All Forum Posts by: Latisha Douglas

@Latisha Douglas

One thing that I keep on saying that no one is really picking up on here or elsewhere is about quality builds -- in my city, in many D-class areas, the quality of original construction of many brick-veneer 60-90 year old buildings in the area is exactly the same as in many of more desirable areas within the city proper, with the same sort of brick-veneer SFR and small multifamily. The only physical difference between one of these stately old houses that goes for $25K and one that's worth $220K is its location and how much the maintenance has been kept up on it, and maybe one or two bathroom or kitchen renovations. Sometimes not even that. It's just a feature of my city and others like it in the Rust Belt.

You've heard that LOCATION, LOCATION, LOCATION is the key to real estate, and this is true. But when you consciously choose to invest in the not-so-nice locations, BUILD, BUILD, BUILD becomes extremely important. I don't buy garbage-built houses. My primary siding choice is always be brick, brick, brick if I can get it. My primary roofing choice is always slate. I want just as little rehab to have happened in the property as possible. My part of the Rust Belt has undergone a massive economic decline for more than 60 years. I want as few residential contractor hacks as possible to have touched my property. I want to turn that property into a hardened SFR that can take all kinds of abuse and come back strong after the tenant leaves.

And the wild thing is, it's the better-built places, the places that were nicest originally, that have always been messed with, remodeled the least over the years and can be turned most easily into solid rentals. This is always a huge hidden bonus for me.

@Latisha Douglas, any way you can reach out to the abandoned house owners and buy them?

This is a great thread for those like us that are involved in Long term rental investors! I developed a 100+ SFR portfolio in Detroit living abroad, that was very time consuming for me in terms of travels etc, but let's keep that part aside. My tips to "keep under relative control" all things:

1) Have a LOCAL team (don't try to reinvent the fire). Even more if you are a remote investor.

2) Give tenants a decent property in livable conditions. Don't expect sustainable long term tenants if you are a slumlord with leaking roofs that doesn't pick up their calls.

3) Develop your "in house" property management team. Yes! This makes sense when you achieve a 30+ property portfolio. All the Property Management companies I hired robbed from me (and I am into details. I stopped it on time and avoided them ruining my business). With my incompany team everything goes perfect.

4) Give tenants as many payment options as possible. Cash, checks, Money Orders, Debit Cards, Credit Cards, CashApp and centralize all this in a unique software (I don't know if I can post the name of the software without breaking BP rules so I will not do it).

5) Your tenants are your tenants, not your friends. We all have problems and relatives that get sick bla bla bla.

6) Keep properties updated. some general repairs will keep them happy.

7) Be strict and clear with your rental rules in your lease agreement. If you have a pet fee enforce it, if there is a late payment fee enforce it. 

8) Don't ever accept partial payments when a tenants is late. Initiate eviction process asap.

9) Try to keep evictions as low as possible (I know is redundant with previous point but rehabbing a house post eviction can cost the rent of a whole year...or more1).

10) Be always aware that you owe a portfolio in a C/D class neighborhood. If you were owner of properties at The Hamptons or Manhattan you would have different issues.

ps: Never get discouraged by NOers, they are still on their couch running excels in their heads.

You asked for tips and tricks so here’s one that probably is going to sound completely crazy and very slumlord-like but I’ll post it anyways .when a tenant in these areas move out they usually leave the place a wreck and it needs carpets cleaned ( I use 68 cent a foot brown office carpeting ) and painted ( I use gladden generic semi gloss speedwall 16$ a can) what I do is go ahead show the property to a prospective tenant anyways and when they arrive I have a bottle of windex out a rag a broom and inform them I’m working on it . Then if they are still interested ... I make a deal with them that if they are willing to finish the work agree to clean up and paint and get the place back to good condition I’ll accept only half the months security deposit to save them money and get it how they like it . This has worked out well and I know a guy in my area that never plays Johnny handyman because of this !

@Latisha Douglas

Stay away from section 8 and let someone else handle the rental processing. Find someone off red door marketing to market your property and do more background checks to insure they are a good tenant.

@Latisha Douglas

Hi Latisha,

I haven't been doing this very long, but all my doors are C class areas for the most part. One thing I've learned from seasoned investors is "training your tenants so expectations are set...and clear." Break their bad habits! As far as systems and other things go:

1. Find a good handyman for things you cannot repair yourself. It's a great feeling when you can simply text a repair to someone you know who will fix the issue correctly and do it at a fair cost.

2. I use Excel for tracking expenses...which track back to my Excel P/L.

3. Don't have a bleeding heart. You will hear every excuse in the book from tenants. Treat your properties like a business. Late payment means they get a 3-day notice (or whatever is legally required in your area).

4. Don't skimp on repairs. Keep the properties in good repair and you will have less calls. When someone moves out, use that as an opportunity to fix things...and possible raise rents.

5. Make it convenient for tenants to pay rent. I use Venmo, good ol check in the mail, or they can deposit rent directly at my bank.

6. Listen to the advice of people. Attend REIA meetings, talk with folks on BP, talk with mentors and learn.

I would convert all of those tenants to Section 8 tenants that aren’t already, that way the rent is paid on time. If it is their smaller portion that is late, I’d say that is fairly normal. About 50% of my Section 8 tenants pay their portion on time, for others it can be hair pulling, but not eviction worthy. One of my tenants only pays $35 a month, am I really going to evict for that? No, you just follow up every couple months and inform you won’t renew if they don’t get their portion caught up. It’s no big deal. 

I like investing in D areas because you get the discount on the buy. The best part of buying in a bad area is that it’s already in a bad area! Good areas can become bad and bad areas can get better.

Is C and D class for everyone? No, but it’s been great for me. I wanted financial freedom about as bad as everyone else. So, I bought what I could afford to get started. If I hadn’t, I’d still be a lump on a log. I’m one of those fearless warriors that likes to do good, prove others wrong, dance in the rain, push themselves financially and mentally, leader type of people. A go getter and a risk taker.

I have to comment on a post above. I like C and D right now over A and B because the market is over priced. My properties don’t cashflow $200 a month as mentioned, they do $500 a month min. They are cheap, so I pay cash and they rent in the $700-$800 range, $600 if a one bedroom, so they cashflow around $500 a door. If you buy A or B, you’ll barely cashflow and I don’t see the appreciation right now. Just throwing that out there. The key is to do a thorough rehab so you get years of cashflow. If the house pays for itself in four years because of the $500 a month in cashflow, buy materials that last 15 years and you’re bound to turn out a winner. Buy more houses, increase your odds.

You’re going to fail many Section 8 inspections, get over it. Expect it, just get it fixed. Good luck. I like the get handy advice given above. I use a handyman. Cashflow is king when you are starting out. Never sell. 

I have some questions that may also be pertinent to this topic.  If you rent to section 8, how do you get a security deposit.  As soon as I say there is a security deposit, it seems like people drop away. 

Also, what is the deal with people who have jobs but don't have bank accounts.  Are they drug dealers?