All Forum Posts by: Mark Douglas

@Lou Delricci  Congrats on taking the biggest step!  A couple things here, just food for thought:

- I'm house hacking/rehabbing a duplex currently, with both sides being 2bd/1ba.  If I had a property with different bedroom amounts, I'd live in the smallest space, in this case the one 1bd/1ba, and rent out both 2bd units.  One reason is a higher gross rent, and higher cash flow.  Another reason is that in some areas, a 1bd place takes a little longer to rent, and may have a higher turnover than a 2bd.  Totally subjective though, your area may be completely different.

- As far as the numbers go, I'd plug it into the BP renal calculator, and see what you're looking at

https://www.biggerpockets.com/buy-and-hold-calculator.  I didn't do it for this deal, but run the numbers and see if the result is acceptable for you.  Some investors try and shoot for a minimum amount of cash flow per door/unit.  If the cash flow after ALL expenses is $400/mo for example, you're looking at $133/door.  (Run the numbers with all 3 units rented.  For your personal household budgeting, just subtract living expenses by how much of the mortgage will be covered by the two units being rented.)  Overestimate expenses..don't be extreme, but overshoot a little.  Don't buy it if it doesn't meet your criteria, or if you don't think you can realistically cut expenses/increase income to make the number work.  Always more deals out there..

- https://www.rentometer.com/ is decent for getting a ballpark estimate for rent.  Craigslist is also ok.  I like to call a few property management companies in the area (most likely they'll have a few rentals close to your property) and ask them what the average rent is for a 2/1 or 1/1 in my area.  You have some wiggle room to adjust (i.e., Your property has central heat/air, and most in the area don't) but I would caution against going too much over the average market rates.  The market dictates the rents, landlords don't.

- This last one is just a criteria I wanted to include when I was shopping around, but everyone is different... For me, I wanted to be able to afford the entire mortgage payment in the worst-case event of all units being empty at the same time, or tenants not paying rent, etc.  I chose a property that met that criteria, and thankfully so!  I'm in the middle of rehabbing the duplex, and one side is temporarily vacant.  (Getting it listed today, actually lol)  But I'm comfortably paying the mortgage for this month because I planned ahead for just such a situation.  If you can swing the mortgage on the triplex, that may ease any hesitancies if you have any..I sure did! :)

Hope this helps!

Best,

-Mark

How do you handle sending application rejection letters?

I'm thinking about what all I'd like to see come in with a rental app.  Here's what I've got:

- Copy of SS card and 1 alt. gov't issued ID (Driver's, passport, etc)

- 4 weeks of paystubs, or most recent benefit letter showing $ of benefits

- 4 weeks of bank statements for checking account

- Last year's tax return

Am I asking too much from them?  If so, what should I remove from the list that I don't need?

(Definitely will do a credit report and criminal/eviction check)

@Vitaly Evdokimov  Personally, I would stick to your criteria.  It's great that she's nice, but there should be other qualified applicants with no pets

Best,

Mark

@Benjamin Riehle    @Dave Hurt

"However, at every point I look back and identify a "lucky" event, somewhere near by was a whole hell of a lot of hard work..."

EXACTLY!  Everyone sees the finished results (listing a newly rehabbed unit, closing on the sale of a beautiful flip, making an offer on a great apartment complex after putting together a creative finance strategy, etc) but they fail to realize the incredible amount of time, preparation, sacrifice, and detailed execution all of this takes.  The whole "it must be nice" attitude is reserved for those who watch others conquer their goals.  Not to sound harsh, but I just don't have any sympathy for those that complain about their situation and DO NOTHING to change it.  You've got to go out there and make it happen for yourself!  There are too many tangible examples of regular people here on BP and in other places, that demonstrate how you can succeed in life if you reach out and use the resources that are available.  It's the input that creates the output.   

@Mat Farmer   @Catherine Aubale Epstein  You can connect as colleagues and send a PM with contact info in the message

I think it boils down to the individual.  Yes, we're all influenced/directed to some extent by our surrounding and upbringing, but I just don't fall for the excuse that there aren't enough resources to achieve our goals, educational or otherwise.

I'm 23, graduated college in 2013 in three years with $0 in student loans, through working and a potluck of academic scholarships.  I'm on a steady but fairly aggressive path to accumulating a nice rental portfolio.  My parents are nowhere near rich, and even if they were, they're the type to (lovingly) let me try to make things happen on my own, without a handout.  To @Benjamin Riehle's point, I used an FHA loan to house hack a duplex. It doesn't mean that I don't know how to budget or manage my finances, it just means I took advantage of an opportunity to buy an income producing asset.

I agree with @Natalie Kolodij, I know a lot of people my age here in Nashville that are in ridiculously over-priced apartments or condos because it's "cool", or in a newly gentrified popular area.  There isn't anything inherently wrong with that, as it's their choice.  However, if I model their spending/lifestyle pattern, it's unlikely that I'll reach my goal of retiring by 35.

Though this 'generational lethargy' is a real thing to a degree, there are still plenty of us willing to put in the work and sacrifice immediate gratification to achieve our version of the American Dream, whatever that may look like for each of us.

@Michele Fischer Looks like I need to do some trimming..lol thanks ! 

@Thomas S.  Never thought about the useful life factor of the cosmetic improvements.  I'm in the middle of rehabbing a duplex (total gut on both sides, just finished one side) and am hoping to cash out refi next year.  I didn't buy the property (1st purchase) at a 30% discount, but I am confident that I will increase the value a good amount, maybe $15-20k after I'm finished. 

Depending on the market conditions in Nashville, I'm open to selling, which would be good to do before the improvements wear out..

@Henry Montgomery III While it's good to hear the path that others have found to work for them, I think it's more important to define your "why". As I'm sure you're aware, there isn't an easy strategy in REI, at least there isn't one that won't require a good amount of effort to successfully implement consistently over time. When you're studying the different niches, it is likely that one or two strategies will jump out to you above others. This might be a good place to focus, and see if that strategy is a good fit for you. You'll want to consider the commitments (financial, time, energy, resources, other sacrifices, etc.) of the different strategies.

If your 'why' outweighs the 'struggle factor' of a given strategy, then you may have found one or two that work for you. 

Hope this helps somewhat !

- Mark