All Forum Posts by: Michael D.

Why do you think you need to make a cash offer to be successful? If you would buy a house for $80k plus $30k rehab, do you have the $50k or so in cash required for down payment plus the rehab?

If you really feel like you need more money to be successful and have some money yourself, you could always take on a more experienced partner. This has a lot of advantages in the education department as well. And if you can't get an experienced flipper to partner with you on a deal, then you can take that as a sign that the deal isn't that good anyway and save yourself the trouble.

Renting it for a year when you're planning to sell it isn't a good idea. Too much risk there. Also I don't see where there is any tax advantage in doing so.

You need to decide whether you want to be a landlord or not. It's not something you want to do on accident, or for just this one deal. Also you tie your money up, so if you don't have a bunch more money or large other income, it's tough to ever do your next deal. I'll also say that I'm a landlord myself - but it's not for everybody.

Based on your description above I'd take a reasonable offer and move on to the next deal.

Your job provides a good financial foundation for investing. It's much easier to invest if you have money and regular income. You could quit and see how I it works out, but consider how long you can afford to go with no income and how easy it would be to get a comparable job later if needed.

Thanks @Jeffrey H., those sound like good ideas.

How about even before that, when you're still trying to figure out which state and city to go after, not even close to having a subject property? I'm comfortable investing pretty much anywhere in the US, which makes it hard for me to figure out where to go next for best results. It would be easy for me to stick to where I already have properties, but that may not be optimal (though of course there are major advantages to doing so).

Property taxes and insurance are part of expenses for the purposes of the 50% rule. Everything is included except:

- Principal and interest on debt

- Income taxes

- Depreciation

@Thomas S., I just don't think that's true. I've had a number of single homes managed by good quality professional managers. A good manager will see these as possible growth opportunities and just part of the gig.

Firing the current manage is obvious and easy - the hard part is properly qualifying the next one. This is a long topic, but here are some ideas:

- Call and speak at length (>30min) with at least 5 of them. Ask a lot of questions, even about broader RE topics than managment itself.

- Make sure that they think about RE the same way that you do.

- Look for a fairly large management company with at least 7 employees that specialize in various tasks (showing, leasing, repairs, collections, bookkeeping, etc).

- Make sure that property management, NOT SALES, is the only thing that this company does. Usually they will still be affiliated with or share ownership with a sales brokerage which is fine, but it should be operated as a separate business.

- Make sure they manage enough properties, like >400 or so to be PROFITABLE doing only management.

- Management cost should be low on your list of things to care about at this point. In fact, be wary of one that is too cheap. Look for a premium product.

As other have mentioned it definitely requires the right temperament to get this right - but if you do it could be a good opportunity to clean things up and add value. Also you should expect a steep discount, otherwise you're wasting your time.

Consider that you could also hire a good professional property manager to handle some of the hard work for you, like evictions (I would). You'll still have to keep close tabs on them though.

You'll also need substantial cash reserves as it will take at least 6 months and likely 12 to really get things humming along.

I'm an out-of-state landlord with properties in two different markets. Both of these markets I ended up in somewhat by accident, though I did do some basic research on them prior to investing. One has worked out very well, the other not so much.

I would be interested in continuing to invest in one of these markets, but I think it may also be a good idea to diversify into one more market instead. This time I'd like to be a lot more deliberate about finding that market though.

How do you all go about finding new markets to invest in, and how do you evaluate them? (I'm a buy/hold rental landlord).

Are there any markets in particular that are great for buy/hold, high cap-rates that I should be looking at right now?

Assuming that these items are separately metered, this is really simple: The next time the lease comes up for renewal, tell them they need to put the utilities in their name and lower the rent an appropriate amount to compensate.

This will work out better for everybody.