All Forum Posts by: Ed Brancheau

Yes, it's a very friendly state to landlords. And because you're in Texas, you should definitely branch out to Oklahoma.

However, and this really isn't directed at you but rather those in states like California, I think that too frequently people focus on that too much to the point that they miss killer deals everywhere.

I live in San Diego and sure, California seems to be tough, but I don't think it's nearly as tough as people think it is.

For the most part, if landlords treat tenants in California fairly -- which every tenant should be treated fairly no matter where they live -- they're not going to face too many problems.

Even at the height of COVID, it was the slumlords that were having trouble collecting rent. Because tenants in good buildings don't want to lose their homes whereas tenants who have been treated poorly over the years certainly don't care about their sleazy landlord's financial problems and they don't care as much about getting evicted for a crappy apartment.

Personally, I only had two more late payments than normal during the height of COVID. And one of those two people called me like a week ahead of time to tell me that she was selling her car to get the payment. She ended up being only one day late and she paid the late fee as well.

The other guy was a working student that got laid off but said that he was pretty sure that his parents could help him out once they got paid. He was a week late but he also paid the late fee without hesitation.

My point is that I, and most other investors who treated their tenants fairly in the past, had very few problems getting their rent. It was the sleazy jerks out there that had Karma come back and bite them in the butt.

Again, this is really not directed at your situation because you are in an area that is good to invest in and generally has less regulation. I'm really only addressing those that might read your post and think that they have to focus on areas that have less regulation -- not that there's not some stupid regulations -- just to find great deals.

Because there are great deals everywhere.

Welcome aboard. You'll find that this is a really supportive and knowledgeable forum.

There are a lot of other reasons to refinance in addition to low rates and investing in other properties.

For one, if you don't need the money in at least five years, you can invest in an SPYDER index fund or something similar. If you can get 10% APY while only 2.5-3% on your mortgage, you pocket the 7-7.5% difference. Of course, the market can crash so that's why you really need to be able to keep it in the market long-term.

Two, when you refinance, you're kind of protecting yourself from lawsuits and foreclosures. You protect yourself from lawsuits because, while anyone can sue you for just about anything, no lawyer is going to take a case against someone that has nothing but debt -- also another reason to use LLCs for everything because "corporations are people."

And you protect yourself from foreclosures because banks will foreclose on houses that have higher equity because they can get they're money easier. It really sucks because those people have been paying their mortgage for years and they'll be given very little leeway.

For example, back in 2009 when the market crashed, my parents and their neighbors of 20 years went through very similar problems with the same bank. Their houses were pretty much the same value of about $750K at the time. But my parents always refinanced about every three years and most recently in 2008.

Then both my parents and their neighbors got laid off for around a year. Now, because the market was tanking, my parents did not take any money out of their stocks because the value we depressed. Instead, they just stopped paying their mortgage and didn't receive a foreclosure notice for almost two years because they only had about $150K in equity.

And when they finally reached out to bank to renegotiate payments, the bank worked with them because the bank could see the market was still plummeting and that they likely wouldn't be able to sell the house for $500K much less the difference of $600K.

On the other hand, their neighbors would refinance when rates dropped but they never took out any equity over 20 years. They probably paid $275K back in 1988 and by 2008 their house was worth about $750K. So, they had at least $500K in equity in 2008.

They received a foreclosure notice within three months of non-payment and they lost their home within another three months. Even worse, the house only sold for like $400K so they essentially lost $100K in addition to their house.

And now, my parent's house will be worth almost $2M once their renovation is complete in a couple of months which they did by refinancing it again, pulling out money to renovate it like they do every 10-15 years, and they bought a luxury STR in Gulf Shores, AL.

Finally, in another example, a friend of mine has a house in East San Diego County that burned down in one of the major fires about five years ago that also burned 150+ homes. Because he constantly refinanced, pulled money out, and put it in other investments, when his house was burned down, he was able to call contractors to rebuild his house before anyone else because he didn't need to wait for an insurance payout like everyone else.

Instead, he just sold off some stocks, rebuilt his house, and then got his payout from the insurance company -- which took over six months to get. By the time everyone else had received their insurance payouts, there were no contractors available but my friend's house was nearly rebuilt.

Also, it's always good to have some cash on hand because you never know when a killer deal is going to pop up that you can jump on while everyone else is trying to figure out where to get the money.

So, my opinion, and the opinion of just about everyone here on BP doing BRRRR method, is to refinance all the time even if rates are higher in the future.

I saw this book before and was thinking about buying it because I struck me that I watch so many "tip videos" on Youtube where I say, that's a great idea but then I never remember to implement it when I need to. I know the book focuses on a higher level but I do wonder why it's so hard to implement things that we learn. 

Max Maxwell has a video about a clever way to find the hottest zip codes in any area. His example is at the County level but I've run the same process at the city, state, and country level just as effectively.

It's going to give you the zip codes with the highest number of cash buyers which means that those areas are where the investors are focusing.

Conversely, and to answer your question, the areas with few or no cash buyers would be the zip codes to avoid.

Do you love managing properties? If so, go for it.

If you don't love it and are just doing it to make or save money, reconsider starting a property management company because their profit margins are pretty thin and they are a ton of work.

I have a few property management companies that manage my properties and I'd never go back to doing it myself. It's so much work.

Also, I'm not 100% certain about this, but I don't believe you need a license if you are managing your own properties and nobody else's properties.

But I'd never go back to managing them myself.

You not likely to get an answer because BP TOS doesn't allow users to say, "Sure, contact me." It's to avoid phishing.

So, it would be best to ask your specific questions AND be specific about your area BUT also leave the question open for others outside of Arkansas because, while there are differences between different states and localities, there is so much overlap.

Then, when someone gives you a great answer, you can follow them and ask to connect with them because members that respond love to connect.

Yeah, this was something that shocked me as well when I bought my first duplex but I did a higher LTV because I'm a bit more of a risk taker and I wanted another property but I'm not sure it made a huge difference in the end.

I'm a 48 year-old investor that wishes I had started at 25 and had known about house hacking.

That's where I'd start. House hack a quad, duplex, or even a single family with an ADU or tiny house in the backyard that you live in and rent out the house.

And consider that having roommates living in your house is also house hacking. because your roommates might end up covering your mortgage.

There are so many options but BP is the best place to start.

Damn. That's a tough one. I've been in that situation before and it sucks.

Now, you might feel that your only choices are to either get mistreated while being $3000 lighter, or to take the money and potentially let other people get screwed because you didn't warn them.

But there might be a third option if you can convince the business owner that negative reviews can be turned into positive results.

Point out that all businesses, even the best ones, make mistakes and receive bad reviews.

But the best businesses work with their customers to fix the problem and have the review edited to reflect that. They don't hide the truth.

For instance, you could leave the original review up but then add to it, "While the owner was rude when he reached out to me, he did apologize, fixed the problem, and give me a partial refund. So, I'm now happy enough to change is score to 3 out of 5 stars."

Most business owners like him don't realize that they don't need perfect scores. In fact, as a digital marketing consultant, I've seen research that shows a couple of negative reviews makes all of the reviews more trustworthy because we all know that, "Pobody's Nerfect."