All Forum Posts by: Mark Nickoson

@Jaron Walling

That last post was suppose to have your name in there too.

I agree with everything you said.

@Joel Allen

@Joel Allen

You know... I agree with everything you both have said.  That is why I still have my rentals.

@Anne Wang

Hi Anne, I thought I would throw my opinion in here too.

Real Estate renting is not a passive job.  Essentially, you are in a service industry.  You have to maintain your property.  And there are expectations that your tenant ought to have about a working infrastructure.  Here are three things that I noticed about the situation.

1) It seems like the property was not quite ready for a renter.  I run through a checklist of things before I rent out my properties.  I snake the drains between every tenant, cleanout sink traps, put in new toilet guts, gutters should have been clean at handover, etc.  I don't get as many maintenance calls this way.

2) When my tenant has a legitimate complaint such as a refrigerator.  I replace it with a new one.  I had a failing gas stove, I bought a brand new one. And I've bought refrigerators and trimmed trees and a few years later had to cut the whole tree down.  Stuff does happen and either you have to deal with it yourself, or you have to contract it out, or hire a property manager as others have suggested.

3) I do not use a standard lease. I write my own lease and attempt to make it clear who is responsible for the big things.  I spell out that the tenant maintains the property for normal things like mowing the lawn, edging, trimming the bushes, cleaning the gutters.  If I have to do it, I will charge them.  I keep adding to my lease template when I see things at other properties that I wouldn't want done at my own property.  I put these things in the lease because if they do not do them, it is a breach of the contract.  When I accept them as a tenant, before I hand over the keys, we sit down and read through every line of the contract.  They initial every paragraph.  I have a second document that is reserved for non-breach-of-contract things.  For instance, the bathroom has a plastic tub, obviously, if they used scouring powder to clean it there would be scratches, so I wrote down products that are acceptable and not acceptable for different areas of the house.  Obviously, if they damaged the tub or any other object, there are other provisions of the lease that require them to pay for damages.

I know that renting can sometimes be a pain, but it has its rewards too.  You have to treat it like a business and think yourself through these problems.  If you do not want to do the work yourself, there are others who can.  Consider the property manager.

@Jiebing Wang

I have a few tenants.  One pays electronically before the first, the other pays electronically usually on the 5th.  Now, I don't get perturbed about payments up to the 5th because my mortgage payment doesn't come out until the 8th.  But, if it upsets you, you could reward the behavior that you want.  If your rent is $1,000/mo then knock $10 off if they setup electronic payment and pay by the 1st.  If it is not by the 1st, then the cost is $1,000.  Most banks subscribe to a service that offers ACH payments.  I like to have payments deposited into an upfront account, then I transfer to another account with the same bank for a little measure of safety.  The service the tenant uses sends a text message to my phone saying tenant has paid.  It usually shows up in my account the next day. 

One of the other things that I do when I have done my screening and we sign the lease is that I give them a short one-page document that explains why I charge $50 for a late fee and goes through a short calculation showing the price of the price of the house and an interest rate.  I describe that they are borrowing a $130,000 asset.  When the regular rent is not in place, the normal payment is not covered, I'm losing $31/week (@5% interest), not to mention that if I have a rent payment coming out of a bank account, I have to scramble to make sure I have it covered.  If I'm not paid by that next week then there is a bigger problem.  I've had a tenant that had two months in a row where he made the late payment.  He has a good job, but they had a large car repair bill and the next month another situation came up.  The next month he was back on track.  Each time he was late, he sent advance notice to me and said that he would send the $50.  It sets the expectation.  I've been leasing properties for 12 years and it seems to work for me.

OK, so maybe you are like me and own and rent a few rentals.  Are you impressed that the price of the property has gone up?  If I buy a house for say $100K and there is 10% inflation for the year and 9% more the next year.  At the end of those 2 years, if I see that the value of my house is $120K, do you think I have made any money if I were to sell?  Uncle Sam says that there is $20K profit and I get to pay the tax.  But you and I both know I didn't make anything.  Inflation blurs our thinking.  We should be getting out our business calculators and getting used to the Future Value functions.  The inflation is a silent robber that steals the value of our asset and allows the government to continue to collect their tax.  Just wait until the high interest rate brings down the value of that house too and I am upside down on the mortgage.  Hmmm.  My numbers were numbers you might find in the mid-west.

Watch out California!

@Reeves Coggin 

@Mike D'Arrigo

So I have lived in Dayton all my life.  I have rental property in the Dayton metropolitan area. 
The problem with going with the Census data is that the city limits of Dayton is a pretty small area. Only about 137,000 people. Within the city limits is half getto. If you buy in the Dayton limits, you can pay as little as 32K off the MLS. I just looked. But you do renovations then rent it for a few years, it is all torn up again. Downtown is mostly a "D" neighborhood. I invest about 10 miles from town. I live about 15 miles from downtown. The metro as a whole is booming. Near Centerville there were at least 100 homes built last year. Springboro is growing. Building is spilling over into Warren County.

You have to consider the schools, jobs and businesses in Dayton.  Dayton is a medical mecca.  I can drive 10 minutes and go to at least 4 different hospitals on the south side of Dayton.  There are one more in Dayton and one in Xenia.  Dayton is home to Wright Patterson AFB which is the 5th largest employer in the state at 28,000 employees.  Dayton has the University of Dayton, Wright State University, and Sinclair Community College which has an enrollment of over 25,000 and is one of the largest community colleges in North America.  And there are a bunch of other one-building colleges.

Dayton / Montgomery County has a fantastic Metro park system, lots of local parks.  And old railroad tracks were converted into bike paths.  The whole network can take you across the state.  There are restaurants, there's entertainment, we have a local baseball team, plenty of museums including the National Museum of the U.S. Air Force - the oldest and largest military aircraft museum in the world.  

What's not to like?  Dayton Metro is not dying.

@John Bongers

I bought a house at auction close to the Dayton Mall back in 2014.  My auction price was pretty low back then but it needed a lot of rehab.  I put in about 16K and I did all my own work.  The price now has more than doubled.  But there is a lot of demand at auctions so bids go higher and margins are thinner.  Therefore, your risk is higher and cash flow is a gamble.  I'm not buying right now. 

@Skyler Mckinney,

    All of us on this forum have dreams of real estate helping us make a better life.  I'm a data engineer and making pretty good money.  I've owned real estate rentals for over 10 years.  Building a business is something that takes time and money.  After 10 years I still cannot leave my W-2 job.  If you have to ask "what next" then you don't have a plan that you are executing.  You are winging it.   Go back to your boss and tell him you made a bad decision.  Humbly ask if you could get your job back.  Then get yourself to a monthly real estate meetup and start asking questions from people who are now doing what you want to be doing.  Read every book that Bigger Pockets sells.  Then read the other books that the podcast guests recommend.  Those books are like a one-on-one mentorship for roughly $15 each.  Once you understand what you ought to be doing.  Put together your business plan and start doing.  Find one of those meeting friends to help steer you in the right direction.  Let's not create a train wreck here.

Mark

@Mark Fries,  

   OK, I'm really thinking through that.  Some of what I have shows a lack of accuracy of estimating.  Others like commode flappers, is just an attitude that says it is not bad to have some things on-hand.  Looks like I need to flip that around.  I go by Lowes and Home Depot every weekday.  They have the inventory.  I shouldn't have to carry it myself.

Thanks,

Mark

@Sylvia B., those are so nice, I'd be more likely to use them in my home than in my garage.  In fact, we had the laundry sorter version for a while.  We do have some shelving in the garage and I'm considering a more sturdy slotted metal shelving from Menards.  Thanks for the suggestion.

Mark