All Forum Posts by: Shaun Palmer

Michael S. Thanks Michael. All great suggestions

Hey BPer's I am just getting going with rentals and I am curious what everyone does to "tenant proof" their rentals? I am in a blue collar, decent neighborhood (B class) if that helps. Thanks in advance

Joshua Dorkin Josh, I am currently getting started with my first buy and hold property and here is what I am systematically doing in order to get off the ground. I am posing this information as questions under the headings as well as my thought process so you can understand the process that I went through. The info is very brief and certainly had a lot of thought put into it but I wanted to keep it as short as possible for the purposes of this reply. I am a very process oriented person so I wanted to answer as many things a so could prior to that first prospective tenant calling me. I have learned so much from BP and I want to pay it forward as best I can. Most of what I have learned is from BP and reading books on my own so thank you for the site and just know how much it has helped. So here goes: All of the following assumes that I have met my goals for the deal (COCR, financing, etc...) and I am moving forward with finding a tenant. If you would like me to go into identifying goals and specific property targets as well, I would be happy to do so because it is a very important part of the process as a first step. If you haven't identified where you want to go, it is difficult to see the forest through the trees. (1) Advertising - How do I advertise and where? What is most effective? What do I use (software, Craigslist, etc...). Who is my audience and where would I go to find a rental if I was them? - I have decided to use Zillow Rent Manager, Craigslist and Cozy as I feel they provide the best combination for visibility to my listing from the demographic I am targeting. (2) Property Mgmt. - Will I manage or not? - I have decided to self manage at first to get going so I moved to step 3. Otherwise I would have been talking with PM companies as a next step. - I think this is a vital part of my growth as an investor so I am forecasting my returns based upon using PM but will self manage at first so I can understand the process and the finer details of what goes into PM. (3) Prescreening - Now that I have my property advertised and I have people calling, what next? How do I handle the calls? What is ok to ask legally? What is the purpose of this call? What do I want to hear and what do I not want to hear (this helped me create my list of questions to ask). What identifies a prospective tenant to move to the next step in the process? - I have decided to place most of my prescreening metrics directly into my listing so I can eliminate tenants that do not meet my criteria. I think this will help with the screening of my tenants since I am new to this. - I created a prescreening form along with questions that I can ask each prospective tenant so I am not caught off guard when they call. I keep this handy in One Note so I always have access to the questions. (4) Onsite Interview - How does this get handled? What questions do I ask? Again, what do I want to see and what do I not want to see/hear? What are the appropriate questions to ask during this meeting? What determines if we move forward with the application? - I feel that this is the tenants meeting as much as mine. This will determine if we move forward on both sides. Body language, appearance, and organization are all things that I will be paying attention to as we are meeting. (5) Rental Application: - Do I use software or do I create my own application? What questions are ok to ask? How do I run a background and criminal check? Who pays for it? What is my criteria for accepting an applicant? Denial Letter: How do I send this and what do I say as the reason? - These are all questions that I had to answer for myself. - I have a detailed answer to each of these questions. I have also created another set of questions for the references the tenant lists as well as the employer they list. - I ended up creating my own rental application for use based upon best bets from all of my learnings. - I will be using software to run criminal and background checks that the tenant will pay for when they complete the app. (6) Lease - Where do I get this for my state?Should I pay an attorney to draft this or are there other ways to get a lease? Can I take something from BP and will it be current? What is legal and what is not? Where are the statutes for my state? Security Deposit laws? Pet fee laws? Where do I get addendums if needed? What are possible addendums? - I decided that I really need to know the laws before I start this venture. I continue to study all of the statutes in my area which I recommend for any new investor. (7) Rent Collection - How should I collect this (mail, software, other?). Are there fees if I use software? Who pays those fees? How do they affect my ROI? Are the fees legal in my state? These are all items that I wanted answers to before that first tenant called. I think that I have done a fairly good job so far and hopefully will eliminate some bumps in the road later on. Time will tell I guess! Anyhow, I hope this helps and sorry it is a bit messy, I typed all of this from my phone. Feel free to let me know if you would like me to elaborate on goal setting or any of the other items that I mentioned. - Shaun

Elliot Salman Welcome Elliot

@Mayank S.

Very helpful information. Thanks for sending this over. It sounds like I might need to use a HELOC in combination with REFI as a strategy.

Hey BPer's

I am working on my strategy for scaling and I am just curious.  If I am making an all cash purchase on a property and want to REFI my way out of it in a short period of time, I am wondering what is the typical timing the bank would want to see? 

For example:

• Purchase: $10-30k
• Initial Improvements: $10k
• ARV = $50k
• Lease is fulfilled (i.e. tenant is in the property)
• Appropriate length of Time before approaching the bank to REFI = ?

I am not sure if there is a specific length of time that the banks like to see or not.  Any advice would be greatly appreciated.  

Another question would be, is there any concerns on the amount of the principal? Let's assume that I would get REFI at 70% ARV = $35k. Would I have to use a HELOC instead?

Thanks

~ Shaun

Diane Kruse I would be very cautious in giving a 50% deposit before they even start. Just my two sense worth. If it helps to justify this argument, as a good rule of thumb typically the materials only cost about a third of the job costs and the rest is approximately two thirds labor. Therefore, if you were giving him 50% he is actually getting more than the material cost is upfront.

@Diane Kruse@Mat Zalk

I have been working in the industry for many years as a contractor and as an owner's representative. I can tell you that the devil is in the details. I have seen many contractors and owners getting into disputes because small items were missed. I think that @Mike Frost had some good points for a high level review of contracts but remember that it is your investment...not the contractors. Be precise on what you want.

I can tell you from experience that the more time you spend on design, the more influence you will have on construction costs (especially change orders) and the less time you will spend on construction.  

My advice is as follows:

• Scope of work
  • Identify areas where you think particular detail need to be focused on.  
  • Perform a walk thru with you contractor and be precise (don't just say I want carpet in this room).  Say you want XX# pad with a renters grade carpet with an all in material costs of $XXX.
• Discuss where you want to be on price up front and ask the contractor for options.  Get them involved on how to be more competitive on pricing.  They will be able to help you.
• Final walk thru 
  • Discuss what your expectations are for the outcome.  What do you want it to look like when you are complete with the project.  Don't just assume that they are giving you a perfect product in the end and never say "this is only a rental." If you say this (which I have heard other investors say), you have set the expectation that it is of low quality and this is the type of construction methods you will receive from your contractor.
• Change Orders
  • Here is the big one. 
  • Identify any area where you think could be a potential problem. ASK your contractor there opinions of where there might be some unknowns in the project.  
  • Discuss the process for handling these changes.
    • Discuss the approval process
    • Ask your contractor for alternative options.
    • Discuss how the contract is to be amended and when he is ok to proceed with the fix. 
    • What paperwork is needed (a verbal is not enough)
• Schedule
  • Nobody ever asks for a detailed schedule. They only ask for the price and the contractor says "it will take a few weeks".  
  • If you ask for a detailed schedule with the bid, daily schedule or at a minimum weekly depending on the size of the project, then you can review this with the bid numbers as well since it is just as important.  This will create accountability on everyone's part. How you handle tardiness is your decision.
  • Remember the sooner you get it rented, the sooner you have income coming in the door.  

I hope this helps

Anyone make any suggestions for RELIABLE contractors in Southern Raleigh NC? I am looking for someone I can call on to handle a tenant request with customer service and quality at the top of the list. HVAC - ? Handyman - ? Plumber - ? General - ? Thanks in advance Shaun

Wish I could bake this one but I cannot unfortunately