All Forum Posts by: Ken Dunn

@Jimmy Alexander - shoot me a PM and I’ll be happy to give you contact info for my portfolio lender in Dallas, TX. I’m not sure they can do loans outside Texas, but it will not hurt for you to ask. He may be able to refer you to another portfolio lender if he cannot help. Cheers - Ken

@Linda Thomas - check your Lease Agreement. It sounds like you only need to give a 60 day notice to raise the rent. If so, you can give the notice before the end of Nov and make it effective on February 1st, 2022.

I always recommend giving proper advance notice and raising the rent on the Lease anniversary every year. Even if it is only a small increase ($25-$30) the tenant will come to expect it every year.

Since your property values typically increase every year, that means your property taxes and insurance increase too. These costs should be passed onto the tenants (as long as the market rate will allow it). 

This also greatly reduces the tenant “shock” since a small increase every year is much less than a big lump sum increase every 3-5 years.

I try to keep my rents a little lower than market rate so it is easier to find tenants.

Another way to soften the blow is to print a recent article on rent increases in your area. I often print a 1 page Zillow rental “Zestimate” for the rental property address and include it with my notice of rent increase. It is like having a “3rd party verification” showing you are not pulling numbers out of the air.

Lastly, I try not to have my leases expire in the months of Nov through Feb. This allows me to avoid trying to find a new tenant during the Holidays and cold Texas winters. 

It seems many folks (but certainly not all) who move during these times are ones who do not plan ahead or are ones who have no choice. They may not be the target population you want for tenants.

If your leases expire in the summer you will likely have at least 2X tenant candidates wanting to schedule a showing…and you can pick the most qualified.

Hope this helps,

Ken

@Jimmy Alexander - I was surprised when I heard Pace say that on the podcast. I’ve never heard of “Due on Sale” insurance either. Please post back once you learn more details. I’m curious to know if it actually exists or not. 

Also, I have some properties that I have purchased and/or refinanced under my LLC. Since the lender is a portfolio lender (using their own money) they can be more flexible. They do not care that the loans are in my LLC. Another big benefit is the loans do not reflect on my credit report and, therefore, have no impact on my DTI.

They do charge a slightly higher interest rate (maybe .25 to .50) but I’ve been able to move my Debt Service Coverage Ratio for my portfolio above 1.5 and soon to be above 1.6…so a little more interest is OK by me.

You may want to consider using a portfolio lender.

Cheers,

Ken

Correction - I joined the Army when I was 19…not 18.

@Mitchell Mahnken - I do not own any mobile homes but I’ve learned some things about them through my RE readings and BP podcasts.

Because they do not appreciate in value like a traditional home (they actually decrease in value) you would need to factor that into your math.

When considering your exit strategy, how much would this sell for after 10 years, 20 years? Look at mobile homes that are that age already and see what they are valued at and compare to their original purchase price.

Is this located in a mobile home park? If yes, what is the lot rent per month? Likely a minimum of $200. Another item to account for when running the numbers.

Because used mobile homes can be purchased for such a low price ($25K, $12K or even less if they are in really bad shape) they can provide some great cash flow since the rent to price ratio is so favorable. You just need to be sure to factor in all the variables before taking the plunge.

Hope this helps,

Ken

@Account Closed - based on the info you gave, I’m going to turn back the clock, put myself in your shoes, and tell you what I would do. 

I want to preface this by telling you I’m in my mid 50’s, the youngest of 4 kids and the first and only one in my family to earn a college degree (Business Mgt) paid for by joining the military at the age of 18 (after earning 30 college credits over two full semesters). I used the Army College Fund and worked part time during college.

After moving to a nicer home and making my first original residence a rental in 2005, (which I still own) I started buying rentals in 2006. I currently have 18 rental properties that each have positive cash flow. 

My recommendation is to stay in school and finish your degree. It will be difficult to get a loan on an investment property if you do not have verifiable income and 20% to put down…especially if you are just starting off.

Having a good paying job will allow you to start saving and build a “war chest”. It is very difficult to invest if you have no money of your own to buy the investment. You should view real estate as a get rich slow and steady type of investment vehicle.

You can avoid a lot of mistakes through proper education - reading books, joining your local REI clubs, attending seminars, listening to podcasts, watching uTube videos…etc. Let these sources be your "mentor".

I never had a “live in person” mentor, but I have thousands of hours of listening to self improvement gurus, real estate investing experts and reading books.

Gotta run now…Hope this helps,

Ken

@Michael Perry - I’m a roofing contractor. A few years ago we started using Trello to track projects, from initial client phone call to final payment/close out. It has made a huge difference. I can attach photos, notes, documents and share it with my team. Best of all, it is FREE. 

Of course, you can pay for the premium version, but I doubt you will need it.

The system uses “cards” that you move linearly from one step to the next as the sale/project progresses. It is very intuitive and easy to learn the basic functions, which is all I use.

I’m pretty sure it does NOT tie into our QuickBooks accounting. But as a sales guy/Senior Project Manager I don’t worry about the accounting side.

I even use it to track projects and keep up with documentation on my rental properties.

The files are loaded on the cloud, so they do not take up space on your iPhone/iPad/MacBook Pro….yes, I’m an Apple guy.

Hope this helps.

Ken

I’m in the DFW market and finding renters is never a problem, except slowing down during the Holidays/winter months.

After having a few refrigerators grow legs and walk out the door when the tenants moved out (especially for ones that are evicted) I no longer maintain or provide refrigerators or clothes washers/dryers.

It is clearly spelled out in my Lease that the tenant is responsible for maintaining these appliances. Of course, I take maintain and will replace any other appliances plus HVAC.

If a tenant leaves one of these appliances then the next tenant can use it or refuse it. I will have it removed/recycled as needed. 

Then, the new tenant can buy the fanciest refrigerator or clothes washer/dryer they like, and take it with them when they move.

I also encourage them to get Renters Insurance, which would cover such a loss of spoiled food. This coverage is pretty inexpensive.

By doing this, I will never have to lose sleep or argue with a tenant over a broken refrigerator.

Just some food for thought…pun intended.   :)

Ken

I second getting an insurance broker to shop around after you tell them your situation and needs. They are not loyal to a single carrier and therefore will typically find you a better deal than going directly to an insurance agent.

As a roofing contractor, I have worked about 1,000 claims with multiple insurance companies. Based on my experience, I would avoid MetLife and Travelers and a little unknown company called Maison Insurance. They have been the most difficult to work with over the last 12 years. Their initial scopes of work are typically lower than what other carriers/adjusters would write. The contractor or homeowner then has to arm wrestle and send in legitimate bids/supplement requests to increase the payout to fair market pricing. 

Or, you can just settle with chuck in a truck who has the lowest prices in town, has no insurance and runs his business out of his pickup.

Of course you get what you pay for. USAA and Amica do a great job of taking care of their policy holders and writing a proper scope of work / paying for quality work. They are consistently rated #1 and #2 by Consumer Reports via about 200,000 questionnaires filled out by homeowners who subscribe to Consumer Reports.

They are also the most expensive insurance carriers….but like I said, you get what you pay for.

Hope this helps,

Ken

@Peter J Struck - I have first hand experience with home warranties and do NOT recommend them. I bought 2 4-plex properties in north DFW in Jan last year. They had a lot of deferred maintenance with 4 units sitting vacant. The seller paid half and I paid half for 1 year warranty coverage. I used them several times for AC repairs. Each time a different company came out and some did OK work but others just tried to upsell more repairs or charge about 2-3 what the price for those optional repairs/maintenance (not covered under warranty) should have been. When you place a work order the warranty company sends it out to their list of vendors in the area, whomever jumps first is the company that gets the job. So, you probably will not have the same company back out for follow up work. It also seemed that the companies coming out were just lower quality with lower professional standards. The warranty company was Choice Home Warranty. You can see reviews online. My recommendation is to just save the money you would spend on extended warranty coverage and apply it to hiring a professional service company that you researched and vetted yourself, once you need a repair done.

Hope this helps.

Ken