All Forum Posts by: Bobby Narinov

I purchased an out of town/state property in Toledo Ohio. The purchase price was 55k. Since I didn't want to lock my money there, I put 16k down and financed 44k. I felt that having a mortgage is some sort of insurance: no one sues properties that are partially owned by a bank :)

I used AmeriFirst Home Mortgage (see contact info below). They are a national company and if the prices in your area are low, they will probably finance you.

Liz Terwilliger
Loan Officer
NMLS#137587
LO# 002904.001

(O) (419) 931-9011
(F ) (419) 931-9012

AmeriFirst Home Mortgage
NMLS #110139
1070 Commerce Dr.

Bldg. 4, Suite B
Perrysburg, OH 43551

I'm evaluating an apartment complex (two buildings) where the owner pays water, gas and sewers. During the inspection I noticed that some toilets have constantly running water and the wall heaters were still heating despite 110 degrees outside and the evaporative cooling running full blast. The tenant pays for electricity but obviously not high enough otherwise they would have turned down the heaters.

So my question is, is it possible to convert the leases after purchasing the property (probably one by one as they expire) and make the tenants pay utilities. Since the buildings are pretty old, I suspect re-piping would be extremely expensive and the hot water is still provided by a single water heater per building. 

What are the pitfalls of doing so? The rents are market but most of the other places are paying for their own heating and in some for their own water but the tenants are people on disability and food stamps.

How did you organize the payment? split evenly between the apartments, per person or some other way. How do you deal with the cases where the bill comes 2-3 months later?

For the last 7 years I have used the lease agreements from  "The Landlord Protection Agency" (WWW.TheLPA.COM) they claim they are using them for their own properties. they have different leases for the different states as well as different leases for apartments and houses.

After the first two years with them I have paid $150 for 5 years membership. Every time I had a problem with a tenant I have found that there is one or more paragraphs in the lease that can be used to resolve the problem in my favor.

They have samples for all kinds of many other documents on their site as well as weekly e-mails that expanded my landlord knowledge.

Keep in mind that no amount of book reading can teach you how to ride a bike.

With $20k-$25k you should start small 2-4 units.

Also, the big boys don't want investors with less that $100k because for a $5-10M deals they'll need 50-100 investors and managing them requires a full time person. If they were 20k per investor, this can put them dangerously close to the SEC limit of 500 investors/partners per deal.

I would recommend staying away from people that are willing to use your $20k-$25k on a large multifamily deal. They may be too green or too desperate - both of which are not good for you (as a newbie investor) and your money.

I think you are looking to solve the wrong problem.

Actually, you are not even looking to solve the problem: you are looking to pass the problem to someone else and pay them for that.

Tenants are like kids, they quickly figure out your boundaries and then expand them. I bet you did not start with tenants paying in the middle of the month - they trained you to do that. My tenants tried to do it with me too.

After I served them twice with "3 day notice to pay or quit" on 6th day of the month, they started paying their rent on time. Actually not really on time (my rent is due on 1st and late on 6th) but by 5th I have the rent check in my hands.

The first time it happen the tenant told me they are going to be late with the rent by 2 day(technically late by 8 days but who is counting) I told them that as long as I get my check by 9th it should be fine. They were surprised by my "3day notice" served on 6th but I told them that this is to protect my interest and that I am not filing with the city until the 10th of the month. Surprisingly I got my rent the very next day.

I also give my renters "an early bird $50 off coupon" if I get their check 3-7 days before the 1st of the month and 80% of them always pay it early. $50 may look a lot to you but my doors are rented for $1,700 to $2,000/month. For me this is a small price to pay for the convenience to sleep well at night.

You have to train your renters instead of letting them train you.

I'm looking for one that knows local rules and regulations and can do a regular and preferably termite inspection at the city of Barstow, CA.

I'm not looking for the cheapest one there but for one that goes beyond filling in the standard inspection form.

The amount of rehabbing was not disclosed. I didn't even want to dig deeper because the stated ROI was too low and the expected rent was too low comparing with the price.

I felt that they are trying to milk the "California Buyers" because there are not so many good deals here. And I kept telling them that within 2hrs drive I can find better deals. The 8% ROI calculated by them was more like 5% ROI when accounting for the higher expenses.

It looks to me that TX real estate in 2015 is like Dot-COM stocks in 1999. Let see how will the things go with the low gas prices this year. I expect the rents to stop going up for a short while.

One of the big advertisers on this site is very heavily trying to sell my turn key investments that they have found and they are going to manage in Texas.

The problem is that those properties are selling for less than 1% of their own rent estimation. e.g. a 3Bd2Ba in Forest Hill, TX for about $111k. They claim it should rent for about $995-$1095 a month. A craigslist rent search in this area shows lots of similar homes in the $800-900 range.

On the other hand my experience is that 45-50 years old homes require more maintenance than newer homes and this is why I budget 8-10% from the rent on that. I also have found that you usually loose at least a month to rehab a home and put a new renter in there.  Sometimes way more if the renter leaves without a notice or you have to evict it. For this reason I have budgeted 8-10% of the rent too.

When I contradicted the sales guy on those he came up with the following statistics:

• Maintenance: On our 2700+ properties under management, the average maintenance was sub 4% last year.
• Vacancy: Our average tenant length of stay is 36 months.
• Rents: This is a statistic that we track monthly, and it hovers between 95-97% of our properties that rent at the high end of the rent range that we give our investors on the front end. Last year, 0 properties rented below the rent range.

When I asked for any guarantees on those numbers, they said that no-one can guarantee them.: "No sir, we don't guarantee those numbers, and neither would your stockbroker."

What are your statistics on that?

Is it responsible to pitch to the unsuspecting investors such low numbers (on 50 years old houses)? What will happen when one has to do a major repairs and/or has to replace the roof? 

I think you should avoid this management company. Not because they are bad but because you have lost your thrust in them. It is not a pleasant investment if you constantly question the honesty of your management company.

You would sleep better with one that you thrust more even if they are crooks. (or at least until you find that out).

On the other hand this is not how you pick a management company. There are plenty of posts here and on the web that give you a list of questions to ask your management company before you jump into bed with them.

Here is a link I got from one of the previous posts(I don't remember the post but I saved the link):

http://www.jmbgrouppm.com/blog/item/23-questions-to-ask-a-property-manager.html

Good luck.

@Jason Bott My investment properties/rentals go for over $200,000.00 and their insurance is between $170.00 and $280.00 per year. And they are in a worse area than this property: i.e. they are in low income, modest crime area.

If I do the same calculation using my most expensive insurance I get 3x the price for 36% of the premium. It comes to over NINE TIMES MORE for the same amount of insured value.