All Forum Posts by: Michael R.

So far 2 of our deals came off of the MLS and the other from word of mouth at work. "Hey you buy houses right? So and so just inherited a house from his mom and wants to get rid of it." The deals sourced from the MLS were between good and very good while the word-of-mouth deal was outstanding. Hopefully as more and more people find out we buy houses we'll be the first ones that come to mind as others inherit homes or look to sell something they own.

Just some thoughts:  The plan was to start a direct mail campaign, but there happen to be a few wholesalers in our area we'd be glad to pay an assignment fee to in the event that they send over something decent.  Leads have been coming in from them at a fairly consistent rate.  A number of them have been right-price-wrong-area so that's promising.  You're paying to avoid the aggravation and if $5,000-$10,000 makes or breaks the deal, to us, it's probably not worth making a move on.  If direct mail is a job you don't mind doing then you stand to save some coin there.  One thing to consider with wholesalers is it's hard to tell if you're getting the "pick of the litter" having not done a deal with them in the past.  It may take some time to build up to that.

@Thomas S. I'm sorry to hear about your troubles with your Sec8 tenant as well.  I was surprised to hear that your attorney told you to back away on this.  I would consult a couple of others to see if their experiences are all consistent with that of your attorney. Have you found that after you posted the notice they became stand-off-ish and decided to stop paying their portion altogether? 

@David Dachtera I totally agree, and once I get north of 10 units I'm going to transition to a property management service to save some of my sanity.  

At the moment I'm on unit 5 so the more I can "juice my gains" by managing things myself, the better (financially at least).  I'm trying to nail down a 10 unit after the 1st of the year, so that marginal relief may come sooner than later.  That being said, the words "lighten up" will be pinned up in my kitchen, until that happens.  It's not just my rentals either, I'm finding that I'm like this about a lot of things…

@David Terbeek I think I would have to work through the process myself to determine if that is, in fact, the case.  It seems to be a common occurrence that they hold off until the temperature rises, based on what I'm hearing.  

I'll start PM shopping now so I have one ready to go when the time comes.  Until then…stand tall, and press on!

That's not a bad idea, except that it states, explicitly, in the housing choice voucher packet that the housing authority does not get involved in matters like these and it's up to the landlord to use the same process as they would for any of their other tenants.  If it gets to that point I'll call the case worker to see if they could provide some sort of a "nudge" .

I'm interested to hear what the no BS, by the book, landlords think of this situation.  To evict,  be out the lawyer fees, 70% of the rent, and the next few months of squatting sounds like gluttony for punishment.  Getting walked on isn't fun but it keeps the rent rolling in until spring.  

From 1,000 feet this goes back to screening well, I know,  but these are inherited tenants.  They're on a month to month so that helps should I need to take action once the weather clears up. 

I'm not sure how everyone else keeps it together, but for the last week of each month and every day after the first that I don't receive a rent payment for a unit I start imagining the worst.  It's actually pretty stressful and my mind runs to all the various ways it can play out. 

The one that concerns me this month is a section 8 tenant that still hasn't paid her rent as of the 7th.  I gave her a small window since she communicated that she'd be sending it on the 5th and I appreciate that over the alternative, ducking my texts/calls.  This leads to my question:

If I move to evict her and win the judgement will most likely lead to her voucher being revoked.  Since it's December and this is Illinois the sheriff will not remove her and her children until spring.  Does this mean you're shooting yourself in the foot to evict someone in this situation?  Anyone experience something similar?

This is a great thread and I couldn't agree more with what has been said here.  

You really need to love this business and be the type of person who enjoys the act of fielding new or recurring challenges.  If you can pair that with a love for your W2 job then you're really living a great life.  If you hate your job, find another one that you're willing to hustle for and channel that growth into your real estate endeavors.  Every promotion, every bonus, opens new opportunities for your "side business" to grow. 

I'm new to this business and even with some great systems in place the word "passive" doesn't accurately describe my months.  You have great months that are relatively quiet, and others where you're very hands-on.  I can't imagine working a job I hate and still having the fortitude to press on when tenant or asset issues pop up. 

Find a job you love, grow your RE business at your own pace, and someday you'll be pulling in enough from your business to have the peace of mind that you could live financially free if you had to.

That's reassuring to hear.  It seems like just about every other interaction you have with your network in this business.  Scrap the bad ones, get the good ones through the learning curve, and have periodic auto-pilot.  

@Billy Maloney congratulations on your success!  How has your experience been with managing your property managers from afar?  I think this is one of the things that creates the greatest amount of apprehension for me when considering out of state deals.  Do you have to stay on top of them all of the time or are they generally pretty autonomous regarding basic decisions and processes?

One place where I see people making the majority of their mistakes is in finding accurate comps for both current market value/pre-rehab and ARV. This is easier if you work in a smaller market and once you get a handle on it you need to stay on top of it on at least a monthly basis.

For example, I spent A LOT of time, at first, on Redfin looking at 3 bed+ 1.5 bath+ 1+ garage SFR's that fit 3 criteria: 1) Hoarder/mess/needs lots of work 2) Needs an update 3) Rehabbed/ARV quality. Then I just "favorited" houses that fit what I'm looking for both in "sold" listings as well as "for sale" listings so that, once they sold, I could see exactly what prices are right now in my market. It's important to appreciate that learning phase and get really comfortable with the numbers without trying to rush through it. Meanwhile you can get a feel for what things cost to fix on the side so you can limit, notice i said limit, the surprises.

You want to be able to create a small pool of properties worth looking at and accurately estimate expenses during a walk-through. Sure, as time goes on you will meet people (contractors, etc.) you trust to go through them for you without you being there,but you'll still want to know the process as well as they do.  That was a long-winded answer, but as you get some deals under your belt this process will become much easier.  I think what you can take from this is there is no one process, but a number of processes that will combine to give you confidence in your offer price.

People will provide you with all sorts of percentages, but it's really going to come down to what number still keeps you motivated.  How much "meat" do you find acceptable to move forward with the project after everyone takes their portion?  I would also add a fudge factor in there so you don't find yourself eating any unexpected costs in order to do right by your investors.  I agree that 10% of a good deal is still better than 100% of no deal, but what is all of the aggravation worth?  

Keep reminding yourself of all the value you bring to the table as well.  It's easy for people who provide the bulk of the financing to let their ego take control in negotiations and it's important that you let it be know that finding the deal, having reliable contractors on your team, and managing the project are an equal, if not majority, part of seeing these projects through.

Not to mention there aren't a whole lot of passive and marginally secure ways for someone to earn a high percentage on their money.  Start low, know your walk away number, and if it works for all parties involved, great!