All Forum Posts by: Ron T.

I agree with some of the others in this thread and it is one of my pet peeves in REI. If you have a deal, and I mean a true deal not a transaction, if you have a deal they will come.

I'm not sure anyone here remembers the late comedian Jerry Clower. He had a stand up bit called "Wanna Buy a Possum" I encourage everyone to look it up and listen for the 2 minutes it takes. It reminds me greatly of many new "wholesalers"

I hope it is ok to link this: https://www.youtube.com/watch?v=H0BMQCi7xX4

It sounded ridiculous when I heard it 25 years ago yet people seem to operate this way and think its normal.

Here is the secret sauce that none of the gurus will tell you.

They advice to build your buyers list first for 2 reasons:

1- There are more buyers than there are deals. It is easy and they can string you along to get you to keep paying so long as you are having "success" nevermind that said success doesnt make you any money.

2 - Getting a name on a buyers list doesnt require any commitment and it doesnt cost anything so anyone can do it. Though it proves nothing.

There are probably 25 "wholesalers" who have me on their "list". Of those 25 there are 4 that whenever the email comes in I open it, right then, no matter what I'm doing. The balance, I will check it when I get in the office and have some time and almost assuredly delete it because its either retail priced or I've previously passed on the deal before.

One final thought. I am probably an anomoly, but whenever I get sucked in by a ghost ad on C-list, and it happens quite a bit lately and I get the inevitable "its under contract" already BS.  I have the following reply bookmarked and it gets sent.

"Thank-you for the prompt response and letting me know that the property was under contract. Like all investors time is my number one most valuable resource. Lately I have been inundated with leads that I was just beaten out on. I have learned that a national "expert trainer" is advising new real estate investors to create bogus ads on free websites to help them learn who the real buyers are. I find this practice deplorable and can not understand the mind set that would initiate a business relationship based upon deceit. To ensure that I am dealing with a real deal finder I would like to request that you send me the address of the subject property so that I can verify that it is a real transaction. I understand deal security and confidentiality so I will be glad to wait until such time as the closing has passed, however no more than 60 days should be needed since your ad stated this was an urgent quick sale situation. If I do not hear back from you in this time period I will block all future communications from this address and advise my colleagues to do the same. Thanks for you time and feel free to respond by email or phone if you would like to discuss. I can be reach at (xxx)xxx-xxxx."

This may sound harsh, but its lead to some interesting conversations and actually helped me form one partnership with someone who admitted they were new and doing just that. The honesty displayed in the response email sparked a business relationship that borders on mentorship and has been symbiotic for both.

Welcome to BP, Veronica!

Being a lifelong SC resident your post reads a bit like a riddle to me. You are a med student in the upstate starting residency, next year. I thought MUSC (Columbia and Charleston) were the only two MD schools in the state. Shows what I know!

My sister is a doc and a Wofford -> MUSC alum. I was the dummy in the family and went to Clemson for engineering. 

One key piece of info, your taxes will roughly double when your home is no longer your primary residence. Make sure to account for that in your calculations.  $500/month more than mortgage would scare me unless thats a 15 year mortgage or a sub $500/month payment. But everyone's tolerances are different!

Good luck on your career and investment path! I live in York county but hold rentals in Spartanburg and Greenville counties as well. Be glad to offer any advice I can.

Greetings from another, Tiger!

Great community here.

I Love CO. However I wish you were local, I'd be glad to work together and I think our skill set would compliment each other well. Ive actually been looking for a partner or employee with either a marketing or computer background to help on the acquisition side.

yes...always

Different strokes for different folks.

@Mike F I find your tone almost insulting in this thread. Just because you do it one way and it works doesnt mean its the best or only way to operate.

I give a small welcome basket. Cost me less than $10. I also send $25 Visa gift cards to my tenants on their birthday and Christmas. 

Why?

Two reasons:

1- Good Southern Hospitality. It is very much appreciated down here.

2- I dont rent to slobs. I dont rent to entitled a**holes. My screening is good enough that I truly feel like I get the best 1% of all tenants for their respective rent level in every one of my units. I currently have 18 doors. Average tenant length is currently 74 months. It goes up every month we dont add a property as we havent turned a unit in 18 months and Ive never had an eviction. My average vacancy to date however is 3.7 months. I take time to find the best. When I find the best I try to WOW them and retain them. 

My way works for me. Your way works for you. Neither of us are wrong.

@Logan Hassinger

I understand you line of reasoning, but also remember Murphy's law. This is a real example that got me very early in my investing career. Small SFH in Rural SC and one December we got 4" of snow. Unheard of for the area. The roof was 14 years old and in good shape, but aging. A 4" snow accumulation revealed several small leaks that had been present and missed prior and weak boards. Then with the combined heat running unusually hard for 5 straight days the heat pump took a dump.

Until this point I used similar numbers to you (I actually only kept $4,500 in reserves for repairs at the time). Over night I had a $3,500 roofing bill and a matching $3,000 HVAC bill. If I did not have the cash in my personal savings  I would have bee in a bind, with a tenant in place who expected these to be repaired immediately. And if I couldn't have repaired them I could have been on the hook for alternative lodging costs to boot. 

As my business has grown some I now keep larger liquid reserves and I use that hold back account as a fund for new property acquisition.  My current floor on that account is nearly 10 multiples of what it used to be, but I have many more doors building it quickly. When it hits the magic number I allow it to grow unimpeded. And when it reaches the level to fund a new property (after the increased cushion the new property will dictate) I pull it and purchase.

At times I get frustrated because it doesnt allow my portfiolio grow as quick as I would like, but my style is essentially fool proof. I have rent reserves, minimal debt and repair reserves. I could lose my job tomorrow and have every tenant move out the same day and every unit need double normal rehab cost and I could repair them and service my business debt for 6 months without a penny of income. That is my standard. Same with my personal income. 

There isnt a "right" or "wrong" answer here, per se. There is a risky approach that may or may not work and there is safe approach that will not fail. Which path you choose is a matter of personal taste.

You have several heavy weights in this thread giving much better advice than I could probably ever hope to.

However I have a very simplistic mindset and sometimes look at things different and maybe my thoughts will strike a chord.

- Always plan for the S*** Hits the fan scenario

- What happens if the owner dies? If they are married and get divorced? What happens if you or your spouse die mid flip? What happens if the house burns down mid flip? 

All of these things can and do happen everyday to someone somewhere. I am sure they are your bestest friends ever and the best human beings on earth. Doesn't matter what if something happens beyond their control?

The only way I would do the deal with them maintaining ownership is I would secure a second lien position equal to the amount of your intended eventual profit before I spent a penny on the house. This protects you as well as reasonably possible. If it burns, you get insurance payout over and above 1st lien. If they try to shaft you, you get made whole whenever they sell, etc.

If I am not mistaken this property is in Blacksburg, SC. 

Not NC.

At least if it is not, there is an identical in Blacksburg that has been "available"for ~2 years now.

Started out asking $249k

The seller will take $99k and it still isnt a deal at that price. Ive offered $70k cash and that is very lean to me on return.

$5k/per wont get you close. 2 of the homes are pull out and replace specials.

These are park owned homes and you can get 450-500/month each once renovated.

Maybe 550. 

But the area is economically in shambles(even in the shadows of Charlotte) . No industry left to speak of. You tenants are commuters to Gaffney, SC or Gaston County NC. Which means , by default its an odd pool to pull from.

That's in my back yard, and I own 2 other (small) MH parks and I wont buy it at $99k. Take that for what its worth regarding valuation.

Hi all. This is my first time starting a discussion on BP after lurking for a while and listening to the podcasts for a couple years.

Recently I have seen numerous posts, most recently by @Alex_Franks regarding the major disadvantage to investing in buy and hold properties in SC, specifically as it compares to our neighbor to the north NC.

Since I live in York County and have invested in both regions for the last 8 years or so I am confused and hoping the collective knowledge can educate me.

Now to start with I am well aware, and anyone investing in SC should be as well, that non owner occupied properties are assessed at 6% vs owner occupied properties being assessed at 4%. However this assessment is only 1/3 of the tax picture AS I SEE IT, and since several folks much more intelligent than I disagree I am hoping to learn what I am missing.

From my understanding taxes are calculated as follows:

Fair Market Value x Assessment ratio = Assessed value

Assessed value  x millage rate = tax burden

We have covered the assessment ration above (4% for O/O; 6% for investment)

But I think the other 2 factors offset this. Millage rates get very specific and school district, water district, etc can all play a small part in your tax bill. Also if a given address adds value to your property it will also increase your tax liability as well.

I think people see the 6% assessment ratio for SC and see that it is 50% more than primary residence and assume SC is a bad state to invest in because of the "high tax rate". What I think is missed is that the primary resident rate is the 3rd lowest property tax rate in the country. 

To reduce all this down to a meaningful and comparable discussion we need to look at cumulative effective tax rates.

Using the data from smart asset it looks like the border counties in NC have an effective tax rate of:

Gaston - 1.05%

Mecklenburg - 1.13%

Union - .82%

Compared to SC (PR/OO rates)

York - .632

Lancaster - .508

Chester .662

Now these rates are for the lower 4% Primary residence rate which has to be adjusted up 50% to account for the 4%-6% difference mentioned above so the effective tax rate for investors is:

York - .948

Lancaster - .762

Chester .695

All still lower than heir closest NC counterpart. 

After seeing this "SC sucks for rentals because of tax rates" argument a few times I thought "I am a huge dumb-butt I guess I never considered this" But it didn't pass the smell test for me. 

Real world examples:

I own the exact same house, built by the same builder in fort mill sc as well as in Charlotte, NC (28273).

I paid new

Ft Mill - $109,900

Charlotte - $149,900

(yeah I am dating myself a bit here...and buying new and retail for a rental wasnt the ideal strategy but I have learned and it worked)

Most recent assessment:

FT Mill -$192,000

Charlotte - $199,000

So we have a pretty close number to compare to here

Tax bills last year:

Ft Mill - 2,011.62

Charlotte - $2,398.00

I spent a couple hours this week running down the docs and comparing back several years and I must be missing something but frankly I am out of brainpower. I am an electrical engineer not an accountant by day and degree but I want to get smarter at this real estate business and increase my portfolio from its current 18 units to 45-50 in the next 3 years. So I need to learn

Can anyone help?

+1 on seeing the bill.

You mention it being a new tenant. Is it possible the utility company is charging a deposit?

Or even if she paid last month she may have paid late and that payment isn't showing on the statement.