All Forum Posts by: Michael Boyer

Perhaps you could blend the strategies and meet your goals (and get financing). 

For example, if the bank won't finance a pure flip but is okay with a rental, perhaps find a fix and rent project.

That is, find an ugly duckling property where the numbers work as a rental (maybe one with just cosmetic issues but still bank-finance friendly--"complete and livable") and turn it into a swan over a month or two, then rent it out.

Then you get to try an easier first flip (for example, just floor covering, paint, appliances, landscaping, etc) and have your first rental. A good first deal.

Many times you see the two strategies in the media as polar opposites (the fast, frenetic flip versus the long term buy and hold) but they can share some of the same traits. 

You can also add sweat equity to your rental with the fix up and get landlord experience with a fully updated property. Just make sure it cash flows--even after the fix up. 

Perhaps start working with a realtor who can help you find this type of property. And it may be good to read up on both landlording and fixxing/flipping to start your journey.

Jay P. Decima has some good books on this topic--fix and rent (and pops up on BP, too, from time to time).

Best of luck!

Don't get discouraged. 

I would not take them..... (especially if Sec 8 was not in your plans and/or you have a no felony rule)..... 

Otherwise, it could be a very rough start to your landlord career.

Now is maybe a good time to think about some criteria for applicants, too.

I would look again at your terms, the market, the unit, the ad and see what might bring in more tenants and even get good ones to apply. 

A vacant unit is less headache than problematic tenants every time.

And with a vacant unit advertised, there is always a chance a good tenant will call any day.

Even if you are thinking of Section 8, you can still have some criteria (no felonies, good rental history, etc).

Best of luck!

Yes. I do. Why? 

Simplicity.

Last thing I want on a unit turn-around is a color mystery. 

Make it easy. 

This is especially true if you get multiple units. Start changing colors and your garage looks like a street artists studio with a few dozen cans. And a few years later, you may not even recall that you used shabby peach in the bathroom in unit "F"..... Where is that Shabby Peach? Or was it Shabby Chic? And where did I buy it? Oh no, can't recall, I get to prep, prime and complete repaint. Oh, fun....

Plus, if you get too creative, there is bound to be someone (a potential great tenant) who does not have the same taste.

What color? I just use Ben Moore Aura, Atrium White in Satin (or what used to be their Pearl). Easy to clean, good for traffic, easy to touch up (key).

And, you guessed it, the color choice was inspired by what the previous owner had used in my fourplex.... Why do a complete repaint when you don't have to.

You are going to paint so darn many walls that picking colors is not going to be as fun as it is in the commercials. Just stock the 5 gallon buckets in your garage, shake em and go. 

You will be done with the first room before the other person even picked out a color and had it mixed at the store....

Plus, use the good stuff (whatever brand that may be for you) and you may get out of some shorter tenancies or one with lower wear and tear tenants with just a touch up and by washing walls. I keep a quart handy for those wonderful occasions (easier to handle and lug up stairs).

I would get to know the folks at your specialty paint store by name as they can be a good allies, too.

Best of luck!

The interior pics did not look too bad. I have not checked your market rate. Plus, I did not see your deposit amount. 

That said, my thoughts are (1) you are getting a lot of interest; (2) no one is signing up. 

This tells me the price and location are of interest but (my guess) something about the unit or showing process is giving them cold feet or that they think it is an entire house.

My guess (with your clue about folks thinking it is a single family home...): there is a disconnect between what they want and what they are seeing. It could be as complicated as some design issues or as simple as gearing their expectations and altering your marketing.

I do see it is not a traditional triplex but converted. So on a showing---how is the parking, how are the entrances configured, the utilities metered, own laundry. Are the rooms and units distinct or do people have to walk past each other in the hall? 

I would also guess a tenant could feel they are getting "part of a house" rather than an individual, self contained, individualized private unit.  And this may be where the disconnect is: between expectations and the reality in the showing.

Anything you could do to further that message (you have individual units in a traditional looking home) would help. Or anything to further that in the design (be it assigned parking, more private entrances, etc) could help.

Or another (cheaper) angle is to somehow make the marketing scream triplex/divided home. 

Can you make the add and the photos all themed thus: Classic older home in great location, cleverly divided into 3 self contained, private units.... All the comforts of a (rural?) single family home with 1/3 of the costs... etc... At least you then get folks who are open to this configuration or idea.

Best of luck.

There is actually a hybrid strategy of fix and rent (rather than flip) that you don't hear as much about.... even though that was not the goal....

It actually can make some sense in cases like yours. Plus, you get all the features updated for a lower hassle and very attractive rental.

If you can get tenants that are low on wear and tear, you may even have the option of listing it if the market conditions are right at the first couple of turnovers. That is, it may be about ready to show with some polishing.

Also, you dodged some transaction costs that come with selling (closing, realtor, any taxes, etc).

It does not cash flow really well, but keep an eye on rents and they may edge up, too. And you may find a vacancy at the right time of year or when market factors are in your favor. 

Also, you learn alot even on the break even rental. You got a course in both flipping and now in buy and hold landlording. 

So you have even more investment options in the future. You could better target the next flip or look for a better cash flowing buy and hold.

Best of luck!

If I read this right, the tenant stayed two extra days (?). 

If so, I would guess an offset of the deposit pro-rata per day might be reasonable. For example if your rental rate is $30/day, roughly 900/mo, then 60 bucks taken from deposit return may be acceptable for them overstaying two days. Pretty common.

The problem is trying to get them to pay for the week or so of vacancy due to no utilities. I think you have trouble there. Yes, in your turn over schedule and according to your plan, the tenant caused the extra delay. 

But on the flip side (playing devil's advocate) they might argue you should have a back up plan and have between tenants or rollover account or just switch the utilities to your name that AM (Friday) or a day early. 

So while they may have cost you the week in your schedule, it may not be a cause that would hold up. It could be more about your need for some contingency planning. 

It may happen again for example (takes some people a bit longer to move). It may also be hard to show you could have rented it right away anyhow--even if the utilities were on. So getting that extra week of lost rent out of the tenant may not be feasible.

And if it was just a week's rent, I would chalk it up as tuition at landlord college. It could have been worse (like burst pipes and such). 

As a note, I can relate and I experienced one dark, cold unit on a turnover before I put in a between tenants account so it goes straight to me once they change it. 

The trick now, of course, is to get the new tenant to go right down and get the electric in their name when they move (or I end up paying their first week). 

Best of luck!

Interesting situation and prompt. It would be one thing to do a one off transaction and hire/find a translator for the help.

But on the day to day communication that is key for management, even safety (how do you say egress window or CO2 detector, etc) and your sanity, I would think of a third option.

Rather than buy/not buy--it may be possible to see if there is a good bilingual property manager in the area. That would take care of the language barrier. You miss the self management, but perhaps you can handle the maintenance to get hands on experience and ease into management. Let the property manager know you want to work on some of the details (hiring contractors, mowing the lawn, etc).

Absent, a reliable go between, I probably would not take on a first property where I could not even explain my policies to the tenant.

Best of Luck!

The old Warren Buffett saying comes to mind: if you can't identify the pasty at the poker table, then it is you....

We have all been there to some extent. I have been for sure...

There is asymetry in information in some transactions (they know more than us, or share less info). Interests diverge... We just don't have enough info or are at some disadvantage (like being far away).

It sounds like you may have gotten the short end of the stick being the the absentee buyer from silicon valley (next time--tell them you are in waste management with vague references to possible Soprano style ties... leave the FB word out of it).

They are looking to match a duplex with some issues with the right buyer and one from out of state (from highest housing market in the country) shows up......may not even get a good look...hmmm (so what are the rules to this poker thing again? and how much can I bet?)....

There seem too many things wrong with the place or on the edge of going out. They should have shown up from an inspection, buyer's agent, etc. 

But you can surmount them all with some good professional management on the ground.

Of course, you also play a role being on the outside looking in from afar. Perhaps you could find a better deal a couple of hours East in the Central Valley and get to build some relationships with people in the industry (but Austin is probably hipper than Stockton). You could drive over, too, in CA.

What is next? I like how Dave Ramsey just calls it a tax (on making a dumb move) or tuition. 

Your Austin deal was an entire seminar on how not to buy a multi-unit property.

And some of those "educational" products for real estate run 50K+ and you don't even get a property out of it. 

So bright side, as everyone mentions, you learned alot, got your first place, and have a better idea of how to proceed (or slow down). 

Best of luck!

Running 5 units for 320 bucks a month income might be too thin for me. Quite a bit of time, capital, and risk for right at 10 bucks a day. Marginal. But everyone had different goals.

BUT... crazy idea. As much as I like buy and hold, if you can get this for 40K off asking, I might have a contractor bid converting it to a proper fourplex (permits, all legit). 

If it would easily convert (like one shared wall coming down and some demo)...that would be interesting.

Maybe have a larger owner's unit and see if it would be a flip candidate as a more marketable 4-plex with easier financing... Lot more people have 3.5% down than 20-25%.

See if the 4 plex comps are strong in your area. If so, you may have an exit strategy if it could be done economically and feasibly (probably depends on the layout).. It could even be something you do right away or in a few years based on the fourplex market comps and inventory. 

Maybe with some cosmetic improvements and (ironically) losing a unit, you could add value. 

A recent example: a 6 plex on my street has been for sale for years it seems. 

My 4 plex three doors down just got a full price offer right when I listed it, just an example of the power of 4 units or less.

Just another option there (i.e. a marginal rental that might be a potential fix and flip).

Best of luck....

I second what Bettina said: TRY APPLIANCE REPAIR PAINT

 It is not a contractor grade fix or a forever fix but I have some small patches that have lasted many years. In area where not a lot of water hits the tub (not submersed), you may be set a long time. As long as the tub is still structurally sound (i.e,, the hole is not a puncture but a cosmetic ding), I like this easy fix.

There are a couple of brands.

Here is one I have used that is widely available:

It is low cost ( 5 bucks or less) and takes a few seconds (yes, like nail polish). I pack this stuff at every turn around. I have touched up a sink chip, a couple of shower dings, a white toilet seat, a scratch in an almond vinyl floor, etc..

Keep in mind they make white and almond. Looks like you want white. It may not match exactly. But most mid level tenants won't mind. 

Make sure the area is dry when you apply it. I wear a respirator when I use much of this stuff. Do it on your way out (your last task). Then it can dry overnight.

And even if it does come off in a few years, you can just reapply it (the container lasts a year or two if sealed tight). Still very low cost....I do this type of fix for rental turn-arounds and if  I sell the place, I have a pro refinish or just replace the bath with new fixtures.

Best of luck!