All Forum Posts by: Ke Nan Wang

I'm an experienced LTR investor in St. Augustine FL, which is 1 hour 40 min north of Orlando. St. Johns county is one of the fastest growing counties in the State. Real estate is going well here. Let me know if you would like to chat about it. 

The short answer is: it's up to the buyer and buyer's agent to work it out. You can make decisions on your end but you shouldn't ask other people to take a pay cut to make a deal work for you. 

I'd suggest to ask around for a good real estate attorney in your area to best help you in your scenario. I know many attorneys in my area offer a free initial 30-60 min consultation. If you can find one in your area, that would be the best way to tackle this problem. 

There is always risk with tenants no matter how much you screen them. You just have to understand and accept the risk if you want to have other benefits of owning LTR real estate properties. 

Here are our prequalifications:

Credit score >650 (soft requirement, if applicants don't meet the requirement, it's case by case but they can negotiate with more deposit upfront or advance rent paid upfront)

Household income > 3x rent

No eviction/violent criminal history (using a third party background check platform to pull their background. Also if you want to play P.I., ask them which county they have been resided in recent years and go to the county website to search for potential court cases. I found many times I found open court cases from the county on the applicants where these cases don't show up on their background check. Not every county has those as public record. Just depend on how much you want to dig deep. It's convenience vs. risk. 

Favorable landlord/employer reference (Please call them. some lazy landlord/PM skip this step where I see this is another chance to get a data point on the applicant) I've seen people putting fake contact info, their parent's contact info as reference. Any of these is a red flag and confront them why. If your BS detector is going off, trust your gut and move on to someone else. 

If they pass all the criteria above and we had a good "interview" during the showing, I say 99% of the time, they are good tenants. What these criteria won't filter is if you are dealing with professional "bad" tenant where they know how to play the game. Also this process doesn't filter out the "needy" type tenant. I had two occasions where the tenants looked amazing on paper, and connected with them really well during showing but turned out to be super incompetent tenant and called me about everything inconvenient about the house (i.e. smoke detector out of battery, spots with wall paint, natural porous holes on a travertine floor tile).  

I don't have any super bad experience but the worst story I heard from a Landlord friend is that they screened a "perfect" couple who turned out to be human traffickers and turned the house into a brothel. The police later on raided the house and it made it onto local news. That's just part of the business and why you need a good insurance policy. 
 

I'm using Apartment.com for now. It's lowest cost I can find and still gets the job done. I'd love to hear other options. 

I can only comment based on your tone without more details on these deals, I'd assume the larger property comes with a higher risk. I think you can do a worst case analysis and see if you are okay with the outcome in a worst case scenario with the larger property. If large or small, you are okay with the worst case scenario outcome, then it's really just your preference. Higher risk, more upside or lower risk, less upside. 

My wife worked for a local vacation rental management company as a property manager before and they used a program that will synch both VRBO and Airbnb platforms. Basically you post your listing on the program and the program will farm the listing out to the platforms. The program let you manage bookings as well as communication to cleaners, property owners and the guests. The program can automatically allocate payouts to cleaners, owners, and the property manager. Also they will automatically generate owner statement each month. All in all, pretty handy. But it comes with a price. My wife said the company pays about $10k a year for the program. I think if you would like to systemize your booking and management, you can do some research on these type of programs. I don't remember the name of the program but if you are interested I can ask my wife for the one her ex-company is using.

Depend on the condition of the property. For a house that's not so nice I'd charge $200-$250 but for a house that's very nice I'd charge ~$500. If your state laws allows it, I'd charge a one-time non refundable pet fee. I know some landlords increase their rent by $50-$100 a month for allowing pet. I just do the one time non refundable pet fee. Make sure they understand it's not a deposit, it's a fee. 

My experience is that dog is not bad. Cat is pretty bad due to its urine. Nothing that I couldn't turn it around with enough money spent. One thing is that because I don't personally use these properties, I'd always allow pets so I can have more potential tenants but I'd charge dearly for the ones I don't like to ensure either they walk away or I'm covered for any damages incurred. Hope this helps. 

Hi Kristin, 

With 270k cash, we can help you easily find a suitable lot and build a 3 bed 2 ba 1250 sq ft SFH in St. Augustine, FL (St. Johns County one of the fastest growing county in the state) in 6 months turnkey from start to finish. These houses will rent out easily for $2000 a month => $24000 annual gross rent. Assuming 10% management fee and no cost for tenant placement if you are using us as property management. Next to no maintenance because our warranty and new construction. Property tax you are looking at $2000 a year. Property insurance $600-700 a year. You are netting $18900 a year with one property. You can check out our website: https://www.knancorp.com/ and instagram at

https://www.instagram.com/knan...

Feel free to reach out.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $140,000
Cash invested: $600,000

We bought a lot with one house on it for $140k. The property is actually 4 buildable lots. So our plan was to tear down the house and build four builder grade investment houses on the spot. We worked with an architect to design these houses to maximize their efficiency for rental properties and they were built to last. Super renter friendly and easy to rent. The entire project took us 6 month to finish and they all rented out for a premium price.

What made you interested in investing in this type of deal?

We love to build our own new constructions because once we put together a new construction team that can take a project from A to Z, the project costs less than a resale, and you get brand new properties with a very small maintenance cost and insurance premium. New construction is a lot easier than rehab because there aren't that many surprises. Most of the due diligence is done during site study phase. Once the lot is suitable for the project, it's pretty smooth sailing.

How did you find this deal and how did you negotiate it?

The property was surprisingly on the market for almost a year listed at $169k. We made a $145k offer and the seller took it. I am a licensed real estate agent so my commission was about $5k so our cash to close was $140k.

How did you finance this deal?

We used a Commercial Line of Credit against our existing rental portfolio. It's the cheapest loan for us. But if LOC is not available to some people, there are certainly new construction loans people can take out to finance the project.

How did you add value to the deal?

We built four new houses.

What was the outcome?

Great. Houses looked fantastic. Everyone loved our product. Easy to lease and easy to manage. Low/no maintenance. Lowest insurance premium. Each property now is worth at least $330k each on the market so that's 1.32M total. Our cost was $740k. In 6 month we made $580k in equity and generating $98,400 a year in gross income. Currently four houses are renting for $1950/$1950/$1950/$2350.

Lessons learned? Challenges?

Do your due diligence when purchasing the lot and make sure you can do whatever you plan on doing with the property. Another huddle was you have to either become a licensed contractor or hire a GC who can pull the project off. I was fortunate enough to have my contractor's license so I did the project management myself to save a decent amount of cash.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I worked with a local bank named Barwick Bank. They funded the project. I was my own real estate agent and general contractor in this project.