All Forum Posts by: Mark Torrefiel

Hello BP family!

I purchased a property in July with a SFH with two ADUs in the back. I did see that SB7 said that multifamily properties would require submeters installed in every unit. For the first question, since I am planning on renting out all units, would the ADUs require submetering? With this in mind, I have seen other property owners use different strategies to bill their tenants for utilities. In my specific case, the tenants pay electricity & gas, but the previous owners were paying for water. I inherited a tenant in the SFH and am working on putting two more tenants in the other two ADUs in the back. So this means, I'm paying for the water that the tenants in the SFH are using. Since I'm trying to cut costs, I do plan on having the next two tenants pay for water as well.

The different strategies that I've heard other property owners use are: RUBS, submetering, metering, or increasing the rent by a certain amount to cover the water bill. Metering is too costly for me at the moment, and the recoupment would take years. Submetering seems reasonable, as the price isn't too terrible, but then I'd have to have the property manager bill them regularly, and at the end of the day, if they do not pay it, then I am still overall responsible for paying it. However, I do intend to add a clause to the lease that discusses the repercussions for nonpayment of the water bill as per the lease. RUBS seems like another easy idea that we'd have to calculate monthly, costs me nothing, and does a fair division of the bill based on the number of people per unit. Lastly, simply raising the rent to cover the water bill seems like the easiest, however, should their portion of the bill exceed the amount I increase their rent by, then it'd be out of my pocket.

I'm kind of at a crossroads here with making a decision and want to hear anyone's experience regarding the topic. Pros and cons of each decision, what worked for you guys, how you made the decision or any other relevant information you have to share regarding the matter. 

Thanks in advance for all your opinions and help! You guys are doing awesome, and don't forget to track those interest rates. They're getting more attractive by the day!

- Mark

Quote from @Michael Smythe:

@Mark Torrefiel check with local Realtors to find a photographer. 

Have that photographer not only take great pics, but find on that also offers floor plans and 3D Tours. Some of them will user Matterhorn software and charge a LOT, but some use other cheaper software.

How much research have you done on your local competition?

Hey Michael!

3D tours would sound like an awesome addition. This is my first REI property, so I'm trying to find cost effective solutions to this matter. I'm worried on how much that would cost me. Though that is an awesome idea!

As for researching the competition, all I have done so far is check common websites that market properties like Zillow, Realtor.com, Apartments.com etc. Are there any other recommendations you could make as to how I can determine a price or additional amenities to keep me competitive?

Quote from @Nicholas Coulter:

I would pay for new photos. I have a person who has done my listings and airbnb. That should pull in a better interest. Are you posting right at market rent? with my last tenants I tried posting rent "discounts" for length of lease. MTM was 1k, 6 months was 900 and 12 months was 800 as an exaggerated example. 

Nicholas,

Doing some digging now to get a photographer into my property. I don't consider the photos I've gotten "Zillow worthy." By the way, that's a fantastic idea! I'll add that to my toolbox. I've searched around a few websites and searched for properties within the same zip code as mine. I compared size, amenities, whether or not a property was rehabbed, parking, and location. It's odd really, the prices go from as low as $1700 for an apartment up to $2300 for a SFH or ADU. Just from my observations it seems apartments can go for cheaper than a SFH. Is this the usual in SD?

Quote from @Sean Hudgins:

Congrats Mark,

As Hamp mentioned, getting a management company involved before you deploy is a very smart move. When I was still active, the only time I would consider self-managing was when my tenants were college buddies and shipmates. Get that management company nailed down now, as they should have better marketing strategies so you can take those off your hands, and it allows you and the management company to align and manage expectations from day one. 

If you're going to stick to self-marketing the property, get those photos. You can try sites like militarybyowner.com and the groups you mentioned.

best of luck to you!

Sean,

Surprisingly, I haven't heard of militarybyowner.com. Thanks for the lead! I'll definitely check it out. Definitely planning on finding a PM after some careful consideration today. I already have some leads. Thanks again!

Quote from @Hamp Lee III:

Congrats!

Consider going with a property management company now that you’re deploying soon. You may not be able to address issues in a timely manner when they come up. They will help with what I’m sharing below (or should).

Consider your pricing to ensure it’s competitive with the local rents.

Post on military sites as well.

As you said, get professional photos ASAP.

I'm active duty Air Force with four properties. Three are VA loans.

I wish you all the best.

Hamp,

Thank you for your response. Great to see another service member doing this! I'm looking at a few prospective property managers for when the time comes. I wanted to try my hand in self managing for the rest of this year, mainly for the experience aspect. The plan is to have a property manager identified by end of November, then have them in place January.

I have posted them on military group pages associated with the Navy in this area, especially seeing that the Naval base in ten minutes from the property. I'd like to ask if you've ever listed with housing on base? When I was in Norfolk they had a housing assistance office where they would help Sailors find units for rent from their own dedicated list. Any experience in doing that?

Good day, BP family! So far, you guys have helped me find the motivation to purchase my first investment property, find the right management software, and now I'm marketing my triplex. The title says it all, I'm looking for effective and unique strategies to market a unit that is available on my property. For background context: I'm interested in a long-term rental with the unit to offset my mortgage while I live in one of the units. The other unit already has a tenant. For now, it is a house hacking strategy. As a note, I am active duty military, scheduled to deploy sometime next year, and I have plans to rent out the unit I am staying in once that time comes around. 

So far, I used photos from when the previous owner marketed the unit. They aren't the best, so I do plan to find a photographer that would give better photos of the unit. I'm using the software Avail to collect rent from my other unit, as well as to mass market my available unit to about 20 different websites. Do any of you experienced investors/landlords/property managers have effective strategies you use to make a unit more attractive? Since this is my first rental, I'm not sure I can offer much in the way of rent specials. I am open to any and all suggestions, tips, or experiences anyone would be willing to share! Thanks in advance!

Quote from @Nathan Gesner:

Quote from @Mark Torrefiel:

Software is a common question on BiggerPockets. Here are some things to consider:

1. Most investors don't need software until they have 5-10 rentals. You only need a place to track tenant information, payment history, maintenance, etc. You can easily do this on a spreadsheet, and it will take less time to track than finding and learning new software. If the software is not simplifying your life or making you more accurate, you shouldn't use it. Go to Etsy and search for "rental property tracker," and you will find hundreds of nice spreadsheets to track 10-20 rentals, usually for under $10.
2. Software has extremely helpful features like online payments, marketing syndication (click a button, and your property is advertised on multiple sites), electronic document review/signing, maintenance tracking, and owner reports. Do you need all this for a couple of rentals?
3. There is no perfect software out there. Every system you try will have flaws, or you may salivate over a feature that appears in other software.

Some familiar names are mentioned frequently: Stessa, Apartments.com, RentRedi, TenantCloud, Innago, RentManager, Avail, Rentec Direct, Doorloop, etc.

I recommend conducting thorough research on each app online to understand their offerings, pricing, etc. Create a simple spreadsheet or written list to compare the features of each and identify the ones that align with your requirements. Try to narrow down your options to the top 3-4. Once you have a shortlist, sign up for an account with each one and test them extensively to see how they function. Perform the same task in each app to ensure a fair comparison.

• Load a property with pictures and details.
• Market that property.
• See what your marketing looks like from the public's perspective.
• Submit a fake application to see how easy the process is.
• Run a credit/screening report on yourself.
• Enter a maintenance request, assign a vendor, and attach a fake invoice.
• Enter charges to the tenant's ledger.
• Enter recurring charges and automatic late fees.
• Sign documents electronically.
• Run owner reports.

After testing a few apps, one should clearly stand out. It's important to choose that one and commit to using it. Remember, no system is perfect, so avoid the temptation of constantly chasing after the next shiny object. You should only consider switching when your current software has a significant flaw or lacks features that force you to spend excessive time on workarounds. At that point, it's worth researching and finding a solution that better meets your needs.

Nathan, 

Thank you for the insight, I have been going through your recommendations. I've narrowed it down to Avail for now. It was a pretty extensive test of the software, and very much needed. I intend to use it for this year and reevaluate where I am again at the end of next year. As a note, I do eventually plan on scaling. The simple-to-use features and quick responses of the team at Avail stood out to me. Hopefully, this doesn't change, but this software looks fairly promising for what I am working to accomplish. Thank you again for your help!

Hey everyone! Just closed on my first triplex in San Diego three days ago. I've been looking around Google the past few days and can't decide on which rental software to use. I must have looked at dozens of videos, blogs, and reviews on all the different types of software available.

For all you seasoned investors out there, what software would you recommend to new investors? I've taken all the major options to consideration such as book keeping, accounting, taxes, payments, maintenance/trouble calls, price of software etc.

At this point, I'm looking for the most balanced option that will best help protect myself and my assets. Any and all advice is highly appreciated! 

Gladys,

It is interesting that I ran into this post today, seeing as I just closed on a triplex in San Diego three days ago. To make matters even more interesting, this is my first investment property! Well, excluding the single family home that I am planning to rent out in NC in the next week which started as my primary home, this truly is my first multifamily home purchase with an intent to invest.

Now, to answer your question, is it wise? I believe it depends on your goals and strategy. As mentioned above me by many other investors, CA is a very tricky market. There's a lot of laws to navigate, the market is excruciatingly expensive, and the properties you purchase may not cash flow immediately. Let me explain to you why I chose CA as well as my goals and strategy.

For starters, I'm active duty military, and this has given me access to a VA home loan which gives me better leverage to easily purchase a property with zero down. Second, my goal is to grow my net worth through equity and appreciation. I view mortgage payments as a "savings." Essentially paying down my principle puts more equity in my pocket for when I want to tap into this resource. Next, I plan to house hack my my triplex. If I break even on mortgage payments and don't cashflow I count it as a win. If I don't break even, so long as my out of pocket expenses on a mortgage don't exceed $2000, I still count it as a win because where can you find rent for less than $2000 in San Diego? Plus, once again, that's $2000 more equity I pay to myself. On another note, rent will continue to rise, and through both forced and standard appreciation, my property will continue to grow. There will eventually be a time where rent will cause me to cashflow. Let's not forget how awesome it'll be once I am able to do a cash out refinance on the home.

All in all, it depends on you. The first year or two might not be the best, but I believe CA is a long term waiting game to invest in. Higher prices, higher risk, but higher return if you play your cards right and make the numbers work. Bonus points if your property can facilitate the construction of ADUs for extra income.

Quote from @Dan H.:

Buying in San Diego county at retail is a long term investment. The returns initially are poor. If using high LTV loan and legit underwriting, the purchase will have negative initial cash flow. In addition, the city of San Diego has very unfriendly to LL tenant laws. Rent control more extreme than the statewide rent control. STR quota. The most strict COVID eviction moratorium in the country.

However, for long holds there are few markets that have historically done better.  It is virtual guarantee that a RE purchase looks great at 10 years.  Our appreciation and rent growth is near top of nation virtually every year.  We have bp near lowest late payment, missed payment, and eviction rate in the country.  this is largely because we have crazy low vacancy rate.  When we screen, we will not accept you if you have ever been evicted.  We require strong LL referrals and state this requires more than paying your rent on time.  We want your unit to appear like it would if you were owning it and not renting it.  Do we have issues finding tenants with such strict requirements?  We usually get our tenant from our first open house (but we write our leases such as none expire Oct thru February). 

In summary you need to be committed for the long term which can get tough when rent barely covers PITI at purchase and you get a large cap expense. It could be easy to get frustrated and want to sell.

Good luck

 Dan,

Thank you for that advice and insight. Very valuable!

That is exactly what I intend to do to break into the San Diego market, long term rentals. Just taking peeks in the area, I've adjusted my goals to creating that growth in equity and net worth. If I can score some cash flow, I'll take the win, but my plan is to at least break even in payments. I'm fortunate to have the VA home loan to help, as well as housing allowance from the military.

The struggle right now is finding the right property that meets all the wickets. If I play my cards right and take action judiciously, I know it can work out.