All Forum Posts by: Paul Shannon

The debt you owe doesn't relate to what a tenant should pay.  The rent should be fair market value.  

Pull up your house on Zillow.  Click on every house on the block and a few blocks around.  If there are pictures of the home, scroll down to "price and tax history".  You can see what the property rent was listed for, if it is a rental.  The pictures will give you an idea if you're property is nicer or more basic.  Price accordingly.  

I would tell him you'll see him in court.  He's going to lose more than his deposit after he pays his lawyer for nothing.  If its clear in your lease regarding damages and how they are handled and you have documentation/pictures, he doesn't have a case.  Make sure you send him a statement with the damages and amounts.  It sounds like you should be billing him for more than what you are going to get from the deposit.  

Send him the statement and tell him you'll be serving him if he doesn't pay the excess.  My guess is he won't bother you after that. 

It's hard to say without more details.  Example.....3/1, 1,000 sqft house in the midwest w/ 5 year life left on any major replacement items.....I'd be setting aside $125 a month for maintenance and $125 a month for capex.  I'd also have some reserves set aside just in case your furnace blows, or something else, 6 months into owning the property.  

If you don't spend your reserves great.  But if you need them they are there.  

Check out J. Scott's book "The Book on Estimating Rehab Costs".  Talk to contractors locally about prices and hit Home Depot to get an idea of supply costs.  You'll have a better idea of what to budget. 

Depends on deal, LTV, rent income, etc. My case they were single families 70% LTV in low 6% range. Figure about 1.5 to 2 point higher than if you put an investment property in your own name with a conventional lender. Advantage is the loan is in the name of the LLC and you have ability to hold many more than 10 loans.

This is not the first time in history where assets prices do not relate to what assets are actually worth.  Pandemic aside, this is quite normal, economically.  It seems you like books....read "The Intelligent Investor" by Benjamin Graham.  Warren Buffets mentor.  Some of the info is data, but most is timeless.  Market cycles are somewhat predicable, even though the cause is not.  Understand the economics, how markets work, and how real estate fits in, and then know how to balance your risk tolerance and knowledge to capitalize. 

Unless socialism is to prevail, which would destroy our economy as we know it, the answer is no.  To print money to bail out every business, including rental investors, will ultimately destroy capitalism.  You sign up for an obligation, whether debt to a bank or rent to a landlord, the debt is owed.  

The reason the USA is the USA and the dollar is the standard or currency is because our debt obligations are sacrosanct.  You sign....you pay. 

Run YOUR numbers and put your offer in.  When a realtor says put in your "highest and best" tell them you wish the "highest bidder the best".  

What kind of tenant are you trying to attract?  That's your answer. 

I'm sure you've heard of the 50% rule.....50% of gross revenue is your net.  That's the back of the napkin calculation.  But that's just to disqualify 90% of the deals that come across your desk.  You've got to dig deeper.  Are you managing or hiring a property manager?  Have the taxes been on a homestead exemption due to the house being owner occupied?  What the lifespan of the the cosmetic and cap ex items at the time you rent?  

Be conservative in setting aside reserves and anticipate future cap-ex and replacement items and you'll have a firmer number.  

I can understand your thought process and feel similarly.  There's really not a right answer here.  There's also a lot of factors a play related to personal finance that only you know, ie risk tolerance, investment allocation, etc.  

I think if you buy right, no matter what's going on in the market, its a good time to buy. You mention BRRRR. If you buy an undervalued asset, do the rehab, and refi to get your money out, you'd want to be all-in at 75% of the appraisal value as a target. Do you think real estate prices will fall 25% percent in the next 6 months? I don't. Even if they did, you'd still have a property you could sell and get your money back.

Trying to time the market is not possible.  I'm pretty bearish, but still making offers.  Lowball and you may have to make a few more offers than normal.  You may hit a bullseye.