All Forum Posts by: Steven Loveless

All response above are valid - I'll add my experience: I currently have two units. 

I spend on average, about 2 hours/mo. on bookkeeping, tracking expenses, running P&L's, etc. That is on my own time, whenever is necessary. I have trained my tenants to email me instead of calling. I answer about 2 emails a month, and I check in with them at least every 60 days if I don't hear from them. (I also have it in my lease that all repairs will be dealt with during business hours, if there is an emergency they need to call the fire dept. not me.)

I have had maybe 4 repair calls in the last year and a half. I take care of it when I have the free time, or I just call a plumber/electrician/etc. (That's what a PM will do, plus likely up-charge you.)

I do ~30 minute inspections each quarter on both houses, plus travel time of ~45 minutes = 45min/mo. average

Leasing each unit took about 12 hours total of my time - posting, phone screening, open house, signing leases, and dealing with HA's. Note that mine are S8 tenants, so if you are market rate your time could be much lower.

Okay, so let's do some math:

Let's say 3hrs/mo of bookkeeping, inspections, calls, emails, etc., and 12 hours every time I lease up.

My avg rental rate: $1700

10%*2*1700 = $340, @ ~3 hours of work = $113/hr

Leaseup fee $1700 / 12 hr = $142/hr

Granted, I do spend more time turning the property, checking on contractors, etc. But a PM would also charge me for that activity so I'll keep it separate from this discussion. I would guess the hourly rates are similar.

Now the question:

Do you want to pay yourself >$100/hr, learn the ins and outs of the management side of things, and take care of your own properties, or do you want to pay someone else to do that?

You left out an important point - how much you make right now (I'm not asking you to tell us, but it is relevant).

If you make ~$75k right now, that's a huge change in quality of life & free capital to invest.

If you make ~$300k right now, it might be better for you to spend the extra energy elsewhere.

Also - people often forget to realize that raises compound just like investments do. If you consistently get 5-7% pay raises, boosting your base by 20% today will mean you double your salary 3 years sooner than you would otherwise. Also that better "career path" you mentioned might bring some even better raises.

Agree with @Anna Buffkin 100% here. At least for MLS deals, your job is to do the market research to find what type of property you are looking for - then define that property type to your realtor. They send you everything that matches that property criteria, then you go find out if it matches your financial / value criteria.

Asking your realtor to send you everything below X% market value means they should go comp every house on the market for you, run the financials, and then prune that list to send to you. You are asking them to do your job - completely unrealistic.

I look for 3/4 br homes, 2000+ build, single story, in three different zips, for between $160-230k. My agent sends me those homes. I check condition, price, and expected rent. I narrow that list down, my realtor reviews, we go look at them, he submits offers. He works for his commission - and I enjoy the equity / cash flow gains.

I agree with pretty much everything @James C. said above. First of all is putting yourself on a good financial track. House hack if at all possible. Make sure you don't stretch yourself too thin. Get the mortgage in your own name for the better financing, worry about entities later when you are more sophisticated.

Above all else, educate yourself - you asked a few questions that indicate that you haven't really dug deep into details (no offense intended, just trying to be honest.)

As far as forms, etc. go, my advice would be to find a mentor that can help you with this. I did this by finding a friend-of-a-friend RE agent who was also an investor. I work exclusively with him on the acquisition side, help him with some of his properties, etc. In return, he helps me with the lease docs, screening, etc. and has been an invaluable resource. I provide value to him, he provides value to me, and it has actually turned into a pretty good friendship. 

Since you are already in development, I can almost guarantee you that you know someone who knows an excellent person to fill this role for you.

@Dennis L Lewis Jr I missed my opportunity to do it - and that is why I preach it so much now. I contemplated it 5-6 years ago, but couldn't get over the analysis paralysis and just take action. Instead we bought an emotional personal residence with the capital we had and went about our lives.

Now that I am in a different place in my career with young kids, I think I'd be divorced if I tried to do it right now. Now that I have some years on my personal residence, I realize the opportunity that I lost. I would have gained more than half a million in equity, and have several houses cash flowing like crazy right now had I just done it 6 years ago.

If you have a flexible home life, a small amount of capital to deploy, a decent job that is bankable for an FHA loan (3.5-5% down!!!), and the willingness to improve the property it is perfect for you. The risk is mitigated because you live there, so worst case scenario it just stays a personal residence. You get into a property for almost nothing vs the 20-25% down, with the best financing terms possible. You can repeat once a year, which is probably a good speed for a beginner. You build value-add equity. You can learn a little bit about everything - the purchase side, rehab, renting, and even sell it down the road if you want.

House hack. 100%. Buy a place that is livable but could use a little bit of work, live in it while you fix it up. Rent it out, repeat.

I've told several people they should do this while they can, and then they have blown it on trying to become a wholesaler or flipper and are done in 1 year with nothing to show for it.

If it's been that long I would be getting someone on the phone. Sorry - in my comment above I forgot to write "days", so about two weeks to schedule the inspection but only a week to have it actually done. So three weeks total. The inspectors I have dealt with for housing authorities seem to be the most competent of the bunch.

 Do you have the proposed tenant's case worker's name?

You need to be careful changing ownership of the property - make sure DHA knows that it's changing. You'll probably have to re-file your new deed with them. Good luck.

DHA is pretty bad to do business with - in my limited experience they are probably the worst about responsiveness.

It took them about two weeks to schedule my first inspection with them, then about another five to actually perform the inspection. The issue with mine was that I was a new landlord to them - so they had to process my "landlord info" before they would process the property portion of the RFTA.

Overall it was kind of a pain in the *** - but all S8 programs have some of that. The best route I found was I eventually got the direct email address of somebody in the landlord relations office, and she was the one to run things down for me.

Whatever you do - DO NOT rely on the main DHA call line to give you info, either talk to your tenant's case worker or someone in landlord relations directly.

One thing to keep an eye on in Midland/Odessa is current housing stock - especially the multifamily space. For those from the Midland area - you know that available land is not the limiting factor for new builds. 

Most of the housing stock in Midland/Odessa is built during booms. Then during a bust or slowdown there isn't as much activity. It would be reasonable to expect future returns to be dependent on the balance between the population and inventory. Keeping an eye on permits for new builds and inventory coming online would be a very good idea.

That's a pretty open ended question so I'll make two general points. If you have more specific questions ask those and you'll probably get better feedback.

• General advice: develop very rigorous criteria and stick to them 100%. You'll find lots of posts on here if you search "screening criteria"
• As far as a lease: Either hire a RE lawyer to draw one up for you, or try to use a template from your state's Real Estate Commission. Both will likely give you flexibility to add any addenda you want, while maintaining a baseline of protection and legality. Anything else is a dangerous game.