All Forum Posts by: Milton Rivera

@Colin Leach

Caleb mentioned some of the core principles.  House hacking may not be an option since you mentioned you have young kids which means you will be looking for better schools and there may not be tons of multi-family options in those neighborhoods.

A few other options:  

In lieu of taking a loan on the 401k , limit those contributions to get the employer match, or stop contributing altogether.  Use the balance to accelerate your savings for another property. 

If you have an IRA - Consider converting to a self-directed IRA where you can invest in real estate.

Consider renting - You may be able to find a home that rents for less than your current mortgage and use the balance to accelerate your savings. 

Good luck 

Hello,

I am in town from out of state and was hoping to see these properties on Monday.  I also reached out via your website portal.  Please let me if they are still available and if we can arrange a to see.  

@ Jill Peterson

I suggest having an applicant scorecard so that you can review candidates on a level playing field.  Blinds in a home by itself do not appear to be an unreasonable request and actually, you want to consider adding just as an extra amenity.  Having said that, your gut feeling may have picked up something subconsciously and a lot of the time that little voice is right (see Malcolm Gladwell's Book - Blink). 

@ Greg Rusianoff

I suggest joining a local REA.  They are actually fairly active.  They have a meet up set up so you may want to check that site. 

Hello BP,

Has anyone ever used a home warranty company and use them as a maintenance contractor?  Does it make sense to invest about $500/year on a policy for an investment property?

Data:

Initial cost = $500/year

Service calls = $75/each

Assume, the rent on the property is $1,200/month and a 5% repair reserve ($1,200*12*0.05) = $720/year

Under this scenario, it tells me the breakeven is about three (3) service calls per year with the warranty company. 

Has anyone actually used this and what type of experience did you have?

@ Christy Philippoff 

I would start by having a conversation regarding what the actual market rent is.  There are many factors that go into a price including:

area (is your neighborhood nicer?), 

size (are the homes identical), 

amenities, 

schools, etc.

If they have been paying the same rent for a very long time, then they may know that an increase in their rent is expected.  

At the same time, there are other factors aside from price (can you get them to sign a longer lease? Could they handle some of the repairs? 

Good luck, 

Have you created a system to evaluate tenants (think of a scorecard)?  Think a list of qualifications that applies a weight to each trait:

Credit Score - X

Pets - X

Income - X

Previous recommendations - X

Length of proposed lease - X

Deposits - X

Transunion gives you a go- no go decision but the above may help you grade the quality of each potential tenant while being objective.   

@George Blower

Thanks, how would you adjust your asset allocation?

Hello,

I have been contemplating the following question:

How do real estate investments impact your 401k/IRA asset allocation?

We acquire properties to generate cash flow and hence consider them more of a bond than an equity.  If that is the case, do you adjust your asset allocation within your other retirement accounts accordingly?   

The fact that you are asking whether you should keep him, tells me that in a way you may have already reached a decision.  A few things to consider:

No quotes (you carry the risk)

No timeline (you carry the risk)

Coordinating the other subs (you are taking on the risk)

I am having a hard time finding his value-add as a contractor given that all of the above items are typically performed by a GC.  I understand the discomfort of going with something new but if you know the right way of doing business and you are not doing it then you are facilitating the behavior. 

Perhaps you can agree with him to take on the smaller/maintenance type of jobs like changing a light fixture, toilet, etc. You can agree to a unit price to get each of these done and you both know going in what the financial expectations are.