All Forum Posts by: Nat Rojas

Looking at rental property in Baltimore in the 100k range(single family, row homes ). I’ve been working with an agent but I’m not sure how to access whether or not a certain home would make for a good rental property. What data should i be analyzing? What equations should i use?

@Bryan Richardson

It really depends on what the relationship is between you and the friends/family/co-workers. 

Are you providing interest on the capital they provide?
Are they getting a profit/loss percentage of the profits of the deal you are in?

I would look up NARPM and start with them..Below are some questions I would think would be a good starting point for you to see who really treats their company like a business or a hobby.

My business partner is a regional VP for NARPM and I am happy to help if you need anything please reach out

Questions to Ask prospective management companies

• What are your average days on market for vacant homes?
• What is your average rent amount for all properties managed?
• What is your average work order cost for the owner?
• What is your average make ready cost for the owner?
• Are all my invoices uploaded to my owner portal?
• How do you advertise your vacant units?
• Do I receive video of my pre and post make ready?
• Do you have a setup fee?
• Do you upcharge on maintenance?
• When do you make owner payments? How often?
• Are you a Certified Property Manager?
• Are you a member of NARPM?
• What is your Guarantee?
• Do you provide move in and move out reports
• How many pictures do you take of the property prior to tenant moves in and after the tenant moves out
• Do you get weekly reports when the property is vacant what prospective tenants are saying about your home
• Do you provide monthly newsletters to your tenants
• Do you hold investor education classes to help me become a better investor
• Do you have single point portfolio based management services?
• How many properties do the owners actually own themselves?
• What do you do to ensure that the tenant is responsible for security deposit disputes since that is the largest reason for owner lawsuits
• How familiar are you with the newly changed laws that can affect you the owner if they are not used correctly?

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Hey @Patrick Reisinger,

Financing these cheaper properties can be difficult. There are options, however, you just have to look a bit harder, and they tend to be more expensive.

1. Hard Money- You'll need to find a lender that will do smaller loan amounts, this is probably easier to find than a bank that will do smaller loan amounts. You may also potentially find a hard money lender who will fully amortize this kind of loan. I know a few in Baltimore that do it this way, and at the end of the short term you have a paid off property. Could be an option.

2. If you acquire with HM you'll likely need a bank to refinance you out. This could be difficult if you continue to go the conventional way you've been going for two reasons. A, you'll likely have this in an LLC and will have to put it back into your own name, and B, you'll be looking at smaller loans which are hard to get. Sometimes you can package these up, sometimes you can't. Depends on the bank. I've had luck by promising continued business if the bank will refinance me out under their limits. Can't hurt to ask.
3. Private financing- Buy with friends/family money and hold for a short period of time and then the refinance may be easier for you. 

Whichever way you decide to go, I would recommend trying to improve the property when you purchase. This will allow you to build in equity up front, and it will make things easier on your refinance. If the values are over 75k for rehabbed properties, you will be in much better shape to get your refinance. 

@Chadd Brandon We structure purchase money mortgages on everything we acquire...stopped using banks years ago...kind of a silly concept to use bank money once you figure out how to structure a deal. 

I once had a property management company charge me $45 to deliver a letter to the tenant advising them that the PM would be entering the residence the following week.

That same management company also had an early termination cause in the contract.

Now, this may be local to my area, but I soon after received some wisdom from a few other investors. That was to always be leery of a property management company that has an early termination clause in their contract.

If they’re good at their job, there is no need for that clause. 

I’ve switched to another PM and she has made my life extraordinarily better. It feels so good to get owner statements that are consistently rent collected minus PM fee without any other expenses.

She does not have that clause in her contract. When I asked her about it, she said, “if it isn’t a good fit, why stretch it out? If you don’t like working with me, or I don’t like working with you, why stretch it out longer than necessary?”

Completely agree....

Again, this may be specific to the area which I invest...but I hope it helps.

it looks like a fine deal, but I assume you will spend more than 8K on it, hard to give you details when we dont know the address.

THe issue is that it is in Baltimore. The city is know to be Tenant favorable for Landlord/Tenant disputes, to the extreme, unless it is a part of the city. An inordinate number of sub 120K rentals end up in rent court. You may want to include in your calculations 3 to 6 months of non rent payment every 3 years.

Also 1200.00 per month is usually requires a unit to be in pretty good condition.