All Forum Posts by: Michael J.

I agree with others, I would disable the central fans and furnace. You really don’t want it running at all any time a lot of work is being done that can kick up dust and dirt. Maybe it’s just me but I would expect the contractors to provide their own fuel for their own heaters. Unless the area is really really cold it’s not that hard to work indoors with a bullet heater running even part of the time.

Thanks for reminding us, can’t post about this topic too much. I can’t imagine losing your life savings to some pathetic criminal like this. I’m surprised to hear so much bad about Wells Fargo, I haven’t dealt with them much but always thought they were one of the better large banks but I guess not and I won’t willingly work with them in the future. What I don’t get is how is the FBA or CIA or someone not able to track them down. It’s not like opening a bank account for criminal scams is the same as opening a free gmail account.

This is a very generic rough answer but if you want $4k profit you need to hit at least ~$8k of rent coming in. If you have $660k and pay all cash for a SFH $50k and it rents for $850 a month. That would very roughly give you $400-$425 Of profit, if there is no mortgage, per house or about $5200 a month for 13 houses at $400 actual profit a month. Of course the area is important but there are plenty of decent cities in the USA you can get similar numbers. Having a GOOD PM lined up would be imperative. Numbers like this would most likely be marketing for deals and value adding. I don’t think you could get turn key properties with these numbers so it may violate the hands off rule but at least the potential is there with some of front work. Whatever you do don’t get caught with your capex pants down and think most of the rent is profit 😬

IMO I would not add solar panels to a rental. Every single amenity or add on in a rental is something that can potentially break and cause service calls.

Unless the area is super green friendly I don't think it would matter if I had solar panels. Another issue is if I were to add something to increase the rent I would want the extra rent to pay for the item in the first year or less and last time I looked into solar panels they are not worth the cost of electricity savings even on your primary residence because they are so expensive to install.

Also have to be in a area with a lot of sunshine regularly to work as well as it should.

I would rather focus on adding energy efficient appliances, HVAC, low water spouts, make sure they understand to keep the air filters replaced every month to lower their bill, LED bulbs with wording in the lease they are charged if the bulbs come up missing after they leave etc. Then advertise as a energy efficient home.

I would only make these upgrades if the price made sense and as the existing item broke, in other words I would not put a lot of money into upgrades like this from the get go replacing perfectly working items and only if the cost was comparable or I knew I could get x amount of extra rent to cover the cost over a year.

Its all about the numbers and they have to make sense over the long term or you go broke. Sinking thousands of extra dollars into a unit that doesn't return more than thousands of dollars to you or is not absolutely necessary will end up eating all your profits.

If you make an honest $200 of profit on a unit a month after all expenses (capex, repairs, maintenance, vacancies, PITI etc) all it takes is a $2400 unnecessary expense to wipe out an entire years worth of profit.

My lease states any fees or costs I incur that they owe are taken from their payment first and then the balance applied to rent, so they would basically end up owing me $50 in rent or what ever the late fee is. Then they would get a pay or quit notice if they don't pay the balance of rent owed. It would be due the day after the rent is late. State laws may vary.

Good point. I was referring to a monthly charge to allow pets. have to be careful though if they claim it is a comfort or medical pet, most states wont allow you to charge more for a pet in that case.

Hopefully the professional cleaner can deodorize it. I am sure they can if it is distinctly wet dog smell and not urine. We only use vinyl plank flooring like allure or something similar now whenever possible. Cleans up 100 times easier than carpet especially if you allow pets. Hopefully you also charged a pet fee. I know several people that charge $35 per pet. We do too.

Considering all fees interest etc. what is a reasonable rate for someone that has history with a lender? I should have clarified the 20% number was figuring the cost over a one year period and Maybe I am looking at this the wrong way. The pic is an example of common terms for hard money lenders in my area. The lending fee is $495, they charge 2 points and 10% interest on the money. They only require a 10% down payment on the purchase price and fund the rehab costs. The left shows the numbers for one property if you were to rehab and sell within 4 months. The right shows the same numbers based on rehabbing and selling 3 homes one right after the other. The total cost once its all said and done for the year is 17.6% unless I am calculating this the wrong way to determine the total % you are paying on the OPM over the course of a years worth of projects.

From most people I have talked to, and what I have read, most people that rehab for a living use OPM most of the time or a combination of the OPM and cash. I get the point of if you can invest your cash for a greater return then its cheaper to use OPM to rehab houses and obviously if you rehab more than you have cash to support OPM is the only way to go.

In my area using OPM usually ends up costing about 20% after figuring in the points, fees and interest which is pretty normal from what I can see, at least for those that dont have a good long term relationship with a lender that gives them better rates. So if I had cash to rehab a property and to keep it simple lets say I can turn it over three times a year one right after the other (every 4 months) and the total cost for points, fees, interest is 20% over the year then wouldn't I be better off using my own cash unless...

1. I have more deals than my cash can support
2. I can invest the cash somewhere else for more than a 20% return

If the cost of borrowing is higher than what I can make investing the cash then what is the main benefit of using OPM over cash?

Heard about this on the podcast and just wanted to post here (mainly to make me feel better) I would not continue doing business with this GC and/or the sub that did this. I can understand the GC may not be at fault depending on the situation but I would never again hire whoever the person was that decided to grab a quilt off of a chair to clean up any mess let alone a toilet mess.

Seriously, you have to be dumber than a sack of rocks to do something like this and I can only imagine working with whoever did this will produce noting but pain for you in the future.