All Forum Posts by: Randy Landman

I'd go get more money.

Sounds like you're getting a great return.  Well done.  I would hold off on pulling out the cash flow as long as you can.  Put it back into the business and let it grow.  Option 3 would be faster.  But option 2 would be safer.  I just depends on how much risk you can tolerate. 

That one would definitely be worth paying the plumbers hourly rate.

 I budget for a 4% vacancy rate, but I think that is too low for most situations.  I have mostly long term tenants, so I have been lucky with that so far.  I think others budget for a 8 to 10% vacancy rate.  You might want to check with landlords in your area to see what vacancy rates are in your local market.  Repairs, maintenance and Cap Ex would depend on how old the property is, how well your rehab is, and what the quality of tenants will be.  I used 8% in my post which would be $125 per unit per month.  Most months you will spend very little, but one call for an AC repair and you could easily be out $500.  You have to budget for that as well as for big ticket items like a new roof, new hot water heater, etc.  My average is more than $125 per unit, but I figured with a $100,000 rehab you were going to start off with all new appliances and you might get away with 8%. 

You just have to decide what your goal is.  If speculation is what your looking for, then consider it.  But if you're after cash flow, it's not there.               

Congratulations and welcome to St. Louis landlording.  I understand wanting to sign your own lease rather than use the former owners lease, but if the tenants are already on month to month I would not force them into a one year lease.  Tenants are already going to be leery of a new owner and if you force them to sign for a year you may lose some of them.  Are the utilities in the tenants name?  What are you trying to find out about the utilities?  Laclede and Ameren are usually good about giving me information as to whether the tenant has set up the account.  Stop by and get everyone's contact info, e-mail, phone, cell phone etc.  For the tenant that is moving July 20th, how much rent did you get at closing for that unit?  Did you get paid through the end of the month or only until the 20th?   Ask the tenants if they have any maintenance requests.  My guess is the former owner had neglected the property, so there are probably a lot.  If you fix their maintenance request quickly, they'll love you and be more willing to sign that new lease. 

$1.4 million for your first deal.  Wow you really swing for the fences.  You say these rents are estimated.  Is this property vacant now?  If so why?   You forgot vacancy and Cap Ex in you expenses.  $6200 minus the expense you listed  and subtract another 8% each or so for vacancy and repairs gets you to around $3300 a month cash flow.  Your 11% would get you $4,300 a year or less than a 3% return.  Do you really want a 3% return on your life savings?  I'll pass, unless you can make these other "possibilities" a reality. 

There are several tenant screenings services online that can directly charge the applicant a fee, so you don't have to. We use mysmartmove.com . The landlord doesn't get any of the application fee, it's just to cover the cost of the credit check. But you don't have to collect any money personally, and you're not out the money for the credit check.

I like month to month.

1. They are a time saver. I don't have to remember when the lease is up and mess with contacting the tenant, print on out new lease agreements, and getting signatures.

2. I think MTM actually causes some tenants to stay longer. Many people are procrastinators. So they forget about looking for another place to live, until the subject of lease renewal comes up. Then they get busy looking at other options. But if they are on MTM, then there is no hurry. They can move anytime so they procrastinate the decision and actually stay longer.

3. If something has changed in someone's life causing them to want or need to move, I'm not going to use a lease to force them to stay and be unhappy with me and my property. My places are easy to rent, so I'd rather they leave if that's what they need to do and get the next happy tenant in. So I might as well do month to month.

The elf would do my quarterly scheduled maintenance and inspections. Maybe he could slip in and out without the tenants even knowing he was there.

I have a 50% no show rate also. We switch from individual showings to open houses because of this. We do Friday night from 5 - 7 and then Saturday from 10 - 2. If the property is vacant I don't even make appointment times, just show up whenever you want. If it's occupied, then I make appointments every 15 minutes so we don't overwhelm the tenant with too many people at once. Then I always have something scheduled to do like cleaning or installing blinds just in case there's any down time. We usually have someone that couldn't make it during those times that is dying to see it. If we're not happy with any of the applicants we will try to make appointments with them during the week, but they too have a 50% no show rate, even though they were "dying" to see it.