All Forum Posts by: Bettina F.

@Andrew Angerer

One of my biggest advantages is my husband's attitude. Whatever I undertake, his attitude is " so you may lose 10-20%, we can afford it." That is the reality. No matter what asset you buy, it is rare to lose 100% of it.

We have had times where we had to hold on to property longer than we wanted (how we got into landlording in the first place), but we always ended up making money.

We have also backed out of deals that were not right for us. Sometimes that is the wisest course of action. not right for us.

@Michael Watts. Talk to your Bejamin Moore dealer. I painted kitchen cabinets 4 years ago, no chipping and the finish looks great. I can't remember the name of the paint, but it was expensive. My paint guy also sold me a primer that he tinted to match my top coat, thereby making the top coat go further. I have had problems with cabinet paint chipping in the past.

We started (and ended as we are retired and don't want to spend more time working!) with 6 units.  I wish we had gone larger -- here are my reasons:

1) Common area maintenance will essentially remain the same between 6 and 24 units. especially if you can avoid a building with interior corridors.  Your landscape footprint will not quadruple between 6 and 24 units.

2) You will be remodeling each unit on a one or two at a time basis anyway -- it will take longer because you have so many more units.  No experience?  You WILL be experienced after you complete your first unit remodel.   You will get more efficient  with each remodel, you will be able to correctly know what equipment and supplies will be required for each remodel.  You will be able to take advantage of economies of scale and bid desk discounts.  

3) Easier for you to live on site.  Live in one bedroom and use the apartment living room to store supplies and equipment.  You will be able to quickly evaluate which tenants you want to keep versus not renew, since most tenant issues arise after business hours.   

4)  Youth and energy is on your side.  If you totally crash and burn, you  will have many years to recover financially.  Youth is the time to take risks. (not so much for us old farts!)

This IS a huge project, but the payoff is so much greater.  If you are single, sacrifice your social life for a year or two for financial independence.  If you are married, make sure your spouse is 100% on board with this project, since you will have many evenings of painting, laying floors and remodeling ahead of you. 

I second the use of Bounce fabric softener sheets and the ultrasonic repellant devices.  Press steel wool  into even the tiniest of openings, then cover with spackle.  The mice cannot chew through the steel wool.  Scatter the poison bait blocks behind refrigerators, under stoves and in the crawl space of your rental (anywhere kids and pets cannot get to).  Be sure to vacuum out your kitchen drawers and shelves for tell tale signs of mice during deep cleaning of your unit.  Any food should be packed away in tins or thick plastic containers.

Originally posted by @Linda Weygant:

….her postings and messages just got more and more weird as the night went on...…

That is because she just got drunker and drunker as the night went on!

I keep a low profile in general in matters of wealth.  Worse than hate for me,  are the envious, passive-aggressive comments from church members.  This will occasionally come up if a church member has a family member without a place to live.  This usually comes up in the context of "please pray for me-- my deadbeat brother has been living on my couch for 3 months -- he can't find a job".  One pesky little church lady will pipe up "maybe he can rent one of Bettina's apartments?' and everyone turns to me expectantly.   My reply is always "sorry, I'm full!" -- as though I want a deadbeat whose own family can't   stand!  

I have also told acquaintances who are looking for housing for a family member, that federal Fair Housing requires that I treat everyone the same in terms of application, screening and qualifications.  That shuts them up, as they realize their deadbeat relative would not qualify.   

My friends understand that my LLing is my retirement income, and would never try to foist a deadbeat relative off on me.

@Brad S. In that case, price out one week (or however long your contractor promises) at a local moderately priced hotel. Offer the tenant a flat rate off the rent as compensation. Write up an agreement. You are not going to reimburse for meals out, etc. Be sure your contractor is ready to go on time and does not drag out the process. Bathroom remodels take at least 3-4 days because the new mud needs time to dry and you probably have some subfloor damage. The tenant will probably stay with friends or family and pocket the money. Be sure your contract with your contractor specifies a completion date.

 My accountant recommended QuickBooks Pro.  I have been using a 2013 desktop version.  I do not need the software to sync with my bank, as it is easy to switch between screens when recording bills in QuickBooks and then paying them on-line with my bank.  There is a learning curve, but QuickBooks is a very powerful  program and will grow with you.  You only need to upgrade every year if you have employees and are running payroll.

@John Acheson Gold.

Originally posted by @William Huston:

That was a lot of good information, i do have a few questions tho...

How much money are you recommending to leave aside for the first year? I was thinking of trying to use the 1031's to purchase 1 or 2 properties out right, or the other idea i was recommended by another investor since i am still young was to purchase the properties w/ 15yr mortgages since they still have very low interest rates vs 30yr loans and purchase a few properties that still cash flow with the 15yr loans with enough pay down with the 1031's. Basically he said to look for properties that would cash flow with a 30yr mortgage with the normal numbers, then apply it to a 15yr mortgage and offset it enough with 1031 + cash to make it cash flow still. 

That will depend upon the condition of the properties you buy, and your tolerance for risk.   I cannot give a definite dollar amount.  We had budgeted 10% for repairs/upgrades and probably spent this that first year.  We did our upgrades incrementally,  with emphasis on the common area upgrades/landscaping plus repairing/replacing broken appliances.  We did not take any money out of our business the first two years.  Our situation was that we are empty-nesters and moved from the Seattle area to North Idaho.  We had paid cash for a retirement property in 2011 (very cheap then) and we sold our big paid for house overlooking Puget Sound in 2013.  No taxes since we were over 55.  We used the cash from the sale of the Puget Sound house to pay cash for the apartment building.  Our building was fully rented (except for vacancies during rehab of individual units) so it was generating income and basically the building paid for its own repairs/upgrades.  My husband was retired an I continued to work a W-2 until this past year.  I love 15 year mortgages.  A 15 year mortgage was what enabled us to have a paid off house in the first place (Seattle) and eventually funded the apartment building.  The apartment building is now a sweet additional income stream for us.  

Why do you recommend QuickBooks? I am curious what your using this for? i thought this was for tax prep.. in the past ive just used a tax accountant. 

OuickBooks is accounting software.  You will need to keep books on your properties.  There is a learning curve to QBs, so it is best to learn it now, before you are up to your elbows in building rehab.  It is not hard, once you learn it.  You can set it up yourself.  Buy at least Quickbooks Pro.  You do not need to upgrade every year as long as you do not have employees and run payroll.  I send copies of my QB files to my CPA each year for my taxes.  You will want to keep excellent records of income and expenses -- especially in those early high expense years when you are rehabbing units.  Actually, I do the bookkeeping on our LLC, so it might be something you want to delegate to your wife if she has the inclination and temperament.

Since we purchased with cash, we were able to place our building directly into an LLC. Also, LLCs are cheap and easy to set up in our state. You will need to investigate the impact on financing if you go the LLC route. You should also investigate putting your RE into a self-directed IRA while you are young.

Yes, LL Association refers to the local Landlord Association.   If you are interested in multifamily, I am sure that the state you plan to settle in has an affiliate chapter of the National Apartment Association.  They have great trainings, although most of the attendees will be employees of mega apartment communities. Networking with these folks is a great way to learn what the big providers in your area are charging, and what they are charging for (extra for parking, storage, pet rent etc.)    A local LL association will be  valuable for your networking for finding properties and brokers who can help you find properties to buy.

Whoops!  Most of my reply to you is hidden in the quoted text above.  I bolded my responses!