All Forum Posts by: Stan C.

Congratulations on your first property! And welcome (virtually) to NC. I'm a proud owner of a (somewhat) similarly situated duplex in Raleigh so here's my two cents on miscellaneous matters.

1) What exactly does "completely rehabbed" mean to you? From your basic description, I can imagine a ton of small things you could do to add value in the tenant's eyes and increase your cash flow, but I won't waste time telling you to do what's already been done.

2) Pros of renting to service members...As others have said I wouldn't expect any more than the usual wear and tear for a 20 or 30-something tenant (probably less). You may be able to minimize your vacancy time if you include more amenities or if you're willing to consider shorter term leases (possibly for a higher price). Looking up the current BAH rates for your area takes a lot of guesswork out of pricing for your market. And once you have tenants, their individual BAH rate is basically guaranteed rent money.

Honestly, my main concern about renting by a military base would be that most 18-30 year old (mostly single) people with little credit/rental history aren't exactly whizzes with personal finance.

That said, my day job is in multifamily leasing & we have our ways of attracting lots of no credit, first-time renters who become model tenants. I can usually get the tenant to apply with a high-credit cosigner by offering a very low security deposit. At my first leasing office, it was $200 deposit with a co-signer vs. $200 + 1 month's rent without. 

3) The main downside = SCRA. Hundreds of pages of federal legislation that protect service members & their dependents from having their property seized while they're deployed, on leave, etc. So it's all but impossible to formally evict a tenant who is deployed, and it could be very difficult - but not impossible - to enforce lease break fees, etc. 

NC is not a very landlord-friendly state, and you definitely don't want to go anywhere NEAR violating that particular law. Or any federal law for that matter. Get an appointment with a local landlord/tenant attorney ASAP to cover your bases. Even if you never rent to a service member, a good legal education will save you from a ton of headaches. Basic FHA, FCRA, accounting/banking requirements, eviction processes, etc.

I assume you own this property in your individual name - if you employ a property manager and they make a big enough mistake, you could get sued personally for the full amount of damages (and ignorance of the law is NOT an excuse here - I've seen that one play out). 

As everyone else has said, good PMs are pretty rare in the wild, and you have a long learning curve ahead of you. So take this time now to read up on how they're supposed to do their job, just in case you need to find a replacement :)

@Edward B., you are correct, insurance is very high in the area.

@Stan C., re CAPEX: I try to carry a $5000 reserve on every door to account for the major issues: roof, HVAC, major appliance, etc. That number can decrease as you spread your risk out across several properties.

As for vacancies, I think you'll be able to get tenants in should you lose one but I would budget two-weeks between occupants for turn-over. I don't know how often you'll be turning over tenants at that property.

@Stan, no, it definitely doesn't apply to all crowdfunding platforms. Just like there are good and bad advisors and mentors, and good and bad real estate brokers, there are good and bad crowdfunding platforms. A good platform should be transparent, should have maximum protections for investors,keep you informed of the risks, and also keep you informed if something goes wrong.

Also, it's not true that crowdfunding investments don't offer appreciation. Basically anything you can invest in on your own, you can do through syndication/crowdfunding. So while you might choose to invest in debt, which has no appreciation, or you can also choose to invest in equity which does.

On one hand it sounds to me like you are staying that to tolerate any loss of your money. There is no such thing as an investment that does not have risk. So if that's what you're looking for, you really should put your money in the bank (and even then, there is a small risk that perhaps there might be a run on the bank or it might collapse...but at least your risk is minimized). But what I'm trying to say is that if you cannot tolerate any risk on your investment, you should not be putting into real estate, stock market, or anything else.

However, on the other hand, you seem to be having an issue with the fact that $20,000 invested well not generate $500 a month for you for your living expenses.  If you calculate what your expectations are, you are expecting a 30% return on your money every year. There is no way that you are going to get that kind of return in any asset class whatsoever, without taking tremendous risk. 

@Stan C., I think you quoted one of my articles. Just so you know that since then, Rich Uncles went under investigation by the SEC for something regarding how they market their securities. They have stopped answering my questions about anything, so I personally am not satisfied at all with their transparency, and would not personally invest in them.

Also, there are now about 10 or 11 new and different options for nonaccredited investors like yourself, that range from investing in debt to equity, from residential to commercial, etc. So you can diversify to protect your portfolio better. If you'd like any additional information, feel free to ask or PM me.