All Forum Posts by: Michael Seeker

@Ryan Schuler, I have not used Rently nor explored any self-showing solutions.  We had a property next to one of ours years ago that did self-showings through the PM company.  The prospective tenant had to leave their Driver's License with the PM co and were given a key to walk the property on their own.

My thoughts on it: while this is a way to streamline your showings it's also a great way to end up with higher vacancy rates.  It's also not at all feasible to do this with an occupied unit.  We list and show the majority of our apartments while the tenants who are moving out still reside in them.  Most of our leases on stabilized apartments start within 5 days of the previous lease ending.  Doing automated showings will guarantee some vacancy as you have to wait until the tenant moves out to even start showing/marketing.  You also are more likely to end up with a tenant who is ready to move in right away which tends to mean they are bad at planning and probably more likely to run into issues paying rent on time.

On top of all that, prospective tenants have a lot of questions and like to hear about what updates have been made to the property.  If there is nobody there to walk them through, then it's a very impersonal experience which could easily be the difference between a great prospect renting your listing vs. something else that may be an inferior property but leaves them with a better feeling.

@Rick DiChristofaro - something like this could only be done market by market.  Is there a specific market you're looking for?

@Account Closed - there are dozens of online PM software options with varying costs and features.  We reviewed several of these about 6 months ago and our top picks were:

Tenant Cloud
Good format, mobile app seems to work OK, free or almost free for small number of units

Rentec Direct
Reasonably priced, functional, looks and feels like it was developed in 2000 but everything works

We tested out both of these and ended up opting for a custom solution.  If we did not have the drive/resources to do so, we would have gone with Tenant Cloud.

@Abdessettar Ibourki, my first property was the same way and we eventually moved to mailing to a PO Box.  That was better but problematic for different reasons.  We then moved to a combination of various free payment sources such as PayPal (must stipulate the free option), Venmo, Square Cash and a couple others that never really got used.  These are free but do require you to "cash out" which can take a week or longer in some cases.  There are some services that will allow you to set up rent collection for a $1-$3 fee per transaction.

@Edward Carr - I've never heard of anything like this.  If by "lender" you mean private debt/equity, then sure that makes sense.  If by "lender" you mean a bank, then no way.

In my experience, when we find a deal to pursue, we lock it up with a contract and then start calling lenders - not the other way around.  So my advice would be to put a property under contract, include a financing contingency if possible, then start contacting lenders.

It's a seller's market pretty much everywhere, so not at all surprising that a deal has gone under contract while you were going back and forth with a lender. 

 We use our banks Bill Pay feature which allows us to specify recurring payments for a recipient, amount and mailing address.

You should not need to rely on or worry about the status of these programs in 40 years.  Even if you never buy another property and just slowly pay down your existing debt (or not) the benefits of rental appreciation alone will take care of you.  

That being said, I would be very surprised if the benefit structure and age requirements for both programs don't change multiple times over the next 40 years.  They are not sustainable as they are today, by 40 years out who knows what might exist.

Regarding the possibility of setting up a PM company to separate income sources, you may need to look into legality of that.  I know in my primary market you're required to have a brokers license to operate a PM company.  We are allowed to self-manage because we are operating property that we own.  If you split the PM out into another company, you will likely need to treat it as a completely separate entity and jump through whatever hoops are required in your area for that.  I've considered this a couple times throughout the years, but have never found it to be advantageous.

@Brian Babbage - my understanding is that if you roll your Roth 401k into a Roth IRA after leaving, you can withdraw the contributions without any taxes/penalties.

Where are you getting a 10% penalty?

I'm with you on investing in RE over the stock market if you have the deals available to do so.  Even if you have no cashflow and just pay down an 80% loan you'll get 10%+ returns with the added benefit of "losses" on your taxes.

If the deals are there and this is your best source of cash, I'd say the 10% penalty (if there is one) shouldn't be a barrier at all.

We've used sellers for both primary and secondary financing and have had great experiences with this.  The underwriting is very lax or non-existent.  We set up automatic payments and then never hear from them again until we're ready to pay off their loan.

Most sellers are not knowledgeable about or comfortable with doing financing, but if they offer or we're stuck on the numbers on a deal we like to explore it as an option.

@Ben Gordon - This is not a new issue, nor is it specific to your area.  We have always taken the approach of finishing out properties at the top end of the two markets we're in.  We've been able to attract strong tenants at high rents that support the improvements made, BUT there aren't any comps for what we do for two reasons:

1. Very few people improve rental properties above the market
2. Those that do make the effort to go above and beyond very rarely sell

What has ended up happening is we've had to argue on appraisals during refinancing and also keeping more cash in the deals than initially planned.  We've got one in the works that the appraisal was so low I went back to the bank and they had the appraiser redo the appraisal based on my comments.  He made some updates but did not change the price, so now their chief credit officer is stepping in and basically telling him he needs to account for value that he missed.  It's very annoying and unfortunate, but we're okay leaving more equity in the deal if that's where things land.

This has resulted in slower growth for us than we'd like, but also much better cashflow.  We've also skipped the refi on a couple deals because the effort was not worth the amount we'd be able to get out.

It's also worth considering the macro picture, lending is relatively loose right now and appraisers are fairly reasonable.  If we see an economic downturn of any sort, both will tighten up and the scenario's we're seeing will only get worse.  As long as you have a plan A, B, and C you'll be fine.  If the only way you can work the deals is with a strong appraisal and cashout refi, then you'll eventually get put in a bind.