All Forum Posts by: P.J. Bremner

I have solar on 2 out of 4 properties and it is time to finish the job... Anyone on here certified to do the install for the solar systems on 2 separate homes?  I will be purchasing the solar systems myself, I just need labor covered.  PM me please! :)

@Abbas Jamal Eddine

I really do have to jump in here, please be VERY careful with some of the advice you get on here.  In real estate, ratios are marvelous for ball-parking things and getting a rough idea as to what things should cost.  But in reality, they don't always make sense and renting a room is one those things (plus, I suspect most people have no clue about the topic since most people have traditional rentals).  I get that you want to be fair to your friend and charge a reasonable rate, but you don't do that by taking a percentage of the mortgage.  Lol what if you paid the house cash?  I guess he's there for free then... come on people.  If you don't have experience in the area, don't give advice or you will really hurt someone financially.

Here is what I can say: much like any regular rental, you need to figure out what other ROOM rentals are going for in the area.  This is a little bit more difficult to do because they can vary widely and you can't exactly check comps for what a room rented for.  I use Craigslist to see what other people are renting their rooms out for, but this is NOT 100% FOOL PROOF!  For example, I can find a house renting a room for $500 on the same block as one of my rentals.  I get $700 for a small room all the way up to $900 for a room with a private bathroom.  I include all utilities, all furniture, maid service for common areas, pool table in the garage, etc. and I don't have ridiculous rules like most families do who are renting a room out of their house.  That being said, look on Craigslist and see what amenities they have compared to you.  If a room rents for $350 but no furniture and no utilities, and you are going to include all of that, I would go AT LEAST an extra $100 - $150 more.  It really depends on what the market allows, but I would start there.  You can always put up a dummy ad on Craigslist and see if people respond (this is how i test the market to see if the location will work for another room rental house).  I generally get 4 - 5 responses a day, but that will vary depending on your area.  Oh, one last thing, don't ever base something off of "I'll only be there a couple hours at night to sleep".  That makes NO difference because you are leasing the space in the bedroom for 24/7 and you will not have access to it once he rents it from you.  I wouldn't go to my apartment manager and say, "Hey, I work 10 hours a day, so I'll only be in the unit 50% of the day.  Can I pay 50% rent please?".  They lease the space for 100% of the time, how much they decide to be there is on them, not on you.

Feel free to PM me or tag me here if you have any other questions.  Make sure you are only taking advice from people who have experience in the area you are looking for.  I don't know $#@! about development, but I also don't troll the dev forums and post answers on there lol :P

@Hagop Sandaldjian

@Jay Hinrichs brings up my favorite option here, especially living in SoCal. I started my real estate adventures by house hacking an FHA property that had 5 rooms. Since you are studying finance, I assume you can get a decent job with a salary? Obviously the higher the salary the better because you will qualify for more mortgage. You generally get about 1/3 of your monthly salary to cover a mortgage (eg. if you make $9k per month, you can get up to $3,000 per month in PITI mortgage - Principal, interest, tax, insurance and if it's FHA then you have to account for PMI as well). It's not an exact ratio without actually looking at your whole situation, but it's a good starting point. Get a great job with high salary, get that first house done with FHA, preferably get a dump that you can use the $50k to fix up while living in it and forced equity. Rent the spare rooms while living there and keep the train chugging along! I house-hacked my way through 4 homes in SoCal, it's possible and you don't have to go out-of-state for it.

Best of luck, hit me up on a PM sometime, I'll be more than happy to show you what I've done, tour a house or two and give advice on getting you setup as well!

@Abbas Jamal Eddine

I can give you advice based on what I have done in the past, but it may or may not work for you.  Take them with a grain of salt please :)

1) I wouldn't even notify my insurance of this because it shouldn't even be an issue.  If you live in the house, you have a homeowner's policy.  If you rent the whole house out, you have a landlord policy.  Since you have a mixed use, you will most likely have HIGHER coverage keeping the homeowner's policy in place.  When you switch to landlord policy, it does not cover very much but the cost goes down.  It really is none of their concern if you rent a room out, much like if you have guests over.  If your guest burns the house down, is your insurance still going to cover everything? Etc.

2) If you pay your mortgage on time, then your mortgage company really doesn't give a hoot about a room rental.  There may be some obscure clause in the fine print about not using it for business while you're living there, but you have to keep in mind how and why they would enforce something like that.  How would they enforce that?  No clue... As a business, it would require employees or contractors to look into that.  Not only that, if they do indeed find someone using the property for business use and they call the loan due, they just took a perfectly good and performing mortgage on their books and turned it into a lump of coal.  NO WAY would they want that.  Pay your mortgage, pay it on time, they will never want to hear from you again (unless you refi through them and they get commission from it lol).

3) If you're going to use all the proper write-offs for renting a room out, you would have to calculate what percentage of use the renter has and you can deduct that from the gross rents collected.  It's a pain in the @$$ and **speculation alert** I have heard it can flag an audit from the "you know who".  The other option is to collect cash and leave it off the books.  You lose the tax deductions but don't pay tax on rental profits.  I'm not going to recommend one way or the other, I'm simply telling you the options available to you and you decide what's best for you :)

4) When you rent out the room, you give up legal ownership and usage to the room and have to deal with a tenant in the same common area living space as you.  If they have quirks that you don't like, you have to deal with it.  If there are disputes (loud noise at night, not cleaning up after themselves, bringing over rowdy guests, etc.) then you have to deal with it.  If you already know the person and have lived with them before, then you mitigate a lot of those downsides.

5) Again, as far as taxes go, you have to determine which way you are going to go.  If you are going to do everything by the books, then you need to track all of the rent payments and all of the bills that you plan to use as a write off.  Another option that might be a good compromise is to figure out what a fair amount you would use to write off for bills and just claim the balance as profit.  (eg. you collect $500 in rent and you determine his utility and bill usage would be $50, you claim $450 in profits).

On top of these, I would like to offer you a few pieces of advice... I've been doing room rentals for a while and lived in the same house as my tenants for a few years and found a few things to be efficient:

• Month to month lease ONLY (if there is an issue, you simply don't renew the lease the following month, no need to evict.  On the flip side, you explain it to your tenant that month to month is a benefit to them for being more flexible AND you, as the owner, have to be a great landlord and earn their business every month or they will simply leave).
• Average your utility bills for a year, calculate what portion you will be charging them for it and then add it to their rent AS A FIXED AMOUNT.  The last thing you want to do is chase your friend around for rent + electric bill + gas bill + internet + TV + etc. etc. etc.  You simply collect one bill (the rent) and be done with it.
• I prefer to furnish all of my rooms, but if you're renting to a friend then he may already have stuff.  For those who want to do this with strangers, I recommend furnishing the rooms.  If you are doing month to month, the last thing you need is people moving furniture in and out on a monthly basis.  You can charge a premium for a furnished room (bed with mattress, night stand, dresser, desk with chair and mini fridge is what I equip all my rooms with).  My goal is to make the move in as easy for my prospective tenant as possible.  Yes, it's month to month and they could move out in a month, but the odds are if you do your job right as a landlord and provide a clean/safe place to live, they won't be moving anytime soon.  I've had tenants stay for more than 2 years at this point, all on a month to month lease.

Sorry for the long book lol but I hope you get some useful info from this :)  Best of luck!

@Tarek Wazzan

I guess having the option to wake up and work 16 hours or work 0 hours each day is a terrible thing, right?  Again, you are making assumptions and know nothing about me lol I thought I had you figured out, but clearly you keep sinking to new lows ;)  I wake up every morning and spend 3 hours reading, learning 2 new languages and posting on BP.  I guess I should hold myself to your standards and "keep evolving and challenging myself" because clearly, I am not currently doing so.  Troll on my ignorant, offensive friend!

Anyhow, for real this time, take care.

@Aaron Mazzrillo Thank you for pointing out this clown to me, it's been a fun afternoon! lol although I have to admit, I'm a little jealous I spent my hard earned investment money on more real estate rather than a shiny orange Lambo and para sailing equipment :*(  I could have been somebody!!!

@Tarek Wazzan

Likewise.

Food for thought:  Do you think anyone would have said anything if you approached the post differently, instead of intentionally trying to mislead people?

My concern wasn't directed at you OR your success, but simply the methods of your delivery.  But you knew that from the get go and you decided to ignore the concerns that were raised and became combative and petty.  You're going to continue to do what you do, nothing anyone says to you will change that.  I just wanted to give an alternative perspective on the matter so people reading these posts can have more than just one opinion.  If you have students that have paid for your "academy" and have success, why don't you bring them on and have them vouch for you??  A much more honest, respectable and legit way of advertising rather than pretending to be new and wildly successful.

And for the record, I "retired" at the age of 29 and own several businesses that are all successful.  I'm new to wholesaling but certainly not new to snake-oil salesmen.

As you said, best of luck and have a marvelous day ;)

@Tarek Wazzan

First off, I never once said that you didn't make any money.  Second, I never criticized your success.  Clearly you are getting uber defensive because you're being called out for questionable marketing tactics.  You got caught, you won't fess up to it, now you resort to acting like a child and making presumptions about two people you know absolutely nothing about.  You know nothing about my businesses or success.  I suspect you would have made an AMAZING politician based on the way you react to adversity.

I won't stoop to your childish level, but I will say that you have demonstrated EXACTLY what I was trying to warn others about.  Best of luck to those who decide to pay this guy a penny for guidance.  Just make sure you ask yourself, do you really want to work with a person who acts like this?

On a side note, I'm at home on a weekday and saw an opportunity to help those unsuspecting noobs from being taken by someone who clearly has ethical issues.  Did you ever stop to think that maybe, just maybe... I have the financial backing to do so, as opposed to "having no work to do"?  It's laughable.  Grow up please.

@Aaron Mazzrillo

Nothing worse than a bait-and-switch artist preying on the emotions of others.  It's funny because I remember seeing this post before when he first posted it and didn't think anything of it, but now that you mention it, and with a little closer inspection, it's pretty obvious what he was trying to do.  I'm new to wholesaling but certainly not new to real estate investing and DEFINITELY not new to sales and training.  I'm all for the pep-talks and trying to help the newcomers out.  If you're so passionate about it @Tarek Wazzan, why don't you offer your services for free to help the greater good?  Or partner with people?

Word of wisdom to people out there:  When someone is trying to get your attention by "selling you the sizzle, not the steak" such as taking pictures next to their expensive sports car or has a video of some random guy sail surfing with slogans all over the page like "quit your 9 - 5", BE VERY CAUTIOUS.  The core of all sales of this nature is to appeal to your emotional side so that you ignore your rational side and make a rash decision like sign up for some online coaching course.  

He may be legit, he may not be, I'm not going to comment on that because I don't know anything about him.  But I can say from personal experience, I've seen this pattern before and 99% of the time, only $h!t heads use tactics like this and it's really shameful.  Thank God for Karma :D

On a different note, thank you BP for all the FREE PODCASTS AND FREE EDUCATION OUT THERE.  No need to pay for garbage when you have diamonds all around.

@Ashley Cast

I have been targeting Inland Empire recently and have a business partner that also has his license.  When I tell him I want to put in low-ball offers, he says "how low shall I make it for".  I've had my fair share of experience with real estate agents and as an investor and personally, I don't deal with anyone unless they are interested in the same things as me.  When I want to offer 50% of asking, he doesn't question me.  I'm more than happy to forward his contact info to you.  He uses Berkshire Hathaway and their E-signing is SUPER easy.  I've literally done contract signing online in less than 30 seconds per deal (I look at the address and the offer price, I trust him with the rest of the verbiage because we pretty much make all offers the same way).  We are currently working on a property in Ontario, hopefully have it closed within the month, so yes I have used him before personally.  We've made offers in Riverside, but have not had anything accepted as of yet.  But as you know, it's a numbers game :)

Best of luck!

So much cancer and troll in this post, oh my!  Speaking of trolling, I hear that narcotics have upwards of 100,000% mark-up in their products, might be something to look into for those who are interested in HUGE RETURNS and are more risk-averse (lol), makes DSTs and flips look like child's play.  Just be prepared to get shot at frequently.

On a more serious note, i've heard several references in other podcasts to "turn-key" investment companies that purchase homes, rehab them, put tenants in, sell the investment whole and continue to manage the property for the buyers.  This would seem like a decent idea, in theory, but would love to see if anyone else has experience in this area?  Are the returns close to what they purport them to be?  How turn-key are they really?  

This may be something that @Gen Young might be interested in checking out.  I have never personally done it before, so I can't vouch for them.  Just another option to consider!