All Forum Posts by: Steve Rozenberg

Anyone know how to find data of how many non-owner occupied homes are in a city such as Houston and how many of those types of homes are owned by non-local owners?

I think one of the most important things you have to remember is that you are running a business. 

In any business in order for it to succeed you have to have a business plan , you have to policies and procedures not only in place but followed. 

So the question I think you want to ask yourself is do you have these in place are they being followed by both you and the tenants? if the answer is no then you may want to fix that before you hire someone without any clear direction.

Hi Dave

Kevin and I actually work together I did not realize that he had posted this thanks I appreciate it.

no need for double postings

How to look at your property like an investor is not always easy. You need to always treat your property like a business. I can say this because an investor myself who’s owned both Single and Multi-Family properties over the years I have probably made every mistake you can think of to make. If I can help other people not fall into the same pitfalls I did then this will be well worth my time to write.

First thing is to never let your emotions dictate the deal. Don’t fall in love with the house or the investment. The numbers will make it a good deal and dictate whether it’s something you do or don’t want to buy depending on what your business model is. Sometimes investors will want to buy a house on the same street that they live on thinking the proximity will allow them to keep a close eye on it. So very wrong, go where go the deal is not where you wish it to be.

Smart investors will have a team that they can use to help them make smart decisions. I always find it interesting that when an investor is looking for a home they will use a professional like a real estate agent to help locate it, For money they use a bank or hard money lender and for closing they use a title company. But when it comes to actually running the property to get the financial return back out of it. This is the point that they feel they should do on their own. Most of the time without any formal education or training on laws or regulations. I know because I was one of those people at first. I did not understand the power of having a team and utilizing leverage. Leverage that team so you can buy properties in another parts of town, where the best deal is. Don’t buy an investment property only to have a second job. That’s not investing, it’s a surefire way to failure. Just remember the real estate investor is the highest sued in the industry.

Whether you have one property or 50 properties, you own a business. Treat it that way. Be professional, and always write and follow strict policies and procedures. If you don’t have a business plan in place, create one or partner with a property management company team that can help you be successful with your property. You need a plan for where you want to go and how you want to get there. 

My business partner and I have tried all the different ways, I think at the end of the day the one thing that I have found and realized is you have to deliver a clean and nice product for people to want to buy it if you deliver something that is crappy that's the type of person and the quality of tenant you're likely to attract. If we show a property that looks like crap what kind of tenant is going to want to live in there? We now only show our properties when they're completely ready and we found that are vacancy time is a lot less because of that and we get better quality tenants now

How much should you spend on a make ready. Most owners, myself included would like to have a good ball park number, depending on the property I am buying or turning over after a move out. Everybody has different opinions or thoughts of what they should do in a make ready.

My thoughts are first of all it is a business and I am not living in the property, so I have to make sure that however much I am going to be putting in the property, I am going to receive the same in return if not more. If you are going to put $10, $20 or $40,000 into a property are I am going to want get that much money back out of it. It’s all based on making the property clean, making the property functional, and making the property fit the area.

I want to make sure that the house I am buying is going to fit with the rest of the neighborhood. I personally don’t want the ugliest house on the street and I don’t want the most updated on the street, because that will not fit and if I should ever want to sell the property that could come back to affect me

First thing to always do is all the trash should be removed from the front yard, backyard, and inside of the house. There should be no trash at the curb. Second thing is you want to make sure is if the house needs any type of paint. It’s very hard to match paint, you’re better off just repainting houses. I’ve found that the paint and the carpet are the best things that sell. If you don’t think you could clean the carpet, you’re probably better off just replacing the carpet. Those two things are huge motivators when people are looking at properties.

Last thing I would say is make sure the house is very clean. People do not like to see dirt in the house when they are imagining their stuff in it. If you follow those rules and you make sure that it’s painted or the paint looks good, make sure the carpet is clean or replaced, never show up with dirty carpets, and fix the landscaping in the front so when they do come up to the property it looks very inviting, it will go a long way.

When I am getting bids from vendors to do jobs, I get at least a minimum of three bids to make sure that I am getting competitive pricing. I make sure that if I am going to do future work with them I let them know. I have gone through several vendors, but the true partner will shine and you will know when you have found a reliable vendor.

I make sure that whoever I am using I alway get their license and insurance information. The last thing I want is to get the cheapest bidder only to find out that they don’t have insurance. Then one of their guys slips and falls in my house and now the guy’s family cannot eat because he is not working, that will come back to on me overtime. I have learned that cheaper is not always better, spend a little bit extra money in getting the professionals ,it’s not worth the liability. Always remember, it is a business and with a business you have certain expenses, this is just one of those expenses.

So, if you follow these rules, you will probably be able to look at it objectively and look at it as a business. This is the way we try to have our clients think when they are looking at properties. 

Not sure in other states, but I do know in Texas which is a very pro-landlord state. We own our own portfolio of homes as well as manage about 400 homes and have been advised by not only our real estate attorney but a judge that unless you have complete and certain proof that they have "Abandoned" (Key word) the property you do not have a right to be in the premises. 

They call it the Rolex rule, unless you legally get possession of the premises back with a constable clearing the house and declaring that there is nothing of value in the property we have been advised not to go in. If we do and the tenant comes back and says not only was he not fully out but he had jewelry in the property and now its gone, we are liable and on the hook for it. And possibly be in court defending ourselves with a smart and savvy tenant. Our golden rule is that no matter if we think or don't think the tenant has vacated and abandoned the premises, unless they come into the office and we have a notarized document stating they have left we go thru the eviction and writ of possession. We do this on our own personal properties as well as ones that we manage.

If you do plan to go in, I would do as others stated and take as many pictures and full video of the home, I would also make sure to take pictures of the power being off (A red Tag) and the water or gas being off as well. Just a CYA to build your case a much as possible incase your ever called on the carpet to explain.

Not sure how comfortable you are investing out of your area, but I am out in Houston Tx and this area is really doing well. I am from Southern California and moved here in 2001, I have never seen a place that has such a cashflow opportunity as well as quite a bit of appreciation. The average house price is $229,000 and 64% of Houston rents, the average rental here is about $90,000 - $145,000 with rent ranges from $1000-$1700 per month. They are about 10 years behind in construction so they are not planning to stop building anytime soon. I see and meet investors from all over the US and other parts of the world buying here in Houston. Again just another avenue to look at if you are trying to get better returns and more properties for your money.

from now on all the properties that I personally own and all the properties that we manage over 400 of them. whenever the property is vacant the power goes on immediately following a tenant moving out .We have been told that they actually look for the red tags on the meters that's how they know there's no power to the unit and safe for them to do what they want.

Low-Income/High Cash-Flow properties.

I have experienced owning many low income properties over the years. I have come to learn is that it’s not that they are good; it’s not that they are bad, it’s just different. When purchasing these types of properties make sure that you know what you are buying and the type of business model that you are buying into. What I have found is that people like the low-income/high cash-flow properties, because on paper, it appears that you are going to get great cash flow or a great cash return, and like I experienced first hand that is not always the case.

A lot of the lower income properties tend to have tenants who live a month-to-month lifestyle. Meaning, the eviction rate is normally going to be higher and you are going to have more issues with these tenants as opposed to higher income properties. Statistcally you will do more evictions in the lower income properties. Again, it’s just a different business model.

The majority of these houses are going to be older homes, so plan more maintenance issues/costs and probably more call outs with the tenants. Something we have seen is the tenants are normally a little bit harder on the properties. Plan to have a larger make ready or even a rehab many times. Even if they have been in the house for 9 months, 12 months or 18 months, there is probably going to be more damage than you may think as opposed to higher-end properties.

When many of my tenants vacated my lower income properties, they would tend to take parting gifts like electrical wiring, appliances and air conditioning units. We tried everyway to secure them but it’s just something we have never been able to successfully do. Also, when the property is vacant, you are going to have more of a chance of vandalism.

They do look good on paper, which is why everybody looks at them and they think it’s a great return. It’s just different and we see it’s not always as advertised. So, if you are going to buy low-income properties just make sure that you know what business you’re getting into. Make sure that you do have higher contingency funds for things like maintenance, higher tenant turnover and be ready to work more deals to keep the tenant in. We found that by doing that and being more prepared, you are going to be a lot better off. And, if it still looks good on paper with the higher reserves and the higher numbers, then I would say go ahead and continue with the process, but make sure you are going into it knowing what business you are getting into and what that business model entails.