All Forum Posts by: Kristina Heimstaedt

To add to @Chris Svendsen and @JD Martin points, we do what we can to "idiot proof" the appliances. We do have a clause in the lease that states that any damage/negligence that results in appliance damage will be the responsibility for the tenant to repair. 

We had one guy put too many towels in a washer, flood the bathroom and then complain that my appliance repair man with 25 years of experience was incompetent. Needless to say that he is not one of my preferred tenants.

We supply everything. That being said, we have the majority of appliance calls on ice makers, refrigerators and washers and dryers. Even if you do provide a fridge, it's often recommended that you remove the ice maker as those don't last much more than a couple years. 

I agree with @JD Martin that it is area specific. I lease to a lot of millennials and typically they have not yet acquired all of these items. 

If you didn't screen her before, I would screen her now. If she gives you flack, tell her you cannot renew her lease without it. Be up front and tell her that you're nervous about removing her aunt given that her aunt has been the one paying the rent.

My dad is a financial advisor and still invests real estate. I'll first list his cons:

1. Real Estate is not liquid- It's just not even close to the liquidity of stocks. The other concern is that with one phone call (ideally), you can double your investment in a single stock or pull all of your funds from said stock.

2. Free time- You buy a stock and can go on vacation and turn your phone off more or less. Obviously it is wise to keep an eye on things, but you're not getting 2 am calls about rain in the apartment.

The reasons why he likes it:

1. Level of complexity- For as convoluted as real estate can be, it doesn't require hours or study and commitment the way stocks do. I view real estate as somewhat similar to looking at a single sector in stocks like pharmaceuticals or tech.

2. There are lots of failures- However, if you can develop a system and get it right, you will eliminate your competition. Most people don't like to rent to young millennials. That is my bread and butter. They are so excited to be renting a nice place. Typically they work long hours. They do like to have a good time, but not to the point that it puts their jobs/careers at risk. 

3. Dividends- The dividends you can earn from real estate are leaps and bounds better than stocks. In the 5-7 years that we have owned the majority of our properties, they have produced a 10% ROI and appreciated by 75-150%. We plan on refinancing the loans on these properties, collecting the cash and purchasing more properties.

Does this take time to figure out? Absolutely. However, I can tell you just by my few years of experience and my interactions here on BP, I have learned to be an amazing property manager and have great relationships with 95% of my tenants. Are there crummy tenants out there? Sure, but it's your job to not let them have access to your property. Don't get me wrong, it can be really tough when you've been vacant for 30 days and you're looking at another mortgage payment, but it's so much better to work with someone of quality than not. You can do so with this link: Avoiding bad tenants. Be wise and don't learn the same hard lessons that everyone else has learned. If you can do that, you're bound to be successful

@Jack B. you're right that there are fewer buyers for MFH. However, you can spin that and say that there is less competition for purchasing. From there, your most important factor is good cash flow. With good cash flow, you can expect to pay off a property completely, refi out and go do it again. Refinancing on a single location that's twice as much gives you a lot more money and good economies of scale when you want that cash. There is a fine balance between volume and consolidating. It's delicate.

@Jalen Henningsen I personally like the marketplaces that haven't just been flooded with millennials for the sake of jobs and affordable housing. I personally like a combo of infrastructure and vacation destination. I think that combo allows you to hedge your bets and insulate yourself well. I think it's why you've seen California and Colorado come back so hard. I invest locally, but if I didn't, that would be how I'd play things.

To add to @Nick B.'s point, I would work on accumulating cash. Start there and invest in a duple rather than a single family or anything and live in half. The other option is to buy a single family and rent some of the bedrooms. Whatever you can do to minimize your expenses right now is probably the way to go for now. 

Given that you're familiar with financing, I would focus more on targeting a market and move to that particular city. If you think Atlanta is great, scope that out and go there eventually. If you think Boston is the place to be, go there. I would choose based on the marketplace with the best opportunity though. The idea behind that being that hopefully you can obtain both cash flow and appreciation when you're ready. Getting appreciation and cash flow is like getting a successful stock with dividends that provide returns monthly rather than quarterly or yearly. It's pretty awesome. And if you choose to invest in a personal home in your city, you can also open a HELOC and get more financing for remodels or purchases.

Happy earning and shopping!!!

Johann Jells and Jd Martin this is the last place I rented: http://www.moderntake.com/p485481967/h25704cd3 This was prefabricated cabinets, granite countertops, laminate flooring, subway tiles, drop in HD vanities and stainless steel appliances. Although if it hadn't been stainless steel, it definitely would have been white.

Hi @Tyler Mutch. I'm going to approach the question of poor screening.

9 times out of 10, if someone stops you and gives you too much of their time to tell you a crazy story, it's normally a good indicator of someone who mismanages their life. I have never had that situation work out to my benefit. 

The economy is humming, people have money, jobs and stability. There is no reason why you should need to take on someone who has an eviction or such significant issues. The things I ask for:

1. Credit report and score- I want both

2. 2 months of bank activity- I want to see that someone knows how to manage their finances. I always tell people, "I don't care if strippers are your thing, I just want to see that you know how to not go below zero".

3. 2 months of pay stubs- I've had someone tell method they were on salary. Based on looking at their pay stubs, they clearly weren't on salary. It also gives you the opportunity to get a more clear financial picture.

4. Contact for current employer- I want to confirm that the potential tenant is employed and that their employer has no expectation of that changing any time soon.

5. Contact for current landlord- Hopefully this reason is obvious

All this being said, I then use some special indicators of my own.

1. Do they attend the showing on time or early? Anyone who doesn't show up on time clearly doesn't respect or value your time. In the same breath you might also add that it's a good indicator of valuing that rent needs to be in your account when you agreed to it in the lease. I will forgive tardiness if someone tells me ahead of time such that I'm not sitting around and just waiting.

2. Turning in information- I have had some people give me exceptional flack for some of these items that I request despite the fact that I don't ask for their SSN or a number of other things. I had some girl freak out over showing me her bank activity. She felt it was an invasion of privacy. I told her "no problem, that just means that you aren't renting from me". I also expect the information that I've asked for to be delivered in a timely manner. This shows me that the tenant is serious about moving in.

3. Hold your ground- As you're learning, you are better off not needing to deal with a pain in the butt tenant rather than avoiding them in the first place. If someone isn't ok with x,y,z issues in your application, they are more than likely not going to work with you to solve a common goal. I tell all my tenants, "this is a business relationship. I understand that this is your home and I want to make you happy and comfortable. In exchange though, I expect you to pay your rent on time and to treat my property with respect. I pride myself on being exceedingly responsive and solving problems and look forward to having a great working relationship with you moving forward". I think it sets the right tone of I'm here to help, but don't cross me. I also find that tenants are respectful of my time and this allows me to obtain more units and achieve the economies of scale effectively. 

This was a long one, but hopefully this helps!!! It takes practice, but you'll get it.

Unless you plan on scraping the property, which you can't do in a town home, I would always get an inspection. Even if you do plan on tearing a property down and rebuilding, you still ought to take a look at the land, soil and sewage. There are other items such as water heaters, HVACs, electrical and plumbing that could be major issues even within a town home. I also rely on my inspector to tell me the quality of construction in the first place. 

If you don't want to make it part of your contingency, you don't need to. Typically you lose your earnest money if you back out after your contingency period. I just don't know that I would ever personally not complete an inspection for any property. If your inspector is unwilling to go, I would find a new inspector.