All Forum Posts by: Lauren H.

give us the juicy details! Total asking pice, potential rehab cost, total number of units, projected after rehab rent!

previous replies have given you great advice. Generally you should not have to do cash for keys if you wish to end a month to month lease. I've only used cash for keys to motivate late paying or non paying tenants to move so that I could meet my owner occupied loan rquirements. 

I think the pep talk you are looking for before you have 'the talk' next time goes like this:

'I have decided what I'm going to do, I have the necessary paperwork to do it. I will treat all my tenants fairly and with respect, but I made good choices that led me to this position and I am in charge, I run the show and this is what's going to happen.'

This is what I tell myself before having 'the talk'. It doesn't hurt to be super nice and courteous when giving people news they want to hear.

We do have a Net Monthly Income that we need before either of us stop working. For us, that amount includes health care, which spending reduces taxable income anyway. 

I would rather have a contact person locally who is 'on call' for emergencies or posting nonpayment notices while I'm traveling. I don't trust a company to do the quality of work that I would do or have it done in a timely manner. In the event of major trouble, I would just have to fly home. 

We made our first purchase 2.5 years ago and think it will take about 5 more years to go full vagabond. As for the boss comment, see if your local library has Early Retirement Extreme and read what Jacob Lund Fisker says about strategy! Real estate isn't on his radar, but he knows how to trim the fat off the North American lifestyle! http://earlyretirementextreme.com/about 

This is an interesting question. My husband and I are staying 'blue collar' about our rentals while maintaining 40 hour per weeks jobs. We both work four ten hour days and typically devote one full day to rest or pure fun and the other two free days to rentals. The reason we do it is primarily because we have to strike a balance between 'rehab, raise rent and hold' and stashing cash for the next purchase. If I paid a contractor to do all my work it would suck me dry of cash that I'm trying to save to by my next multifamily.

The reason we are able to devote so much time to doing our own remodels is because we can see the end in sight. That is, having enough money to flip the bird at the boss, walk off the job and start traveling the world. We've built our own retaining walls, replaced 16 windows, repaired appliances, sprayed exterior/interior paint, learned to set tile and cut countertops ourselves. We aren't flipping, so it only costs us rent loss to take a little longer to do it ourselves.

The bottom line: do the math. Can you get employment for double per hour (or higher) than you would pay the contractor to do all your work? We don't have that luxury, so we do our own work. The only thing we don't do is carpet, since we can't save money by installing it ourselves.

1. Every occupant 18 years old or over fills out an application.

2. Review the lease thoroughly at signing and make sure you are meeting each person who lives there.

3. Write an hourly rate for repairs into your lease. For example, if a tenant breaks something through misuse or neglect (or paints contrary to the lease) I charge $25/hour labor plus the costs. 

Hey BP! 

I've been lurking around the site for a while and posting randomly, but never introduced myself! My husband and I got into investing after seeing his father be a successful apartment owner. We started by managing the townhome which was our first house, then moved to a fourplex. We do the majority of our own repairs and maintenance. The first fourplex was quite the value add! It needed full interior updating, and new paint and windows on the exterior as well as proper grading of the lot that it sits on. The only thing I have paid someone to do is repair a gas furnace. We do the work ourselves so that we can save all of our cash for the next property. We are currently under contract on another building which will bring our total to 8 units. The goal is 20 units, then transition to self-employment.

Hey Dexter, 

There will always be a trade off between higher down payment with higher monthly return on investment, or lower down payment with higher cash-on-cash return. There should be a sweet spot where you can use as much financing as you are able, while still earning a profit monthly. 

For my goals in real estate I would rather have the extra $400 per month in net income now, rather than realize a huge increase in income in 15 years. The downside is that you have to wait 15 years to see the mortgage payoff put money in your pocket. The present value of money will always be greater than the future value. $400 now is worth exponentially more than $400 15 years from now, especially if you reinvest it into property. That can happen two ways: upgrade units you own and increase rent or save the profit and invest in more units. I will keep my $400 now, take the 30 year loan and more quickly bankroll myself into my second and third investment properties. The bank makes more money, but who cares? You make more money too! 

My goal is to work myself and my husband into full self-employment within 5-7 years with a target income that includes having to pay full price for health care. We bought our first 4plex just over two years ago. We are shopping for property #2 now and will have the down for #3 within the next 6 months. 

Check out 'The Millionaire Next Door' for inspiration!

Hi Dexter,

1. You will find property when you start taking time to look. Don't watch TV in your spare time, instead search online in MLS for your location. On weekends drive around a get a first hand look at the neighborhoods you are thinking of buying in. Find for sale signs.

2. If you are willing to live in the property you give yourself the option of getting in with a low down payment. Use other peoples money, not your own. 

3. If the property cash flows on a 30 year fixed rate loan while you are living in it why would you ever want to pay it off? Why wouldn't you save all the cash you are now earning (and saving by living for free) and invest in another property thereby increasing your monthly income? Buy a property that has the potential to add value, use your free time to input sweat equity then use that equity later for a line of credit on the next property.  

The most important thing is to determine your goals, then remind yourself of those goals and align every decision you make in your life to move you toward your long term goal. If your decision or your spending doesn't somehow get you closer to your goal, then it's the wrong decision or it's something you shouldn't spend money on!

After dealing with such issues in the past I have written into my lease a clause stating the hourly rate that the tenant pays for damage for which they are responsible. In addition, the tenant pays the cost of the repair materials. I had the same thing happen when a tenant ran a garbage disposal with a shot glass in it. I photoed the evidence and the broken disposal and sent the tenant a repair bill just like any service provider would. The tenant moved out within a month and the money ended up coming out of the deposit. In my opinion, and I can't give legal advice, the deposit is for move-out only, not repairs made during tenancy for which the tenant is responsible. 

Conversely, promptly replacing things that break because they are at the end of their normal life cycle with no charge to the tenant builds the tenant's trust and respect for you as a property manager. 

Time to update your lease to say "cash is accepted in person by pre-arranged appointment only". 

We accept all rent payments by local bank deposit. The tenant goes to the bank and deposits money into a deposit account. If they have cash after the bank closes, we've accepted cash in person, but we live in the building. We have been very clear to all of our tenants before they sign leases that they will be paying rent by local bank deposit.

We also have a very specific clause in the lease that says that if the tenant pays our bank in such a way as to incur bank fees (wire transfer, etc) that the tenant is responsible for the payment of those fees.