All Forum Posts by: Kristina Heimstaedt

Hi @Adam Treboutat!! First and foremost, you have an unbelievable rate on that loan. Congrats to you for getting that. To add to that, to be in Marin County anywhere and look at 5.6% cap rate prior to accounting for your mortgage is spectacular. 

Before I give you my 2 cents, let me give you the calculations that we do.

[Annual gross rent - mortgage - property taxes (insurance, maintenance, etc.)]/[cash in property + any capital expenses] This will more or less give you the rate of return on just your cash in the property. I think if you're going to compare apples to apples, it's necessary to determine what the rate of return is on the cash, not the overall property. If you were going to sell and move your money elsewhere, that's the math you'd be doing more or less.

If I were in your shoes and looking at that kind of mortgage rate, I would be inclined to figure out how to increase the revenue on the property. I'm the first proponent to say don't over renovate your property. You won't necessarily see a proper rate of return if you install marble countertops. However, I'm a believer that quartz/granite is more than sufficient to get you a quality price and tenant.

 And although I would love to agree with @Soh Tanaka, you gotta know that there is no way you're picking up multiple SF properties with $700k especially not at the 1% rule. To add to the struggle, there are reports (and BP blog posts) that show that rents are actually decreasing in some of the more metropolitan areas as millennials become part of the next wave of suburbanization. Keep in mind that transactions are costly. Whether it's tenant turnover or property turnover, real estate agents and wholesalers get paid for that special skill set. 

Hopefully this helps and don't hesitate to reach out if you have any other questions/concerns!!!

This guy feeds on economic housing data/metrics. Great resource for hard number data and collects data from a variety of resources and compiles the information to come to various conclusions. The biggest win, he predicted the recession.

Bill McBride's Calculated Risk Blog

@Laticia Braxton thank you so much for the kind words. And it's funny that you say that because I always send out the lease via docusign and tell the tenants to read it over before signing (so not quite living up to your kind words). However, because I send it out to them and give them the opportunity to sign it remotely, they actually do take the time to read it over. 9 times out of 10 I'm clarifying something that is specific to how we operate and I typically work with tenants to find common ground if there's any that needs to be found. Not signing in person removes the car salesman high pressure environment and it seems to work nicely. 

Hopefully this is a nice side note and not undoing all the kind words you just shared 😊

Maybe you could strike a deal with one of the existing agents? See if you can't negotiate with them and say that you would give away a portion (I might say half) of the business in exchange for one of them to become the broker of the office and manage it as they see fit. If none of them choose to take the deal, to me that would be a tell tale sign that you ought to sell the business and buy property instead!!!

I hada client who wouldn't purchase property because it was vacant and he wasn't comfortable with the potential rents. I like @Charles Kennedy's month to month option. 

Worth a shot. However, I wouldn't go into this expecting to get a great deal on the property. Keep in mind that you're not necessarily dealing with a motivated seller. However, sometimes you gotta do what you gotta do to lead a happier life.

First and foremost, check with your state laws as to what is in your power. We use a 3 day grace period with a 6% late fee charge. However, because of the way state of California is, I don't think we can actually collect until the 5th. I believe they consider the second to be day one of the late period and day 5 as the first collectible day. Definitely take a peak at your state laws to be sure you're in compliance. 

Make sure you have a good lease. Beyond that, I always recommend the following when working/negotiating with tenants:

1. Law

2. Your Common Business Practice

3. The Bro Deal You're Willing to Offer Given the Circumstances

Walking the tenant through these indicates that you're knowledgeable of what is or is not in your power as a landlord (law). You also indicate that you're running a business and that you value your time and have systems in place (Common Business Practice). The last indicates that you've heard their concerns and are working with the tenant to troubleshoot the problem/situation (Bro Deal). 

I have always found that walking the tenant through these steps gets you a teammate as opposed to an enemy. In my opinion, it seems like people forget that being a landlord is about providing a product and following up with customer service. I don't mean for anyone to ever be taken advantage of by any means. However, I think walking a tenant through the steps garners respect and a level of camaraderie that keeps your tenant happy and not annoyed that they're paying your mortgage/bills. 

Outside of that, just plan on economies of scale (processes and streamlining) as much as possible and you will grow exponentially without missing a beat!!! Good Luck!!!

@Richard Ladenberg This is the beauty of real estate. It's your decision. It'll shake out just fine either way.

@Richard Ladenberg Take it back to school days. It's easy to hate the teacher that's unforgiving and brutal. The teacher who gave you the second chance or clearly made the effort to help you was always the one that was more well liked. It can be done. Forgiveness is different from being a pushover. It's why I said that I suggest that you say that you look forward to this being the last conversation about late rent. I might even add that it will be an eviction notice next time. Throw them a bone though. I much rather have a tenant who will let me know when something is up rather than open the door after they've moved out and find that I've got 5k worth of work as a result of tenant negligence. An open line of communication is valuable in itself.