All Forum Posts by: Mark Elkins

Alex,

@Ben Graves is right. Go to an agent who will look out for your interests with regard to the contract, earnest money, local practices and what not.  Importantly, rely on this person only for the technicalities of completing the deal! They are not an investor, even if they say they are, even if they say they have rental property.  They cannot help you to analyze the deal according to your predetermined criteria.  Don't let them try, you'll end up overspending on a poor risk so they can get a commission OR you won't buy the best bargain in town because they don't like it.  Trust only your own judgment after reviewing the deal with your mentor.

A good agent will do a lot of work for you, treat them right and pay them well.  Then, make the investment decisions yourself.

I hope this helps! Holler if you need me.

Best regards,

Mark

@Donald S. , @Thomas S. , @John Underwood

I can't imagine why anybody would object to the Housing Choice Voucher program!

For conservatives, it privatizes a vital government function in a way that even small business people can compete;

For liberals, it allows you to personally implement and ensure the survival of a critical social program;

The charitable, get to provide affordable housing;

The opportunists, get a slice of government pie!

Everybody wins!

Note to Donald: I don't know that area but I recommend staying out of the densely populated urban areas until you have more experience. See my post on selecting a market. A quick look tells me in South St. Louis look at suburbs like High Ridge and Arnold. You might get something for well under $100,000 that rents out in the $900+ range. I don't know the area but speculate that taxes are a little high in bedroom communities. You're probably looking at $550/mo or so PITI for something reasonable. Then you can find an HCV (section 8) family if you still want. Again, I don't know for sure, this experience talking. Anyway, that will be a much lower risk than buying a $30,000 house in the city, rehabbing it for rental and holding it. Those areas come cheap but with special problems, you need to be prepared to overcome. The one big exception: if you grew up in those neighborhoods, you already have that understanding.

I hope this helps! holler if you hear me.

Best regards,

Mark

@Tookie Nemchak Section 8 is a nationwide federal program from the Department of Housing and Urban Development ((HUD)as in HUD1). It's available in every corner of America. If the is no independent agency handling it, check first with the human services departments in larger cities and then with the township governments. BTW- townships also handle general assistance in most locations!

Hope this helps! Holler if you hear me.

Best regards,

Mark

@Gail K. That's really funny!  I've seen that when I have a place in the "hood".  Tenants will move the bulbs from room to room.  There the real problem is that they think they can't afford the luxury of addition lightbulbs.  Besides, fewer lights on keeps their electric bill down! LoL!  I suggest you be a sport and give them some bulbs.  Another tip is, there are programs all over the country to give away free light bulbs.  Duke power gives them out on request.  Home depot frequently has a coupon that reduces the price to zero, you may have to pay the sales tax, nevertheless; that's practically free.  Google free lightbulbs and you will find dozens of places to get them.

Hope this helps!  Holler if you hear me.

Best regards,

Mark

@Linda Labbe Can you pin that 20% return on to something?  I think it might be okay on a fix & flip it's not necessarily good for a rental.  I'd like to know what you mean.  I'd be really cautious about waiting for appreciation unless you are forcing it.  Whenever I buy I presume that the property will NEVER be worth more than it is today and I presume the price will drop or I will be a distressed seller forced to take a low price.  This tactic compels me to look at how I'm going to make money today and every day at the current value.  Appreciation is a fabulous concept until you try to spend it! LoL

@Sebastien Hitier has a great point about the trends and is citing some great information if you apply it to your search. FYI- MSA is Metropolitan Statistical Area and it is the way HUD and  FHFA describe larger market areas. This data can be used for your "extra-local" area I described as being 100-200 miles from your home and the states have studies and planning documents to consult.  In choosing Rockford IL I consulted the Illinois Dept. of Transportation (IDOT) 2040 travel study.  The need for an extra lane of highway each way to Chicago and Rockford IDOT had committed to along with the need for additional future rail and airport expansion was compelling evidence that my market choice would continue to grow.

If you follow the links in this post and add your own research you will find highly detailed information about every corner of America.  There is even a downloadable calculator that will tell you the approximate value of any house based on the MSA, zip code, purchase price, purchase year and today's date.  It is astonishingly accurate!

I hope it helps!

Holler if you need anything!

Best regards,

Mark

Thaddeus,

There are many variables that will affect your electric bill and it is a legitimate complaint from your tenant.  It may not be proper for her to break her lease but if the electric bill is so high that it has changed the affordability ratio for her, you have a potential problem for non-payment!  She is obviously a responsible person or she would not have asked you to change the lease terms.  Here are my suggestions:

1) Ask your tenant about the difference in square footage between her last place and this.  It should be easy to understand that a larger place uses more electric.

2) Ask about the size of her household, if there is a new baby or boyfriend, this will affect the electric usage.  This is also easy to find.

3) Ask if she has any electric appliances that she did not have at the last place.  New TV's, Computers, Printers, Entertainment systems all use electricity differently than she has done in the past.  

4) Check the electric supplier and rate from her last home.  If it is in the same city and a different supplier, have her change to the other supplier.  If it is a different city and that supplier is not available or perhaps the same supplier but different negotiated rate with the city in your area, point this out.  She should recognize that her move to be closer to work or whatever came with a price increase in electric that nobody knew about.

5) Check the usage of existing appliances and equipment.  If someone in the house is mining Bitcoin for example and leaving the computer on 24 hours a day that will be more expensive.  If she is using a washer dryer in your apartment but at her old place she had to go to the laundry room or laundromat, her costs may actually be less for the convenience and she doesn't recognize that.  Check the age and function of the refrigerator.  Sometimes these just use too much power.  You may be able to borrow a gauge to measure the power consumption at your library or city hall or your local power company.

6) Check if she is now using more power supplies for devices.  These buggers are power hogs!

7) Check with the power company to see if the bill is similar to the neighbors.  If not, the problem is in your house.

8) Ask if the lights ever get suddenly brighter for a moment and then go back to normal or if the tenant notices that she must frequently replace bulbs. If yes, then you have a good indication of a loose neutral wire.  Either way, check for a loose or resistive neutral wire in the house.  This will drain power faster than you might imagine.  The loose wire will periodically connect and then disconnect at unpredictable times perhaps even "connect" with a small gap that allows the power to flow but requires more of it to complete the connection.  This is a dangerous fire and electrocution hazard and must be addressed immediately.  Sometimes the only indication you have of this is the higher than normal bill.  This was the problem in my home until my wife informed me that we were regularly paying double the rate the neighbors pay.  The power company will check this likely at no charge.  If you have one, the bill is higher because more voltage is required to run your devices due to a loss in the line.

Once you have identified the problem area, you can work on solutions.  What follows are several solutions that are cheaper than finding a new qualified, responsible tenant. 

1) Purchase, or have her do it, a supply of LED bulbs for every lamp and fixture in the house.  The price of these devices has really come down and they are as affordable as the old carbon filament lamps once were.  Some of these lights can last for 18+ years so they will still be there for your next tenant and they could possibly cut the electric bill by as much as half which, in your case would reduce the tenant back to her original power consumption level.  If this saves the tenant, it is more than worth it.

2) Replace the offending appliance.  If your refrigerator is sucking back power at pre-1970 levels, you need a new one anyway.  Today's appliances are quiet and energy efficient.  Any one appliance is cheaper than all the costs of getting a new tenant.

3) Get the power company to do an energy analysis and check the house for bad neutral connections as mentioned above. 

4) Purchase a set-back thermostat for the house.  These are big energy savers!  Show the tenant how to use it, you can get one at the big box store or get a pro to install it for under $100 in most areas.

5) Buy some timers to control the power supplies on the tenant's devices. By midnight her phone and toothbrush are likely at full power and you can turn off the power to those outlets without interfering with the tenants' use of those devices.  You can have the power come back on just before wake-up time just to be certain that the power is topped up.  You can actually use these on all your electrical devices and appliances in the house.  Turning off your equipment doesn't mean you cut the power, it only means you suspended the operation of it.  If the equipment has a little red or green etc., led indicator on it, that is an indication that it is still using power to run your remote control and such.

6) Change the furnace filters and explain that the furnace/AC can use as much as 40% more with a dirty filter than with a clean one.  That's a great way to get the tenant to commit to regularly changing them when she can see the difference in her pocket!

There are other things you can do besides this. Check with your power company or with the USA Federal Government.  The government has got more stuff to work with than you could ever believe in all areas of your life and business.  Check them out at https://www.usa.gov/

I hope this helps!

Holler if you heard me!  I'm available to answer questions too.

Best regards,

Mark

Here's how to get a free list!  Ask a Realtor to give you a list of all the expired, unsold and off-market listings that did not sell within a space of time and send your letters to these people.   This is a great list because all of the people on it have demonstrated their willingness to sell their houses and failed to do so without your help.

Why will the realtor help you for free?  You are going to tell the realtor which prospects are willing to list their homes again but aren't prospects for you.  That's right!  You will get a particular level of responses from people who still want to sell their homes.  Of these, only a percentage of them will want to offer you the kind of discount that makes it worthwhile for you to pursue.  The remainder, if they still want to sell their property, might be open to talking to your realtor.  You are going to recommend your partner and tell the seller that you will have your Realtor call them.

If you are really enterprising, you can offer to sell the leads back to the Realtor rather than give them to him!  Why wouldn't he be willing to pay for a completely screened, qualified lead who is expecting his call?  Your effort has value to the Realtor, get what you can out of it!

@Ray Lai  That's an excellent tip about the postcards!  I have run a direct mail business since January 2001.  Most folks are so concerned with saving money, they never consider why the price is so much higher for other classes of mail.  What Ray is referencing here are the often overlooked features of first-class mail.  

First Class mail is processed by the USPS on a priority basis… it goes to the front of the USPS line. Locally, first class will typically be delivered in 1-2 days and nationally; all of it should be delivered by about 4 days.

If your party has moved, your mail will be forwarded at no charge for a period of 1 year. If it’s undeliverable, it will be returned to you at no charge with the reason for non-delivery.

Standard Mail, formerly known as bulk mail and 3rd class mail, is a back of the line product, USPS delivers when they have the time and it goes in the recycle bin if not delivered.

That all depends on what you like to do, where you start financially, and how much risk you can tolerate!  Welcome to the family, it's a great adventure you are starting out on!

@Josh Bauerle

I will defer to your expertise and step out of this thread.

Best regards,

Mark Elkins

@Mathew Zorn

Yes, you can have a PM.  It may help you but you may not need the expense since rent gets paid every month by direct deposit.

Just to clarify here, the program we are all calling Section 8 is now called HCV, Housing Choice Voucher and HUD hires local agencies to administer the program and issue the HAP, Housing Assistance Payment. This is designed to bring the Tenants housing payment down to no more than 30%of their gross pay. You might get a tenant that doesn't work but you need not. HCV helps working mothers, as well as non-working but also disabled and elderly, have equal access to the program.

Your dwelling will need to regularly meet the standards of the program to qualify as a landlord.  I will gladly answer all your questions if you care to contact me and now I just want to address something basic that most people don't think about.

Your success with HCV will be dependant on 3 things of equal importance:

1. Your careful screening of tenants and a firm hand in managing your property.

2. Cooperation and compliance by the tenant AND often overlooked,

3. Participation and control of the managing agency.

This last is so important!  Some agencies will poke a late tenant in the ribs if they don't pay on time or, kick a client out of the program for failure to pay repair costs or otherwise provide services that help you have good, long term rentals and other agencies will not.  Some won't let the tenant move if they're behind or need repairs and some will. Some offer to counsel for tenants or even pay more for high-quality housing.  I recommend you interview the local agency to learn all you can about their policies, procedures, and rate sheets before you decide to rent to their clients.

I hope this helps!

Mark Elkins