All Forum Posts by: Ralph R.

@Edward L lauckern. I manage about 60 tenants a month. Been doing it for years. Experience tells me it doesn’t happen very often. If she is risking 2 months or more of rent (a couple thousand dollars maybe?? We don’t know how much?) plus the cost of a flip. In my book the risk isn’t worth the gain. In fact I don’t see a gain with this guy. He will try it again I promise. Possibly another tenant won’t. Land lording is a tough business. It takes a tough tough attitude to succeed. After the second or third time most landlords learn that or give it up. RR

@Jonathan R McLaughlin. The only leverage she needs is the fact that he hasn’t paid rent. I don’t believe a judgement for a couple hundred dollars from small claims will matter. ( if small claims even issues one). The judgement issued for back rent will matter because it will show up on his credit score and future land lords will see it. RR

@Kimberly Kesterke. I’m glad you got your rent but your not clear yet. He’s almost to Feb rent. Rarely have I had a tenant this late not fall behind and dig a hole they can’t get out of. I recommend applying the rent to the late fees first. Courts will usually award rent but not late fees. If he goes past the grace period in Feb once again post the eviction this time immediately. I’m going to also recommend another thing. If you need help managing/ working on your properties get a PM. BE SURE TO VET THEM FIRST!! The PM also keeps all your income and expense records for each property. Plus they would have been dealing with this guy not you. It’s a huge relief when you find a good PM. RR

@Jonathan R McLaughlin. Going to small claims court won’t gain a thing. You can’t get blood from a turnip. He can’t pay rent why would he pay a small claims judgement. Only option is evict and move on. Your first loss is your best loss. Cut your losses and move on.

@Edward L lauckern. Absolutely not. The OP owes no explanation to this guy whatsoever he’s late with his rent. If she owes him anything it’s an eviction notice. Here it’s 2 months lost rent after the notice to flip a unit. She’s already lost 1/2 a month. It will cost her 3 months rent plus repairs to get her next full rent check. Why does she owe him an explanation?? RR

@Steve Rutherford. Manage your leverage. Investing is managing. You manage your money, your leverage, your PM’s, and your properties. You manage taxes, tenants, leases, you have to manage ALL of it. If your afraid of debt then keep your leverage small. Pay cash for a property and then leverage the next one. Then cash again and leverage again. In this high market keep the leverage down. If the market drops leverage can go up a little. That way you buy less at a high price and more at a lower price. I’m not an expert but that’s how I’m comfortable. I’m also nearing retirement. I’m after cash flow not long term gain that makes a difference too. Taylor the leverage to your goals, needs,and comfort level. Don’t just go buy everything at a high leverage. Be smart about it. RR

@Nathan G. I’ve been to Cody took a pack trip west of there a few years back. It’s been my experience that those PM’s that charge fees etc for early termination are poor PM’s. I had one that sold his business to a friend. He was a terrible PM and his buddy was worse. I got a lawyer and we discovered there was no legal transfer of my contract. I had no contract with the new PM so I got a new PM and the old one held on to the tenant deposits. It all ended when I turned the old PM into Colorado’s Dept of regulatory agency’s. He tore a hole in his shirt pocket getting his pen out to write the check for the deposits. Point is after that I don’t sign a contract with a PM that has a penalty for leaving early. If they need that to stay afloat they usually aren’t good PM’s. RR

@Justin Polston. No links portfolio lenders are loaning money out of the banks portfolio. It’s small local banks and credit unions. Not the big box banks. You have to check with your local bank or credit union. RR

@Justin Polston. You feel wrong. Portfolio loans are a type of loan not a dollar amount. Not for the purchase of commercial property only. They are funded by the bank or credit union and not subject to Fannie or Freddy. You can buy SFR, multi family, a commercial property, storage units, vacant ground, whatever the banks guidelines will allow. Has nothing to do with the cost of the property. I have several portfolio loans both on duplexes and some on SFR. They loan to LLC's or individuals and there's no limit as to how many you can have. RR

@Steve Rutherford. The strategy is ok but one of the advantage’s of real estate over other investments is the ability to leverage your investment funds. If your going to use your investment money like your describing it will earn way more invested in stocks or something else. Buy storage units or a campground. My partner buys multi family’s and pays cash or huge down payments. He typically makes 8-10 percent MINUS the time loss of money which is 2-3% annually. This reduces your gain to 5-7%. Multi family’s don’t appreciate like single family’s. If there’s value add that helps a little. I use leverage and manage the leverage. I make 18-25% on my money and sell or cash out refi when those returns start to drop. Say you invest 90k in a house (I’m leaving out appreciation for simplicity) and the rent is $1,000 a month. Let’s say expenses run 30% leaving you a net of $700 a month. It’s 128 months until you get your 90k back. It’s making you 9% interest Why don’t you just draw out 700 a month for 10years?? After all that’s what the tenant is doing. He’s living in your 90k investment and paying it back to you at a rate of 700 a month. It’s going to be 10 years before you get your original investment back. Then you start making a profit after that. The real profit is in the value add or in the appreciation of the property. Not in the cash flow. If the property is leveraged you only have $22,500 invested. The bank has the rest. Now you get $700 minus a $342 loan payment or $358 a month. That gives you a 19% return on your money. You get your $22,500 back in about 5 years. PLUS the tenant is also paying the loan down and you can get that money when you sell or re-finance. If your afraid of debt ( Ramsey failed at realestate) then look elsewhere to put your money. Your losing 50% of your gain by not using correct leverage. That being said you have to manage your leverage. I’m 66 so I want a lower amount of leverage. At a younger age I ran about 60-70% leverage. Today the market is high so I keep my leverage a little lower for that. When the market is low I would leverage higher. If you have 2 $100,000 houses one paid for and one with $75,000 of debt you own 62% of your assets. In a tough time you sell the one with a loan and own the remaining on free and clear. Where’s the risk in that? RR