All Forum Posts by: Lynn McGeein

Renae, Have you thought of getting a property management job with a large apartment complex? Your real estate license might make you more attractive than those without one, you could probably find one near a bus stop so you'd have set hours and transportation fixed until you could save up for a car, and as a bonus, you'd learn all kinds of things about screening tenants and problems managing property on someone else's dime.

So happy I found this forum. My husband and I have been dabbling in real estate for over 10 years now, always liked it but never too serious mainly due to traveling issues for my husband's job, but thinking of getting into it more seriously now that we're finally settling down back on the east coast permanently, although still in transition for another year or so.

Have been very frustrated by financing conditions and hard to find answers (I'm kind of a research fanatic) to real life questions, stumbled upon this forum 2 days ago and have been learning a lot, especially about financing options I wasn't even aware of before. We've only ever kept about 5 properties at a time, so we're small investors, but I think the answers here will give us the momentum to finally push for the 20 we wanted to have before retirement.

Thanks to all here for the knowledge and insight, and especially to the forum moderators as it's very nice to read post after post of useful and smart answers & information instead of fighting and posturing as on most other forums I don't belong to anymore.

Brad, Maybe talk to a loan officer about current guidelines involving cash-out refi of investment property in today's market before you try to pay with a LOC with plans to cash-out refi. While a few years back it may have been a great plan, I was shocked to learn that these days it seems the worst way to go, much higher interest rate and much lower cash-out. This past September, I was told by a bank I do business with that I could get no more than 70% of appraised value and would have to pay 6 3/4% with huge points and fees to get a cash-out refi on an investment property, even though I could get an investment property loan with 25% down at 4.5% at the same time. I also thought I read somewhere on here that you can only cash-out a percentage of the purchase price of the home instead of the appraisal price if it's a recent purchase, although that wasn't at issue so I didn't ask. If the Homepath investor loan is only 10% down and 2% closing and probably 4.25% or less, I'd definitely be happy with that next time, too. Only thing is you have to buy a Homepath property and those are hard to come by in my area, mostly snapped up by owner-occupants in the areas I want during the First Look phase.

Trevor, Everyone has made good suggestions. Wanted to add that if you hire a manager, make certain it is a group w/ more than 1 property manager. I hired a broker who had good references for managing property, but when she had family issues, it was a battle getting my money, even though tenants were paying her. I had to pay mortgages for all 3 properties she handled the entire time, 3 months worth until she finally settled up. I don't think she meant to cause me trouble, but it could have been fatal if I didn't have a good emergency account built up. When I called the real estate bureau, they told me (off the record) that I should never go with a single broker, always best to have a reputable management company to make it easier to force compliance and also so someone else is available when your main manager isn't.

If you're skilled at painting, plumbing, hvac, etc., or have great local contacts that will come in an instant like when a pipe bursts on Superbowl Sunday, and can do efficient background checks by yourself, then worth it to manage yourself; otherwise, management company can actually save you money ... no emergency fees for outside electricians and plumbers, and everything always seems to happen when you're out of town. And the other reply about being incognito is really worth it.

Also, heads up, the managers I interviewed for my Washington State (southern part) property mostly seem to use property management as a way to build their own handyman companies, so make sure they allow you to put in a clause where you can do the turnover work yourself if you choose or be notified if repair is over a certain $ value and have the right to get other estimates unless it's an emergency. My company did when I asked them to, although I haven't taken them up on it yet as they seem fair if sometimes a bit high. It's very weird there, different than I've seen elsewhere. One I interviewed even has in their contract something like the vertical blinds must be cleaned once a year by their own vertical blind company, and for my house it would have been hundreds just for their cleaning. Weird. Didn't hire them for sure.

First post here, glad I found this forum, very insightful.

My list of top 5 mistakes:

Along with improper tenant screening and not having enough emergency funding, others I didn't see mentioned here (may have missed) are:

1. If you need to use property management, take time to find the right property management and Do Not hire one manager, even if she has a small team behind her and good references. Tenants were paying on time, but she wasn't paying me, sometimes three months in arrears. You need a management company, even if it's a little more costly, so others can take care of your issues if your manager has bills or troubled teenagers you don't know about.

2. Raising rent on a good tenant can be a huge mistake, worse than not charging enough, in my opinion. First thing I learned, through watching a friend. He lost a great tenant who was there for over 2 years because he wanted $25 more a month, and turned out she was on a fixed income (which he knew), so she moved, house sat vacant, next tenant required eviction (judgment, never recovered), next ones had the police there constantly. I make keeping good tenants who pay on time a priority over trying to maximize rents.

3. Location, location, location. It is much easier being a landlord in a decent neighborhood and good rental market that has plenty of demand to pick and choose good tenants. Townhouse next to mine rented to 15 or 20 people after owner moved out of state, causing trouble but police wouldn't help as they only had 2 cars parked out front so couldn't prove high occupancy. By the time I found the owner, months later, they had caused my tenants to move out, and cost him over $20,000 in damage to his property. I sold that unit and am now much more careful about the neighborhoods I choose. Never thought it wasn't just about my tenants or my house causing me problems, and very happy I learned that lesson early on without it costing me too much money. Even in "good" neighborhoods, I make it a point to talk to neighbors before buying a property, and am learning to love HOAs, even if they do not like me for renting it out instead of owner/occupy.