All Forum Posts by: Matt Higgins

I would start reading personal finance books instead of real estate books.  Maybe start listening to more Clark Howard and Dave Ramsey and less bigger pockets for awhile.  Also, I would spend a lot of my time thinking about how you could make more money.  If you took a 2nd job that paid 20k a year you would have that credit card knocked out in 6 months even if you didn’t change anything with your spending.

Good luck! 

Thanks amber.  I appreciate the information.  I had missed that.  

@John WoodrichYep, 15 year LOC is great. I should have talked to you before I did my latest. I have one bank that makes me renew annually and one that does every 3 years. I was doing the online real estate investing bootcamp with Rod K a couple weekends ago and he suggested pulling the entire value of the line and depositing it in another bank so the bank can't claw back the money at anytime. Personally, I wouldn't want to pay interest on money I wasn't using, but I guess if people quit paying rent I might resort to that strategy. He had had his LOC called with out warming.

@Bob B.. Sorry to throw you in with the usual person that self manages.  I’m sure you’ve come across the person I’m talking about.  

@taylor L we have been @ about 100% collections in Minnesota and things have been going well, but you already know that it’s not the good operators that will be hurt.  Plenty of commercial loans are in forbearance and commercial lending standards have changed drastically.  12 moths of reserves?  There is going to be some inventory hitting the market from the refi & roll crowd with minimal equity and have to REFI.  Interest rates better stay low.

@lee rimpa. Same here on SFH at the moment. Keep in mind though that you have a pent up demand from a couple months of no sales, it's peak buying season in our market, and the courthouses here aren't open so we have had a couple months of no foreclosures. I really think it's going to take a lot of patience to get the "deals" but they're going to come unless we get 2.something interest rates, and we might

@Bob B.

It sounds like the rents too low. In many cases I tell people, I'm going to charge you $75 a month, but I'm raising the rent $200 so you will be +125 and you won't have to do a thing. There are plenty of online resources available to check and see if you're getting market rent. People complain about paying 10% but if rent is 10% under market. SFH have less turnover so you might be getting market rent. Plus, I find that a lot of the people I purchase from really enjoy the people and the work. When you really enjoy the people it's hard to raise their rent. I've seen some tears at the closing table from long time property owners who self manage. When they sell their small apartment it really is their retirement day and that check is the gold watch. However, I wouldn't have bought the property if I wasn't going to be able to slowly raise the rent a couple hundred dollars a unit.

Ok, so most properties have a price that makes sense. I wouldn’t try to talk anyone out of a deal with strong cash flow day 1, but the writing is on the wall, and real estate prices will be falling

1. Twice as many properties are in delinquency.

The share of delinquent FHA loans grew to 8.57% in April from 4.82% in March. (Yahoo finance)

2. 36.5 million people have filed for unemployment in the last 8 weeks (Washington post)

3. The financing market has changed. 680-700 credit scores, 20% down vs 3.5%, and higher closing cost.

4. County governments are hurting financially so they will have to raise property taxes making housing less affordable

5. Way too much uncertainty in the market for buyers, sellers, builders, and banks.

Interest rates are low and inventory is tight, I get it, but the doubling of delinquent properties means we should be waiting 12 to 18 months right????

I’m not doctor Fauci, but I think we need to “flatten the curve” of properties in delinquency before we jump in.

@Peter T.

It was the same for us Peter. We didn’t “discover” that we were good at it, but we are always tweaking our systems to get them where we need them. Most people that self manage do a bad job.

The simple test on if you’re an ok property manager or not is if you have all of your tenants on a current lease, and adjusting rents annually. If so, you are most likely doing all of the jobs associated with being a good property management. If not, hire someone or sell it to someone who can do a job than you.

@John Woodrich is the best! I recommend him to everyone 

Unemployment in Minnesota should be paying somewhere around $1200 a week, stimulus checks on the way, so most of our tenants should be doing better than ever.  

The biggest issue I see is that unemployment doesn’t last forever and the fed said unemployment rate might be 32% by June vs a 24% worst during the Great Depression.  On top of that, the deflationary pressure in the economy is crazy, lending is being restricted, and according to the news only 70% of rent was paid by April 10th so what will may 10th look like?  I still like the sub $1000 rent to get paid because people can afford it, but if 80% of people are living paycheck to paycheck and 30% lose their job I would think rent, asset prices, and everything else is going lower.