All Forum Posts by: Michael Rossi

andrew415,

If the guy is a successful real estate investor, then your uncle would probably be happy to be your mentor. However, I would suggest that you do as much studying as you can before you approach him. When people ask me for help, I like to see that they are putting forth some effort and not simply taking advantage of me. Also, I would certainly not ask your uncle for money. Nothing is worse than borrowing or lending money from/to a relative.

Good Luck,

Wakefield,

Donna's course is the most expensive course I ever bought. It is a VERY COMPREHENSIVE course (about 800 pages if I recall correctly). I bought it at the Ohio REIA conference and literally within 3 days of the conference being over, I bought 2 notes that were in the foreclosure process from a local bank. I took over the bank's position and forclosed on both properties. Within 3 weeks, I made $26,000 on these 2 notes.

The information in the course allowed me to do these deals. WELL WORTH IT!

RedStar,

Congratulations! This was an excellent deal. However, there are several things that you should know.

First, you are WAY OFF on your cash flow analysis. Operating expenses not only include management, repairs, and taxes - not even close. Operating expenses also include advertising, vacancies, insurance, evictions, legal fees, court costs, lawsuits, capital expenses, damage done by tenants, etc, etc, etc. In fact, if you do a little research, you will discover that throughout the United States, operating expenses run 45% to 50% of the gross rents. That includes paid management and paid management.

Second, it is unwise to do too much with the rehab, especially with low income rentals (which is what you have). Tenants in these low income rentals are very hard on the property. I have several dozen rentals here in Ohio and I NEVER put new appliances in rentals. That's just a waste of money. A bad tenant can destroy (or steal) your appliances in no time. I would strongly suggest going to the used appliance store and buying appliances that look new for 1/3 or 1/4 the price. I typically buy stoves for about $65 and refrigerators for about $100. I just replaced a refrigerator destroyed by a tenant this week. The same is true of the flooring. Stone tile in a low income rental? That won't last a year.

Be sure that you screen potential tenants. Most low income tenants will have bad credit, but you should be sure to do a criminal background check. We eliminate about 75% of the applicants for either previous evictions or criminal history. You can't throw a rock in Ohio without hitting a crack dealer.

Again, I'm not trying to cut down your deal. It is a VERY GOOD DEAL! Buy all of these that you can and in no time you'll be a full time rental property owner. However, be sure that you understand the realities of the rental property business so that you don't needlessly throw away a lot of money. I would suggest immediately joining your local REIA. Ohio is blessed with some of the best REIAs in the nation!

Good Luck,

Mike

vegastud,

I think that you've answered your own question. Your rental is priced too high. Rents are set by the market. If you set yours too high, it will be very difficult to find a tenant.

Do you sign a "suspect" renter because you can't find a good one? NOT ME! It is much better to have a vacant rental than one with a terrible tenant. A terrible tenant will cost you a lot more than a vacant rental.

I would suggest coming up with a written policy regarding tenant screening. Then - don't violate it.

Good Luck,

Mike

Unfortunately, the mortage, taxes, and insurance are only a small number of the operating expenses. You completely ignored management (whether you do it or not), maintenance, capital expenses, vacancies, utilities during vacancies, advertising, entity maintenance, legal fees, damage done by tenants, evictions, court costs, lawsuits, fuel so that you can drive to your rental 1 1/2 hours away, etc, etc, etc. (I could go on and on).

When you only have one rental, it is easy to pretend that you are making more money than you really are. When your porfolio grows, the truth becomes readily apparent.

On the topic at hand, I agree with All Cash - I would not do a rental that far away. However, if I were doing so, I would schedule several at once like the others said.

ALWAYS screen your tenants! With low income rentals like yours, it is ABSOLUTELY NECESSARY to do a criminal background check.

Good Luck,

Mike