All Forum Posts by: Michael Rossi

SoBeRei,

100 rentals in 10 years is VERY doable and without even 1 penny in appreciation. I have acquired several dozen rentals in the past 3 1/2 years without any problem and my goal is to have 100 at the 5 year point.

While we're speaking of appreciation, would you rather gamble on appreciation of 35% in a few years or buy at a 35% discount and pickup 35% in equity at closing? For me, that's an easy choice. You make your money when you buy, not with risky speculation.

Also, if you want to build a large rental portfolio, you MUST buy without using your own money. Even if you have to put down $5,000 per deal, you'd need a half a million dollars just to buy 100 rentals. OUCH! There is plenty of 100% money still out there if you've got excellent credit and a connection with your local banks. In addition, it is also possible to get 100% financing with subject to, lease options, and owner financing.

With rentals, CASH FLOW IS KING! Even $100 per unit per month in cash flow is real money if you have 100 rentals ($10,000 per month). In addition, if you do the management and maintenance yourself, you will earn at least another $10,000 per month. That's $20,000 per month. To get a positive cash flow, you almost always MUST buy at a discount. If you buy each rental at only a $20,000 discount, then with 100 rentals, you have $2,000,000 in equity even without a single penny of appreciation or considering any principal paydown of the mortgage by the tenants.

Buy a rental for appreciation? GET REAL!

Mike

AMEN! And I would just add that you should get the full 15 days rent that is owed and you should get it on time. Never allow a tenant to use his security deposit to pay the last month's (15 days in this case) rent. Make him pay that 15 days on the 1st (or whatever the lease calls for).

Mike

I would never buy a house for a specific potential tenant. You should be buying your properties based on the numbers.

Tenants are very fickle. Just because they say they want to rent a house from you does not make it so. Moreover, I reject about 95% of people who call because they can't pass our basic screening. Just because someone calls and wants to rent something does not mean that they are a suitable candidate or even actually intend to rent your property.

I get about 40 calls each and every day from potential tenants. I can tell you for a fact, that many of complete idiots. Many don't even know what they are looking for (literally)! Many others are ciminals. Many others have recent evictions on their record. Many others don't have employment. Others can't come up with a security deposit. I could go on and on, but you get the idea.

My suggestion is to buy a rental at a huge discount. Be sure that it will cash flow using real world expense numbers. Then, advertise for a tenant and thoroughly screen them. Ensure that you get the 1st month's rent and security deposit IN CASH and in full before they sign the lease or get the keys.

The rental property business is VERY UNFORGIVING! The vast majority of new landlords fail in a short period of time. I would strongly suggest learning this business before you buy anything.

Good Luck,

Mike

mindlessroller21,

First of all, NEVER tell the tenants you own the property. That is just an invitation to problems. You are the MANAGER of the property.

Second, you shouldn't care what the tenants think. You are in charge of your rentals and as long as you strictly enforce the lease, what they think is irrelevant.

Your age is the least of your concerns. Buying your rental properties right and handling the tenants correctly are infinitely more important and will determine whether you succeed or fail.

Good Luck,

Mike

new_man,

Yes, you can do all the advertising, contracts, screening, etc yourself and save the money you paid to the realtor. That's the way most landlords do it.

Mike

r2d246,

If he's in the process of buying a building, then he hasn't made a penny yet. My grandmother always said "Don't count your chickens before they hatch". That is good advice in this case.

The real estate market is teetering on the brink of a major downturn. Lending standards are tightening. There is a huge supply of inventory that will only increase as the foreclosures heat up. The condo conversion fad is over and in many areas there is an excess supply of condos.

BTW, buying 30 units at $100K per door and selling for $200K per door does not give you $3 million "net". In the real world, there will be a bunch of expenses including holding costs, legal fees, etc, etc, etc. Then, when you're all done with those expenses, uncle sam will want his cut (and a big cut it will be). $3 million net? Not even close!

Mike

Here in my little corner of Ohio, we can do the setout ourselves and save several hundred dollars. If you think sitting in you lawn chair feels good, it feels GREAT putting their stuff on the curb yourself. Unfortunately for the deadbeats, I'm not a professional mover and I tend to drop a LOT of stuff. Well, I guess if they wanted their TV, VCR, DVD Player, and Stereo to still work and their dishes to be in one piece, they should have moved it themselves!!!

Mike

Charles,

There is nothing to be sorry for. It IS a crappy deal for the desperate seller and you may not want to do these preforeclosure deals for that reason. Preforeclosure deals also have a much better chance of turning into a lawsuit, when the previous owner decides that the buyer took advantage of them.

Also, don't get too caught up in trying to "help" someone. The purpose of running a business is to make money, not be a social agency.

Mike

fizzlemahoe,

With all due respect, you are NO WHERE NEAR putting an offer on this property. Two-unit means duplex. You certainly aren't ready to buy something when you don't even know what it is. That is an invitation to disaster.

In addition, there is a LOT more due diligence that should be done on this property before you make an offer.

Mike

Grovenpal,

I charge $50 extra per month AND $200 extra security deposit for a large pet. I also make them sign a pet addendum to the lease. They must pay for any damage from the pet that I discover immediately.

Mike