All Forum Posts by: Mark Nickoson

@Jim K., wow what a response.  Great tips and you got my vote.  BTW everyone else, I look for people who have more votes than posts.  These are the people who are worth listening to.  Hat's off to you Jim.

@Matt M., I'm convinced I need to clean my garage by buying another property and just relocate it.

@Matthew Paul, I just finished a den meeting for cub scouts.  In fact I still have my uniform on.  Thanks for serving the kids.  I'm not as heavy duty as you on the equipment, but I've got the table saw, sewer snake and some other space killers.  Thanks for your view on garage space from a contractor's perspective.

@Mark Fries, Are you saying that you'd throw away half of a contractor's pack of receptacles?  I know it's not worth very much, but I like having a few on hand.  That advice hurts.  Pray for me.  I'm not quite there yet.

@Joe Splitrock, a 30X60 is what I really wish I had, but perhaps I would be headed down the path that you went.  I'm going to try to minimalize first.  I know it will make the wife happier.

Thanks all for your inputs.  I like seeing the diverse answer by both contractors (who have to have their tools), and by managers.  I haven't quite determined what path I'm on yet.  So far, that is, with three rentals, I've done most of my own work.  I can't wait so see what else may pop-up.

Does anyone always have a rehab going so that they can store their tools?

Does anyone use an enclosed trailer?

@Marcia Maynard, My dad was in the rental business and he has the equivalent of 8 car garage full of stuff that he will not use.  Hopefully your garage is more usable than his.  I'm trying to setup my systems so that there is thought behind it and I only keep what I need, and it is organized in bins that I can grab and go.  But it is not easy to setup the right system.  I appreciate the openness.

@Max T., that is smart to not save the materials.  They are cheap.  I don't have a lot of material.  Probably one storage bin of plumbing and one bin of new receptacles.  A few 2x4's and just a few longer boards.  How do you organize the tools?

@Matthew Paul, I hear you brother.  May the good Lord keep the work a coming.

@JD Martin, I've considered the storage unit, but I find that after 4 or 5 months it equals the value of the items that I wanting to store, so I only see that as a short term solution. 

@Marcos Paulo Cerra, I've looked at Menards at some shelving that is much better than what I have and that may work.  I have to be careful to choose something that is either movable or a solid garage solution for the next person to own the home because there is a 50% chance that we will move in the next year.  But I like the Pinterest idea.  I'll give that a try.

Has anyone bought a property to relocate their business outside the home?  If so, how many rental properties did you have before you did that?

BP community, I need some advice kind of help!  I've been into RE investing for 10 years now.  My wife and I have three rentals and our own home.  I manage all four properties.  With all of the properties I've also begun accumulating tools to help me get the jobs done.  So my 2-car garage has a plumbing toolbox, an electrical toolbox, a toolbox with new receptacle covers both white and cream and the foam inserts, I've got the contractor boxes of receptacles, spare garage door rollers, copper plumbing parts, PVC and plastic plumbing parts, 3 boxes of painting supplies, clamps, drills, saws of all kinds, and on and on.  Plus, there are the normal things that come with having a young family such as bicycles, skate boards, baseball bats and gloves, footballs, etc.  I'm running out of room.

I already built an extra 100 square foot shed, but that filled up with extra roofing, concrete supplies, and ladders.  The other shed is devoted to the lawn equipment.  Mowers, string trimmers, chainsaw and some camping equipment.

Does anyone have any advice on how to manage the tools of the trade and reduce the clutter?  I go through things every once in a while and clean out the boxes of junk that come from cleaning out a property.  I use my stuff, but it is starting to take over. 

@Cory O'Dell, I think I would look at the properties, but like @Steve Stackman said, stick to the numbers. Remember, we have had a good economy for the past few years and it is probable that there could be a downturn in the next few years. You don't want to buy at the top and get stuck. My wife bought a house in 2004, which we are now renting, and the value today is still not what she paid for it. If he is not advertising this to anyone then you have some advantage of time on your side. You don't have to move quickly. I would play it a little cool, not overly excited. Quote his numbers back to him in aggregate and the cash flow, ROI. Tell him that this is probably the top of the market and if prices come down 15% you'd loose your shirt. Start at about 20% lower than what he's asking. And I'm not sure these numbers would work. I don't know if there are repairs needed. How old are the furnaces, roofs, etc. I'm going to have to dump about 20K in one of my properties this year to do windows, furnace and A/C (still has Freon), a new roof and carpet. Don't get caught with a lemon.

Mark

Hey @Matt Kitchen, I live in the Dayton area too.  I endorse the Dayton meetup that Darrin leads.  Only been there twice, but plan on making it a regular thing.

Shanese and other interested readers,

I agree with many of the suggestions already given. What we are talking about in general though is risk management. Generally, the only way that we can afford a property is to leverage, in other words, to go in debt for it. And as long as a property cash flows, we think of it as doing ok and worth holding in the portfolio. The BRRRR strategy makes extensive use of this obviously. Just a warning though, it is easy to be a million or two in debt. When the economy is fine everything cash flows and life is good. But in a downturn, good people can fall on hard times and may not be able to make their rent. That makes a normally good cash-flowing property turn into a money sucker for a month or two. Advice like from @Todd Dexheimer is to have "ample reserve funds (9+months)".   I have a little different perspective.

    I met a guy from town who had 110 properties.  So he had mortgages on some, but not all of these.  When the 2008 downturn came, he had tenants who couldn't lost their jobs and couldn't make rent.  He had mortgage payments to make on over 80 properties.  It didn't take long for him to loose his reserve.  He still had to make payroll.  He had to sell most of his properties at fire-sale prices.  His portfolio stabilized at 20.  But he also had a full-time crew and 20 properties was not enough to maintain the wages of the crew.  He had to radically redesign his business and he eventually sold even the 20 that he had.

    I realized that 9 months of savings for 110 properties is more than what most people keep on-hand.  I've heard all kinds of proposals including our co-host David Greene saying having equity in the property is good insurance.  But I think this... having equity in your property doesn't stop the mortgage payment from being due.  And the only way to not have a bank take your property is to always be able to make your payments or not have payments.  My strategy is to have some percentage of my portfolio that is fully paid off.  Right now it is about 75% paid off.  I will be lowering it to about 50% soon to raise money for my next purchase.  Paid-off properties are in a lesser risk position than the rest of my mortgaged portfolio.  Selling when prices are high can be an important part of my strategy.  This business is easy to get into, but many will not survive, especially the highly leveraged, if they do not handle their money well.

   There are other ways of managing the risk.  Having partners to share the risk is another strategy.  You benefit from the income and abilities of the team and your portion of any downturn is divided by the number of people on team (assuming roughly the same financial portion).

   What do you think?  How do you mitigate risk?

Mark

Sarah,

     Sorry for you husband's dog bites.  I was bitten as a teen.  No fun.  I cannot add anything new beyond the advice that is already given. 

To all the rest of us landlords,

      I think this is a real wake up call to check our leases.  Make sure tenants have renters insurance.  Thanks to @Alan Pederson on the first page for providing the wording for one of the clauses of his pet agreement.

Mark

@Alyssa ODell ,

I have not seen the BP form, but like others, if I run the credit report, I do not refund an application fee. I clearly spell out on the application form that the application fee is not refundable. You should spell out that any misrepresentation will result in not being considered.  I do believe a blank section is misrepresenting when there is a criminal history. I would look for someone else.

BTW, here is the link to the Ohio Revised Code governing Landlord and Tenant responsibilities http://codes.ohio.gov/orc/5321

Mark