All Forum Posts by: Olatunbosun Idowu

Hello Alyssa 

You sound like someone who is not prepared or ready to be an active investor, to be honest with you, you must decide if you want to be an ideal investor or desperate investor because you sound more like the latter. In your words you said you would quit if your initial investment does not work, this is a sign of lack of purpose, inept and insight to what real estate investing is all about. 

I will advice you take time off to seek real estate investing knowledge before seeking real estate experience and I can say there is a lot to learn, understand and conceptualize before making any real estate investment. I urge to understand how to analyze deals, how to develop your projected financial plan forecast, make estimate analysis of real estate financing  and other associated cost such as acquiring, rehabbing, holding, reselling, escrow service, contigencies, management fees and other expenses. As an investor you must have an idea of all these costs and also ensure you are right about these estimates figures to avoid misjudgment of cash flow, income, cash on cash returns, returns on investment and operating expenses. 

If you are through with this you can now talk about investing strategies, plan, goals and objectives where you determine the type of property you want to invest in and the goal of the investment could be investing for cashflow, capital gains, or for  appreciation of property. If you have done this prior to making any real estate investment you wont want to quit even if the investment go bad because you would be convinced that you did the right thing and would want to do more until you succeed at it. 

What you have will only take care of acquisition costs and associated expenses like i mentioned earlier the escrow service, rehabbing, holding, reselling, contingency, underwriting, etc. It is in your own best interest to determine all of these cost and see where it takes you before setting out. I don't know where is best for low real property investment in the United State because am from a different region, Lagos  and am sure you will get help on BiggerPockets by  connect with members and investors on BiggerPockets. 

Thanks for sharing your story Alyssa 

Best of luck in your real estate investing adventures. 

Olatunbosun Idowu. 

Hello Patrick, 

I don't really understand your arguement but I know state laws on security deposit is clear enough. Tenants own security deposits paid to property owners, who is obligated to deposit the security deposit in an interest bearing account and as well as inform the tenant in writing the amount, name and address of the bank. 

Property owners are only entitled to 1% of the security deposit on a yearly basis to cover for administrative expenses while the balance and interest are returned to the tenant if and only if no major damage is recorded or noticed in the apartment. 

However, If there are cases of unpaid rent or substancial damage to the apartment, the property owner may use the security deposit as a reimbursement for the unpaid rent or reasonable cost of repair and return the deposit less any lawful deductions to the tenant not later than 30 days after the termination of the lease contract agreement. 

Unexpected repairs and maintenance of apartment is inevitable and it is the responsibility of the property owner to fix it and it should also be in your expenses estimates yearly, you must have a maintenance plan and have funds  reserves to take care repairs particularly unexpected liability and expenses when the need arise to continuously improve and increase the real property  asset value in order to increase earnings. 

If the property management company is doing anything contrary to what i just explained then they are doing the wrong thing and you can ask questions because their services is not free so if anything is not clear to you in the way they manage your property please ask questions. 

Thanks for sharing your story Patrick. 

Best of luck 

Olatunbosun Idowu. 

Hello Matthew, 

I am really not impressed with a thing like this because of past experiences. Let me quickly share an experience with you which is still in court as I speak with you. The former  managing agent of one my clients made the same mistake offering a tenant an apartment without proper tenant screening and selection process before qualifying the tenant for a lease contract agreement simply because the tenant was willing to pay all payments requested for including the first year rent and security deposit so it was easy for the agent to ignore the requirements and even bend rules for the  tenant if he didn't meet the minimum standard. 

After the first year rent elapsed and it was  time to either renew the lease or pay six months in advance, If he is going to make any payment,  may be tomorrow and he has stayed in the apartment for two years plus  now without making any rent payment. He was able to do this because of the trust the agent placed on him and the initial unreal impression he gave when moving in which makes it difficult for the agent to relate with him on a business level to demand or seek rent from him. 

Consequently the property owner has spent more than the initial rent payment made by this tenant three years ago prosecuting the case in court and she is still going to incur many more unexpected and unnecessary cost on the case because the case has not been concluded. Improper tenant screening and selection process by an inexperience or greedy agent  turned her asset into a liability. 

My advice is that if you have a working system or structure for  qualifying requirements for tenant screening and selection that takes care of all that must be met for a successful real estate investment  and property management please stick to it and don't bend it or change it except if you need to amend it for higher productivity or result. 

Thanks for sharing your story Matthew 

Olatunbosun Idowu. 

Hello Carlos, 

This can be overwhelming and really tough for newbies but you can always get help to avoid real estate investing pit-falls that most times can be avoided. I am going to be really fast about this and I want to believe you done or have an independent party perform due diligence on the property to give you an unbias opinion about the property to enable you make an informed investment decisions, this step is very essential to real estate investing success. 

Besides due diligence, I will advice or suggest you get your figures right about estimates analysis to avoid misjudgment of cash flow, income, cash on cash returns, returns on investment and also all associated with financing and the amount you will end up paying for the property. 

Let me quickly help you arrive at what you may realistically  pay for the property, usually referred to as the maximum purchase price. 

If you have  already known the cost price in the market this is what you will work with and not the asking price. 

If it is an investment property you need to create a profit margin of 9.3% - 9.5% of the cost price. 

Rehab must not be between 1% - 1.13% of the cost price. 

Escrow cost to purchase should be above 2% of the cost price. 

Holding cost for 2 months should be between 0.92% - 0.95% of the estimated cost price remember. 

Your contigency may be 0.1% of the estimated cost price. 

Also your resale cost is an important part of real estate investing and this should be between 3.33% and 3.35% of the estimated cost price. 

Finally to arrive at what you can realistically pay the seller for the property that is the maximum purchase price is you deduct all of the estimated costs above that is the profit margin, rehab, escrow, holding, contigency and the resale cost from the estimated cost price of the property in the market and not the asking price. 

This is just my suggestion to help you analyze property deals, you can as well seek opinion of people but I believe this with a little twist can help you have an understanding of how to analyze real estate deals. 

I wish you successful real estate investing adventures. 

Hope to hear great news from you Carlos. 

Thanks for sharing your story Carlos 

Olatunbosun Idowu 

Dong Yan, 

I really don't know why people always ask this question of holding and selling of their rental  property mid way into their investment many times because of problems that should have been considered prior to making the investment. This show lack of purpose or preparedness on your part or inability to predict the certainties that could affect your investment. I know their are uncertainties that could affect an investment but i think that is only common in  an unstable economy but definitely not the US. 

I understand you bought at peak and  the purpose or your strategy is cash flow investing why do you want to go outside your initial plans or do you have a clause on your plan that if your cash flow, income, cash on cash returns and returns on investment drop to a particular limit is a cue to sell it. Did you even plan the cost associated with reselling the rental  property at the beginning as part of your investing cost because all of these factors are vital to real estate investing success. 

If you want to sell the property  due to cashflow not meeting your expectation, you must decide on  what you intend to do with the proceed from the sale  even before you consider selling the property. The proceed must be able to afford you something of supperior or equivalent property that will meet or exceed your new investing strategies and plans.

Let me reiterate that you must always consider all costs associated with acquiring and reselling of a property before taking action, this helps in making excellent investing informed decisions. 

Thanks for sharing your story Dong Yan. 

Olatunbosun Idowu 

Hello Brandon, 

Its been a while since i heard from you, Although I have not seen the video because I don't know how long it is but am sure it will be great for everyone simply because its from you. I am rushing somewhere now to take care of my sick aged dad,  he has an appointment at the hospital today. 

I also have some fresh ideas to share with beginners later on how to be a better investor, being organized and having a script to follow, a business plan which includes the projected financial plan forecast and action steps to take to accomplish their investment goals and objectives, all these and many more. 

Also am about completing my book on real estate but still don't want to let the cat out of the bag for now because massive work needs to be done to get it to the right people. I am still talking to experts on how to go about the publishing and marketing of the book. I will keep you posted. 

Thanks 

Olatunbosun Idowu.

Hi Cindy Zhang, 

Investing in out of state property for rentals requires much from you as an investor  and I must be honest with you it is somewhat demanding. I am glad you understand and can deal with issues relating to cashflow, I will try to expose you some other important factors to consider when buying out of state property for rentals. 

It is wise to know the risk of investing in property asset  in another state most especially information on the way rent is regulated and controlled in the state. Also find out if the state is a pro tenant, pro property owner or neutral, this should form the basis for your investment decisions particularly on rental properties 

You need to do your due diligence properly because a pro tenant state has a  tenancy law with rent strongly regulated in favour of the tenants and rents are strictly controlled by laws set far below reasonable returns on investment while a pro property owner state has laws strongly regulated in favour of the property owner but a neutral state has a balanced law system for both property owners and tenants. 

On appreciation of property, I am not from your region and I don't think i can be of much help in this area but I know property appreciate every two years and this is regulated and controlled by the housing laws of the state you are in. I am  also sure  there are books you can get this vital information from out there if you ask from people or investors in the state you would like to invest in. 

I believe it is best and reasonable to  invest in states that encourage collection of security deposit, whose legal system and the alternative dispute resolution outfit work effectively and efficiently and which is clear about the right and obligations of both property owners and tenants and also  whose laws  on issues relating to evictions, contract termination, lease and lease renewal, subletting and assigning of apartment favour you as the property owner. 

All other issues you may want to consider is the location, a friendly neighborhood and availability of other social amenities to make the place comfortable and habitable to your tenants and their families. 

I wish you a successful rental property investing adventures 

Thanks 

Olatunbosun Idowu 

Hi Matthew, 

Members have given you advice and suggestions on how to go about the problem but what I don't understand is that is getting loan for the rental property the problem or having the LLC transfered to your personal name. I am sure you know the reason for holding your rental property in a limited liability entity in the first place before now if am not wrong for proper asset protection from liability of being a property owner such as attacks from judgment claimers, creditors claim, litigations and tenants claims on your personal asset which can immediately turn your entire asset into liability if there is a lawsuit.

I also want to believe that you know the consequences of not protecting your asset properly, some advice you to insure you rental property and do the transfer of title from LLC to your name but anything short of a comprehensive insurance package is not enough for a rental property with this it can cover for additional increase in construction cost in case of the unexpected or natural disaster.

It is easier to do 1031 exchange with your investment property and defer tax and still have adequate protection of your rental property in LLC than in personal name. I will suggest you face and resolve the problem of getting loan with the LLC entity and not think or have the impression that if title is in your name will quiken or speed up the rate at which you get loan. I also want to say that not getting loan is not because lenders are afraid of the protection LLC offers or they think you want to hide their fund under LLC. If you ask from the right people am sure you will definitely get loan for that rental property. Keep up the search

Congratulations and we appreciate your effort in teaching and  educating people on how to prepare for the future now. 

Jonathan

What you need is not what you can readily see in the market you need not only search all available inventory on the market but also involve Investor's brokers and agents or better still get information on where and when there will be foreclosure sales of real property assets. The whole essence of real estate investing is to get a great deal with with both equity and cashflow potential but for an apartment building of 80+ units with built in equity may be a difficult one to pull off immediately because most of these apartments are most time owned in partnership or as a syndicate group or investors where even if they have plans to sell, it will take a long process of delibrating and  deciding on their plans to sell which I think may not happen quickly or may not even materialize. 

I am not saying you can't get one that fits into your criteria but to great deal you must dig and dig deep into all available resources including foreclosures, auctions, short sales, it may take a long time to get what you want one.  Also ensure you perform your due diligence because such property are sold for a reason and you must do your best to find out why they want to sell it, so that you don't fall into any unforeseen trap of the seller.