All Forum Posts by: Ryan Fox

@Edwin Wong- Did the neighbor cite a specific building code or did they just say it didn't meet the building code?  Did they provide you the results of the sound test in writing?

I'm able to take a significant number of passive losses on my rental properties.  However, I don't qualify as a Real Estate Professional.  Are there any investments I can make that can take advantage of these losses now?  

@Daniel Shafer- I bought my first rental properties from GC Realty back in 2017.  Wow, that was a really good decision.  Top notch property management.  I've requested inspections of the properties from time to time and I'm amazed how well they've held up.  If I ever have a question, I get an answer within 24 hours.  And it's not a BS answer like, "We''ll look into it," but actually a substantive answer that addresses the issue.  

What's perhaps most impressive about GC is their monthly statements are always accurate.  I've worked with many PM's in other markets and there are several who just can't seem to get that right.  

You were asking about the accuracy of their pro-formas.  Yes, their pro-formas, as I recall, are pretty accurate.  If you have a question on your pro forma, feel free to shoot it to me.  I think the properties I bought are pretty close to the one you're considering.  

Diversification is important.  Not to toot my own horn, but the income I've made from trading stock options has gone up significantly since the stock market started to fall this year.  I'm now using the income from that to fund renovations on my properties, instead of using debt.  

@Scott Mac- That's an interesting idea, but another story I was told about the property is the homeless were getting in there.  The door opens straight to outside.  There's only one door.  I'm afraid folks will break in. 

Thank you @Greg Scott!

I recently purchased a 5-unit apartment complex.  It has a laundry room that hasn't been used and none of the units have washer / dryer hookups.  After closing on it, my property manager discovered through interviewing tenants that the reason the laundry room has been closed is one of the tenants would go in there, hang out and do hardcore drugs.  These tenants have a lease that goes through June of 2023.  So far, my PM has not been able to observe any direct evidence of these tenants using or selling drugs, so we can't evict at this point.  

My question is whether to attempt to re-open the laundry room or hold off until we can get those tenants out.  Two of the units are currently vacant and we want to be able to bring in high-caliber tenants who will appreciate laundry facilities.  However, at the same time, we don't want the drug-using tenants to go in there and possibly vandalize equipment or make the laundry room a place where other tenants would prefer not to enter.  

The property is in a C-class area, so we kind of have to try hard to attract high-quality tenants.  Most neighboring properties offer laundry facilities.  The vacant units will be fully rehabbed before being leased, and we'll use stringent tenant selection criteria, but I'm not sure that will do the trick.  There are other laundromats a couple blocks away.  

My goal is to hold onto the property for a long time and benefit from increasing rents.

I wanted to update this thread to explain how things turned out.  

Let me start at the beginning.  I bought the property in October of 2020 for $109k.  I financed it with no money down using my securities-backed line of credit.  Since this was during COVID, I was able to lock in a seven-year fixed interest rate at 2.48%, interest only.  The monthly interest payment is $220.  

The tenant in place at the time rarely paid her rent of $900 / mo and was destroying the property.  

When the drunk driver drove into the property in Sept. 2021, the tenant moved out.  Someone stole all of the electrical wiring and plumbing in the property and I'm strongly suspicious it was her.  I know for a fact that she stole the refrigerator.  

Anyways, it cost about $107k to rehab and pay the carrying costs of the property.  I received a little bit more than that from the insurance, after paying my public adjuster.  It was a great suggestion that I hire a public adjuster.  I was pretty lucky to pick a good contractor who did a really good job, unsupervised while I live in Nevada and the property is in Missouri.  They even put in some upgrades that were within the budget.  

The property took about six months to renovate and I now have a reliable tenant in there.  The rent is $325 / mo higher than it was before.  Property is now worth about $150k-155k.  

Major lessons learned:

1) Sometimes the biggest disasters lead to the biggest upside.  

2) I filed two insurance claims here - one for the property damage and one for the theft of electrical & plumbing.  I probably should not have filed the theft claim.  Filing too many claims leads to your insurance rates going up overall.  Now, I'm seeing the premiums going up on most of my rentals.  The theft claim was only worth $9,500 and that's an amount I could have paid out of pocket and still made good returns on this investment.  

3) I spent a good amount of time dealing with the contractor handling issues that came up.  On my rehabs out-of-state, I usually have an independent project manager handling these issues.  I should have done that here.  It is not my strength to make good design choices and it was difficult to make decisions on design choices.  Also hard to keep track of the progress of a project from out of state.  

I can't say that being an attorney has especially helped me with real estate investing.  If anything, I have this voice in the back of my head constantly asking, "is this legal?"  If you've already gotten through the first year of law school, you've probably already developed most of the skills you would need to deal with any legal issues that come up while real estate investing, anyways.  For example, you know how to analyze a contract, know how a lawsuit is started, ect.  

Personally, I just like the work of being an attorney.  I'm an analytical, detail-oriented geek.  If I had to do real estate investing full-time, it would probably drive me nuts.  

You should have the right to communicate directly with your attorney if you want to.