All Forum Posts by: Ryan Pyle

Those numbers are doable in Toledo, but the address matters a lot. I'll sell you 35 houses right now that hit those numbers. But you'd be pretty mad at me once you found out that all of the houses around them sold for $15,000. 

Like @Andrew Fidler said, we can help you if you give us addresses. 

@Fawaz Alkhaleefah, I can't really answer that question based on the info you gave. It depends on the utility layout (who pays gas, electric, water, sewer, trash), and are cooking, heating, cooling and water heating gas or electric? Also the condition of the property and surrounding properties make a huge difference. 

I think 14% net yield is not achievable by an out of state investor over the long term. You may have years here and there where you do much better than that, but you will also have years where you are negative cash flow (replace roof, HVAC, big turnover, bad vacancy year, etc.). When you have to pay a management fee on top of that, I think you should be happy with 8% over the long haul. Just my opinion. 

@Rob Badhorn- my maintenance staff does it.

Here is a pretty good video explaining: https://www.youtube.com/watch?v=L2iZqWrpyzc

Basically, to prep you need to clean the house from top to bottom (literally, start high and work your way down as dust will fall down). Make sure all windows are very clean. It's a good idea to paint the insides of the windows a day before the test. Also, clean your floors. Vacuum  carpets in several directions with a HEPA vacuum. Mop all non-carpeted floors with clean water and soap. Again, this should all be done as close to the testing date as possible. They also told me to lay down mulch all around the house where there isn't grass. As long as there's no exposed soil, it's a visual pass.

I have no idea if they will change the tests, but it sounds like this is how they are doing it in Rochester and Cleveland right now.  

@Adam A.- as a multi-family owner I am thankful that we are excluded. :) But, I also own many SFR's and am slightly annoyed, although if your house is well-kept it won't actually be that huge a deal. I've been through swipe tests before (LMHA used to make us do them) and as long as you prep the house properly (don't let the tenants do it) you will be fine.

My main beef with the whole thing is that the current laws and awareness campaigns are working just fine. As I've stated before, we went from 14% positive > 10 microliters in 1997, down to 7% in  2000, 4% in 2003, 2% in 2006, and less than 1% in 2014! Progress has been made. And I do agree with you that targeting less than half of the housing stock is not addressing the problem. For all we know the problem may NOT be landlord-owned houses, it could be owner occupied. We landlords are held to very high standards with Section 8 inspections, lead paint disclosures, etc. Home owners aren't. I'd love to see the statistical evidence city council has showing that landlord-owned houses are the problem. 

@Adam A., thanks for the link. Sounds like it's not likely, just a worst case scenario possibility. And it's 10 years out. I guess that's incentive for all of us to have our properties paid off by then so we could easily absorb such a fiasco! 

@Fawaz Alkhaleefah, with Section 8 your lease determines who pays the utilities. HUD has allowances for each utility that you pay that you can build into the rent. The allowances can be found at www.lucasmha.org. For single family houses in Toledo it is typical that the tenant pays gas and electric. Each landlord differs as to how they handle water. I have found it better in the long run for me to pay water and build it into the rent. Sometimes the tenants use more than what I built in, sometimes they use less. But I don't have any issues collecting water bills. Ask most landlords who make tenants pay for water what their #1 headache is and they will most likely tell you, "collecting water bills."

@Adam A., please point to where you found that Toledo water bills will triple. They have been climbing steadily since 2011, and are scheduled to continue to increase through 2018. However, I haven't seen anywhere that they will triple from where they are now. The last I saw they will go up "in 2016 and 2017 by 13.2 percent each year. In 2018, it is scheduled to jump another 4.5 percent," according to the Toledo Blade.

Speaking of implementation of this law, I am curious as to how City Council plans to carry out the inspections required. According to cencus.gov, there are 117,785 occupied housing units in Toledo. About 88,520 of those are SFR and duplexes, which are the unit types that will be affected by this law. 87.7% of Toledo's housing stock was built before 1980 (couldn't drill down to 1978, so close enough), which leaves us with 77,632 pre-1980 housing units, of which 45.4%, or 35,245 should be renter-occupied. I would love to know how they plan on inspecting that many units. Let's say they give themselves 3 years. In a typical 247 day work year (let's give them 2 weeks vacation), they would have to inspect 47 units/day every day for 3 years to comply with the law. No way that's going to happen. That means 5 inspectors inspecting 1 unit per hour every work day...with no problems, sick days, no-shows, traffic jams or snow storms ever backing things up.

I'm personally fine with the city testing my properties. I've had these tests done before and as long as your property is properly maintained it should be fine. 

My concern is how is this going to effect turnovers? I assume existing leases will be grandfathered (just an assumption). But does this mean I'm going to have to wait for an inspection  before I can re-rent? Or worse, are we going to all be handcuffed for years while the city tries to inspect all of the properties that have never before been inspected?

With that said the city made a big deal a few years ago about us registering all of our properties. I complied, but in all honesty I've since forgotten about it as we don't hear about it at all anymore. My guess is the city forgot about it too. I suspect the same will happen with this.

Devin, a broker has to hold your license. There is no way around that until you get your broker's license. But there are lots of broker's out there who will hold your license. Usually they will just want a small monthly fee. 

My advice to you would be to get your license and interview as many brokers as you can. Most of them are investors themselves. Many of them are very large investors. I think it's worth working for/with them just so you have access to them and their networks.

Good luck,

Ryan