All Forum Posts by: Michael Higgins

Although a few respondents mentioned it, the first thing you need is a goal and a plan to get there.  So, find knowledgeable finanical advisor and CPA to setup and create a balanced investment portfolio.  Although i do not know your background,  but learn lessons from others who have come into large sums of money and quickly lost it (former professional athletes, lottery winners, etc.). This could generalational wealth or a nightmare.

In nearly every property I have purchased there were long tenured tenants on month-to-month leases paying rents below market value.  In each case on the day of closing, I sent the tenants registered mail introducing myself, the property manager, and notifying them of rent increase in 60 days. The property manager also contacts them.  month prior to the new rent increase I send a new lease for signature. Since the tenants already had 30 days to determine if they are moving out, once presented with the new lease I give them only 3 days to sign the lease or get a notice vacate.  This is all in accordance with Georgia Law, so always make sure you are following the advice of a good attorney.

One final note, if i need the market rents for the property to cash flow and then I increase rents as soon as possible.  In another case, I agreed with the tenant to raise the rent in six month increments. This was all documented the lease.

Hello Juliette,  i am going to contradict a few respondents and say that you should manage the property yourself.  The
reason is not financial but practical.  I self managed my first properties because I wanted to learn the process and be actively involved.  For me, if i had not acquired the knowledge of the process of property management on a small scale then how could i possibly know what to expect from a property management company or individual. Next, if it is one property (and its in good condition) then it will not require a lot of time once you have found a good tenant.  There are a lot of online solutions to help advertise, find and screen candidates, setup leases and ACH payments (i use Avail.co). My bookkeeping activities take about 2 hours per month and i use an online soltion for that too.  My conclusion, there are a lot of property management companies that will happily take your money, but they are risky if you dont know what to expect from them. So,  I recommend you invest time in learning the process on your first property while improving your cash flow at the same time.  You can always convert to a PM later.

American Samoa, a population of 44k and easily accessible (nearly 10k miles away).  Why not?   Seriously, its a great list of examples that wont inspire collaboration and feedback. I am not active in posting in the forums to solicit responses because i want to be thoughtful, clear and realistic in my intent. My criteria for posting also somewhat "flies in the face" of getting my brand out there and causes hesitancy.   I think learning what to post in a forum is like anything else, its a skill you have  learn through trial and error.  So, if you see posts like topics from this list do not judge too harshly, we want to encourage learning and growth, thats why we are on BiggerPockets.

I am now 58 and bought my first investment at age 54.  Now, I have 5 properties with 8 rentals, all positive cash flowing. It's been a great learning journey.  I am 100% sure my retirement portfolio has grown dramatically since starting my journey.  I wish I started in my 40s because could have quit my corporate job already.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Rome.

Purchase price: $235,000

Duplex with each unit being 2 bed and 2 Bath.

What made you interested in investing in this type of deal?

Multifamily located in my targeted city that met my buy box criteria. This property required a new roof and some basic renovations. Able to keep the tenants and increase rent by 50%.

How did you find this deal and how did you negotiate it?

I have a great agent who found this 1 week before going on MLS. Reduced asking price by $13k to cover the roof.

How did you finance this deal?

Pulled down-payment from. HELOC and the rest traditional financing.

How did you add value to the deal?

New roof and basic upgrades to kitchens kept the existing tenants. Raised rents by 50%.

What was the outcome?

Despite higher interest rates for the mortgage (7.625%) and the HELOC (9.5%), we are still positive cash flow.

Lessons learned? Challenges?

More lessons around financing. Don't be afraid of higher rates, it is just one variable.

Among my criteria for investments is to target small multifamily properties with upside In rents to enable cash flow - nothing new.  This in part happens because rents have been steadily increasing in the area.  Great for me, however, I do see a clear gap forming in affordable rental communities for families who income cannot keep up.  Therefore, I want to solicit creative ideas from the community on how small investors can help these families by providing affordable housing while growing our investment portfolios?

Thank you Minna, you are correct with lease/purchase approach.  i have informally spoke to them and I believe they would be open to the purchase.  But, I wanted to get my "ducks in a row" before having a detailed discussion with them.  What are normal terms in your experience 1 year? and 300 per month more?  

Thanks Kate,  Appreciate the feedback.  Would like to consider seller financing however, since I have a mortgage it is not an options (as far as I know). 

The property I bought (as a rental)  is a very nice condo in highly desirable area near Atlanta.  I immediately found fantastic young professions who have rented the unit for the last two years.  With interest rates lowering, I would like to sell the unit to the tenants.  The other reason I am selling is primarily because I am shifting towards a multi-unit strategy (higher cash flow).  One option is a rent to own type strategy wherein I offer them a good market price valid for 6 month.  In return, they pay me an additional $100 per month in rent which (if they bought it) would be applied as a credit later.  
benefits:
1. this would give the tenant to get their finances in order (if necessary). 

2. The tenant is already familiar with the property and could waive the inspection ($400)

3. The tenant does not have to find another property and move (hassle) 

4. I might be able save on commissions because tenant will not need a realtor  (3%)

Thoughts? Other Ideas?