All Forum Posts by: Susan Gillespie

Congrats Tara. It's always nice to be able to choose between two opportunities.

Three years ago, cherry picking was a top strategy for us in several neighborhoods. Now we're at a 2.7 month's supply of homes for sale in Minneapolis-St. Paul and the pickins are slim.

Good luck with next steps in the process.

Whatever you decide, make sure you put it in writing and you both sign.

Is the firewood really a bother? Can you consider storage as a small, supplemental revenue stream? I would propose a daily or weekly storage fee, as others have said, with a firm end date. I would also include language that says if it's not removed by date, the cost to remove for him is $xxx.

I'd be more concerned about the boat. That's a big eyesore and hassle and expense to remove. And where would you move it to?

I agree that you should withhold a portion of the security deposit until he's fully moved.

Can I sort keyword alerts? Is there any logic behind the order?

It reads like a random list of by dates and keywords. I'd like to see topics together. Maybe I'm missing something?

Hi Tara, what is the condition of the duplexes? Are they currently rented, or vacant and need repair? What is the housing quality and price trend in the neighborhood? Have you included all expenses? Do you have time, experience and/or a property manager for taking on four units?

My thoughts:

-Is one duplex better? Cherry pick the best one if you're more comfortable with costs. Partners can be a lot of work and it takes time to find the right partner and type of agreement.

-I wouldn't borrow IRA money for real estate due to penalty potential. Or would you live in the duplex to take a penalty free withdrawal?

-I don't have detail on expenses in your analysis, or know age, condition or deferred maintenance issues, but I look for net cash flow of at least $300/month. You're just under, but maybe you see something else compelling in the deal?

I rely on cash flow projections and internal rate of return for my buy and hold decisions. Good luck with yours. Let us know how it goes.

Hi Sam, I've never had a same day move-out/move-in (potentially stressful?), but have had next day move ins. It's great because I don't lose rent and don't have to deal with switching utilities.

If you have a good relationship with your current renter, it really helps with the showings and transition. Try to start advertising 45-60 days in advance. Many good renters are looking in advance and organized in their search.

As others have mentioned, the place is usually more organized and neater several weeks ahead versus two weeks prior to move. Many people don't mind seeing the moving boxes either, they understand the situation.

Two things to watch are transitioning the utilities and carpet cleaning/move-out cleaning. If the rental is vacant only a short time, you'll need to make sure these are tightly scheduled. I usually have the renter schedule utilities in their name at contract signing. This allows me to verify the service is set, and I can help the renter in case they have questions setting up the new service.

Hi @Account Closed

There's a spectrum of investment choices. Your decision boils down to your own goals, investment style, personal preferences and risk tolerance.

If you're able to consistently save and invest, your behavior will predict your long term investing success more than the specific investment vehicle. This is an interesting reference on how behavior negatively impacts stock market investors. http://rodgers-associates.com/newsletter/newsletter-2012-05-09.html

I personally think real estate is a great way to balance and diversify a portfolio. I don't know why so many people think real estate is "risky," but I hear it all the time. I also hear from real estate investors who are highly critical of the stock market. I'm more comfortable with a mix.

Please let me know if you find any good resources on this subject -- I'm very interested in the topic.

@Chris Hougland

yes that's the problem, it's not easy to find properties that work as profitable long term investments. Don't be discouraged, it's much better to evaluate real properties and base your numbers on actual expenses in your market versus averages. You'll learn the numbers that work for you and be better prepared to make your offer when you find properties that meet your criteria.

I would aim for more than $100 net cash flow/month, that's break even in my experience.

I'm not sure what your buy strategy is, but are you looking at distressed, wholesale or "problem" properties? I've had more success with problem properties. They sell at a discount, I fix the problems and make them nice places to live. I've purchased a few turnkey properties, at or close to retail, and have not done as well with cash flow or return. On the positive side, they're less work and quick to rent.

@Michael Baradell I agree that's a large rent range and would evaluate based on the lower end. A common new investor mistake is overestimating rents. Yes, updates and nice finishes generate more interest and maybe higher rent, but depending on your market, many renters expect up to date finishes. We have two similar rentals in the same area, one with a stainless kitchen and the other with white appliances. They rent for about the same, but the one with stainless consistently rents more quickly.

It's often too easy to focus on getting new customers/renters versus retaining and thanking the current ones.

@Pam R. like the anniversary gift. I bet it made their day.

@Tami R. how thoughtful, especially for a student. Plus less than having to hire a move out service.

I'm happy to offer a small monthly discount ($25-50) for 24 month terms.

I've tried promotions during winter months when it's harder to find renters, but without much interest. I then rented for regular price when traffic picked up.

Hi Pat, I like your approach and thoughtfulness of your plan. My belief is that realistic goals, good preparation and careful research on the front end lead to much better outcomes over time.

My main comment is on monthly cash flow. The text is small, but does it say @$125/month average cash flow?

To me, in the context of single family, that's break even. Or worse, you're close to one repair, upgrade or insurance deductible away from negative cash flow. We've had AC, furnace, flooring, roof, etc. issues that would wipe out that amount (and more) at once.

I would plan for a healthy reserve fund and consider increasing desired net cash flow, and clarify gross vs net in your assumptions.

Good luck with your next steps. Are you sure you want to leave HI? What a beautiful place, I hope you're finding time to enjoy it.

@Account Closed

A duplex can be a great first purchase that you can later convert to full rental. For choosing a location, I would consider:

-your primary knowledge of each market, including real estate prices, taxes, rental supply/demand and expenses by location

-strength of your local network and contacts, including people you know and trust

-your personal goals and longer term strategy, including exit strategy

I have experience in Minnesota and Florida, and generally find FL expenses higher and market conditions more dynamic.

I second @Michael B. 's advice that you save more than you think you'll ever need. It'll give you a cushion, peace of mind and more options in the long run.

And I would run a side-by-side cash flow analysis to see how your options differ. Research your numbers and you'll get a better idea of how rental income and expenses vary by location.