.  Depending on the deal I would suggest you be living in the area to be intensively involved to get these assets thru the next 2-3 years.  I don't think even the best PM perform in a way to implement your business plan successfully unless you find that needle in a haystack.

I am invested in properties in both places and out of everything I have those two are probably the worst performers and take the most times.  Those markets are very very different from Dallas.

Dallas may have some opportunity depending on what you want to buy.  Deals are tough though.  I don't see much distress yet...and maybe that never really happens.  Financing is tough.  Even in Dallas I think AM will be key, but perhaps less intensive than Houston and CC.   I still believe though it will be perhaps tough to improve values with only PM implementing business plans and maybe 1x a month conference calls for AM.   Those days are probably over for a while.

Just my thoughts....and obviously very deal dependent.   I am in Dallas and have been for the most part of 40+ years.   Also invested in both Dallas and FTW, and those will probably be the best performers long term out of where I invest.

Hi Bruce, 

Recently I saw a subto deal posted on Pace Morby's facebook group and seems like an amazing deal in Corpus Cristi. The house looks nice. I don't know Texas so I'm here at bigger pocket and found your post. Would you be able to elaborate a little on the insurance cost in that area? The subto deal had PI at $1100 with 2.5% interest rate and the rent estimate is $1900 a month (conservative estimate, Zillow is showing $2000 to 2200 for like properties currently on the market). Entry fee $25000. 

Other than insurance, is there anything else about the city? 

Much appreciated. 

Hi Christina, 

1. Experience experience experience. You stuck in analysis paralysis mindset for many years for a reason. You are afraid of losing. Here is a mindset switch for you, people spend $50k to $250k to go to university to earn a degree (mostly useless unless you are in STEM or any other sought after technical skills). 

Worst case you learn a life lesson with a fraction of that cost, so you gained knowledge, experience and broaden your network,

or not so worse, breakeven (so the cost would be your time and labor), you gain knowledge, experience and broaden your network, 

or better you make money and increase your net worth while still gain knowledge, experience and network. 

Real estate investing is a skill you don't need to go to college to learn. If you are a person with a college degree, then it's a no brainer to do real estate. 

The easiest real estate investment strategy is long term rental. So many people in the world who have never heard of the Bigger Pocket are doing this strategy, how hard could this be? You don't have to BRRR and over extend yourself. All you need to do is make sure your rent can cover all of your mortgage payment and expenses. Don't think in terms of well the tenant destroy my property and I didn't make anything in the last two years. Things happen, and real estate is a long term game. The main objective of cashflow is for you to hold on to the property so you can exit (sell) at the right moment and make better gain via appreciation.

Both STR and flipping are more advance to do it successfully. STR you can't lose badly unless you purchase in the wrong location. Flipping is a high risk high reward where you can easily make 100k or lose 100k on, as I know many people did. You are speculating on the market. If you still want to flip, do it in the 85% of the medium house price in your area.

In the end, if you are too afraid of making a move, I would find a trustworthy more successful equity partner to hold your hands through a deal. Like both of you go in 50/50 and come out 50/50. You win small but also hedge your bets. Gaining the experience is most important. 

2. can't advise you on that specific area. 

I agree with everyone's suggestion here. I would like to add that normally you would request rent roll and bank statement when you are under contract and in due diligence period. 

To make an offer on a property, you can make an offer assuming what the listing/realtor/seller telling you is the truth. Some seller may not mind sharing their private info but most sellers would not share that info to someone who's only "interested." So if you are serious, read the listing, talk to the agent or seller if you are direct to seller, ask how much rent from each tenant, how long is the lease left, any delinquent tenants, any tenant who are always late, any tenant who usually cause problems to landlord and their neighbors. Don't worry about seller give you false info. You just need enough info to make an offer. Some of the soft questions you can get a read from the seller if speaking to them directly. Very very small percentage of people can lie without giving a tell. 

Once you are under contract and in due diligence, now you can ask for actual rent roll, lease documents, bank statements for review. These documents will tell you who pay rent when. You will see most people behave with a pattern. The one who pays early or on time, assuming rent is consistent, will always pay early or on time. The one who pays right before the late fee kicks in will always do the same. 

Hope this helps and welcome to ask follow up questions. 

Quote from @Travis Timmons:

You can make money is most markets if you know what you are doing. The best market to invest in is the one where you have an unfair advantage, advanced knowledge, relationships, or another compelling reason to invest. Both Cleveland and Columbus are good places to make or lose a pile of money. Your team, your own studying and due diligence (you better get on a plane before you cut a check - if you are out of town/state), solid management of the property if you do pull the trigger, and a clear plan or strategy is what will result in success - not the market you choose.

 This one is a solid and honest advise I would like to see more people say. 

Quote from @Joe S.:

Quote from @Justin Perez:

Hey Leslie!

I Joined Jeromes Buying land and building homes program back in 2019

Heres my opinion on my experience....

First and foremost He offers two different programs. a 6 month program and a 12 month program.

BOTH PROGRAMS ARE EXACTLY IDENTICAL THE ONLY DIFFERENCE IS:

You can choose to have the weekly mentoring by Jerome once a week for 6 months or 12 months on a zoom call and you can have access to a private networking group of real estate professionals whether that be (realtors, contractors, brokers, Private/Hard money lenders, loaning institutions, Surveyors, Engineers, Zoning Board members in different municipalities, pretty much anyone you would need to get a project completed) for either 6 months or 12 months.

6 month program will run you $5,997 if you decide to pay all at once

or you can make a $2,300 payment every 2 months totaling $6,900

12 month program will run you $9,997 if you decide to pay all at once

or you can make a $3,000 payment every 3 months totaling $12,000

I decided to join the one year program and chose the payment option as i figured within 6-8 months i would have my 1st project completed therefor my last two payments would essentially be covered by the return on investment from that project.

PROS:
The group is really a family oriented space where you meet a vast variety of people from all types of background throughout the country and other countries that are doing business just like you. Everyone is truly your team member and not your competition. I have been able to take my real estate portfolio to a level in which i really didn't think possible and educate myself on so many things not only in real estate but in creating wealth throughout the power of networking with others that have experience and proven track records in other types of businesses. I honestly would be here all day about Pros.

CONS:
Not every single state has dozens of contacts at your access but majority of states do.

I wish i would've started when i was 18.

NOW THE BIG QUESTION IS IT WORTH IT? 

In my opinion it was well worth every penny. I'am now on my 4th year with Jerome but no longer am in the 12 month course. instead last year i joined another private group Jerome offers to students that have been apart of the program for a minimum of one year which is running me $30,000 a year which includes another course that dives in deep mostly with Muti-family apartment complexes, Manufacturing warehouses, Commercial Property and even High Rise skylines for people looking to scale their real estate portfolio to a massive level and attain nine figures.

I Hope this helps if you have any specific questions or are thinking about joining the program I don't mind referring you to someone! Good luck and much success to you in your real estate business!

 I’m not sure if you’re a real poster or you are part of Jeromes marketing team. If you’re a real poster, they need to give you some sort of commission on the sales you bring in. 🧐🤓

The account looks super sus. I really wish BP does a better job at monitoring scamming post like this. 

Developing land is more difficult as opposed to buying existing because it's higher risk and the capital required to complete the project is much more expensive (think in terms of higher closing cost, more down payment and interest rate). 

When you say you want to turn your life around, do you mean you want to work in the construction industry?

The credit you should ask for would be the one that's not apparent when you made the offer. If you made a offer on a property that clearly shows a roof that needs to be replaced, exterior siding needs to be repaired, a boiler or the AC that's at the end of the life age, then your offer should have factored in those elements. If you made an offer on a property that appears to have a very beautiful nice new roof, but during the inspection, the inspector discovered a few leaky spots or an unpermitted work, then it's more reasonable to heavily negotiate on those items. 

This is doing business at the elite level. You negotiate in good faith with class.  

But if you don't mind playing at the amature level and just want to squeeze every penny out of the seller and don't mind lose the deal, then you can sure ask everything you listed and the seller can either counter or worst case decline your request and walk away.