All Forum Posts by: Michael Paling

I’m at the same point as you and somewhat feel the same. I have been part of a regular meetup for a couple years now and it definitely helps ground you in your local market. I like how Nathan mentioned that most social media stuff is inflated. You don’t need to be someone that owns $100M worth of real estate unless that’s really your goal. 

One of the most successful investors that I know in my area told me that his business really didn’t take off until year 10. He bought his first couple houses in the first year or two and didn’t buy much for a few years. I’m learning that time, consistency, and patience are helpful. 

Quote from @Chris Kay:

@Jake Baker Thanks, that's helpful! Okay that seems like good news for making a BRRRR work in my market since I was looking to spend something like 45-75 on rehabs for these smaller sized homes.

Unfortunately I feel like a new roof is going to be pretty standard on the things I'm looking at so it might just have to get done on a regular basis. Almost nobody in the Upper Peninsula has air conditioning though so maybe can save money on just doing a new furnace and not a full HVAC, we'll see.  

Now I gotta get linked up with a good contractor and see what they have to say. 

You should be able to do a pretty decent update with $50k (purchase price not included). As someone else mentioned, make sure you don’t go overboard with the updates. For your first deal, it might be beneficial to try doing some of the simple work yourself so you know what goes into it. Painting and flooring are super easy. It’ll save a couple thousand dollars. 

While I don't yet have personal experience with a HELOC, I've thought about this one for my self many times. I think in this scenario, I would advise against it. 5 years is a long time to pay off a HELOC, which doesn't have a fixed interest rate. The advice I have received is that HELOC's should be used for short term loans only with a definite plan to pay it off. Are you able to cash out refinance your property instead?

Charles P has some pretty good points. I like his points about building a “team” and not actually asking people to be “on my team”. Just approach everyone with your business potential and they’ll typically help you out. When I worked on my first deal, I felt like a complete idiot. Sometimes I still do, but I now know who to talk to and how to approach things.

I’m sure you’ve also heard people say you need to “find a mentor” too. I like how some people have said change the word “mentor” with “friend”. I’ve never asked anyone to “be my mentor”, but I feel like I have several now, because I just showed up, created friends, and asked questions. 

Also, I believe there’s really only one PM company in the local Marquette county area that has a Real Estate license, which is needed to legally manage other peoples rentals in Michigan. Since you’re looking for a house hack, just plan on managing it yourself for now. As long as you have a good tenant, it’ll take you maybe 5-10 hours per year to manage. Maybe. You’ll spend more time learning how to manage than you will actually managing something. If you haven’t read Brandon Turners book on managing rental properties or Landlording on Autopilot by Mike Butler, read those. I like Brandon’s book more. 

Has anyone denied an application that they've already approved? Basically, reversing the approval. I have an applicant that I should have out-front denied based on income, but I approved them and tried justifying it in my head. The applicant is two people who alone don't make 3x rent, but together are fine. However, one of them said they won't move in for 5 months but will sign the lease now, even though they're still renting another place during that time. They also don't have all move-in funds available until the 18th. They do have funds for a Deposit to Hold though. 

A couple hours after I approved their application, another person that actually does qualify and has all funds available now applied. This applicant would be the clear winner between the two (better income/jobs, better credit, overall more professional). Aside from just looking like an idiot, is there any reason I can't just reverse my approval on applicant #1? Nothing has been signed and no funds have been exchanged (aside from credit report costs to TransUnion, which I'll probably refund). The decision would be based on the income situation, so I'm not worried about violating fair housing laws.

Lesson learned... I still need to learn to control my emotions better. 

I've got nothing to contribute for STR advice, but I'm curious what town you're looking to buy in. I live near Marquette and haven't heard this kind of restriction yet, but I'm not surprised.

Quote from @Nicholas Cavato:

Anybody know if Marquette, Michigan is going to lift their STR rental cap anytime soon? The city is limiting STR's to 250 houses which has been used for a few years now. There is a wait list, which already has 270 people on the waitlist (per the city admin assistant).

I doubt it’ll ever get lifted. The city of Marquette is quite restrictive and is getting hard to invest in overall. If you’re in the area, we have a monthly group that meets. We’re doing it at the UP Brewing Company in Negaunee right now. Send me a message for details. 

I've been a landlord for a little over 2 years and I've learned a lot of stuff, but one of the most annoying lesson's I'm dealing with is that I just can't trust anything tenants say. At least 3 out of 6 tenants I've had have been liars. I know that's not many yet, and I'm still new, but I'm curious what you all think is the percentage of tenant that DON'T lie. 50%? 25? 2? 0%?

I'll just keep working on learning to stop trusting tenants as if they all lie, but I'm just curious.

The security deposit is only to be used after they have moved out. Tell them to get caught up on rent, move out, or you'll get the eviction process started. If you haven't been charging late fees, make sure you start, because that will help reduce the amount of times they're late on rent. 

Quote from @Sarita Scherpereel:

@Rolando De la Cruz I would never tell the seller my intentions for the property. The less you say the better. Let your realtor guild those conversations. It sounds more like you're planning on getting roommates. Which is fine to talk about but in some places SROs are frown upon or not allowed. If you need that for your numbers to work then I would have a conversation with your realtor. You should be using someone who understands these restrictions (if any) in your state/area. You might not be talking about SROs but more of a roommate situation. In that case, just call it that- it's more direct. Best of luck on this deal! 

Hey Sarita, what’s an SRO?