All Forum Posts by: Tom NA

I have to admit, in spite of what I may have said in my earlier post, if you are in a position to have $25-30k in the bank at age 20, you are way ahead of the game financially and should be very proud to have gotten where you are at such a young age. I think this is a strong indicator that you have the discipline and responsibility to be successful in RE or whatever else you pursue as long as you take the time to learn before jumping in too fast.

Ok, Andrew, I'll take a shot at answering your initial question(s):

They provide an opportunity that I would have considered investing in 2-3 years ago when I was more naive and didn't know better. Now that I've learned more, I wouldn't touch their "deals".

This is really for you to decide. My definition of "good company to work for" is one that is financially successful, provides a good or service that I can be proud of, and that provides a good, respectful, enjoyable work environment. Blue Moon may be all that to you or may fit whatever your personal definition of "good company to work for" is so only you can really answer that question in my opinion.

If you're asking whether they have a viable model for long-term success, my guess is that experienced investors would not consider them a "good company" but from a sheer sustainability perspective, there are enough green investors out there that want to be in real estate that the company will probably do just fine for years to come.

Nobody really answered your initial question about what age people got their first house. I didn't get mine until age 31 but then again I spent a couple years at grad school in my 20's and I also live in an area where the average house costs in excess of $600k so ownership is tough for a young, single earner (thank God I got married eventually!).

If you really feel that you need to get out of the house, I would recommend renting with some roommates for awhile - like most 19-year olds do. You may quickly find that the cost of owning your own home is much higher than you think and renting is a much more manageable option until you get yourself a little more established. Also, it sounds like you're grossing maybe $25k/year (~2k/month) and spending almost $500/month on your car alone (including insurance) which tells me that you may want to get your financial house in order or at least determine priorities a bit first before you look at taking on a mortgage. You should probably thank your parents for their support because you may quickly find out that once you're on your own, you can't afford both a house (or maybe hardly an apartment) and the hot rod car. Remember, the list of bills that you *don't* have to pay right now goes on and on - electric, gas, phone, cable, water, garbage/sewer, house/renter's insurance, property taxes, maintenance, etc.

So I guess you should follow your dream but make sure you're going in with your eyes wide open and that you have a reasonable plan. In fact, I can't even tell if you merely are trying to get out of the house and this is something that will facilitate that or if you are looking to get into RE full-time.

And to your comment that "life is all about money" - that's probably the most common misperception there is. We all believe that money is the avenue to happiness when in reality, I believe it plays a very minor role. Those with money have their own set of issues and challenges, just like the rest of us - most of the people on this board that focus on the desire to make a lot of money in their posts are the newer members. The established investors, whom I assume have done quite well financially, never talk about how much money they have made or how that is their main goal in what they do. I could be wrong but I think RE investing is much more than merely a way to get rich for most of them.

Good luck and don't forget to have fun with whatever you do!

Actually, my friend does have his RE license so I believe that I am covered but thanks for keeping myself and others protected, John!

I don't feel like I'm overly demanding but I want the following:

1. Someone who promptly returns phone calls - prospective tenants, existing tenants, and myself. My last PM seemed to feel that several day turnaround was adequate and that's the main reason they are my ex-PM. A prospective tenant will quickly move on the next place if you don't give them a voice to speak with in a short timeframe. Similarly, I don't call often but when I do, I have good reason and am not expecting to wait 3 days for a return call.
2. Someone who actively markets my property. I consider it a major problem that I am paying someone to find me tenants yet I found 2 out of 3 from 1000 miles away via CraigList. And when I did find potential leads, see #1 above to get an indication of how hard it was to put these people in touch with my PM. I often ended up sending pictures of the place and doing everything short of showing the property due to my PM not responding for days sometimes.
3. Someone who takes care of the maintenance promptly. At least my experience here was mostly good.
4. Someone who is willing to show my property on both evenings and weekends. I am definitely flexible on this and understand that PM's need to have a life to but if you consider that many potential renters have jobs during the day that they cannot leave, you need this type of flexibility to show the property.
5. Nothing beyond the most basic of reporting required for me. Collect the rent, subtract any fees, and send me my check with a statement. End of year, etc. are nice but not necessary.
6. I expect to pay anywhere from 6% to 10% for this.

Lucky for me, I have a friend in the area of my property who also has his own rentals so he has become my property manager. He's ultimately flexible, responsive, etc - everything I couldn't get from my last PM!

These opportunities are a dime a dozen on Craig's List. Bottom line as far as I can tell on any of them is that at the end of the day, you are taking out and solely responsible for a mortgage so best case, you are buying property (if you're on title) and worst case, you're buying property for someone else (if you're not on title). You're the one on the hook for the mortgage so unless it's an investment that you would feel comfortable making without this 3rd party involved, I would steer clear. If they were so good at this, surely they wouldn't need you to take out the mortgage for them.

As someone who lives in a negative cash flow area, I look to invest out of the area with the following challenges:

1. Finding deals. RE is not my job so I'm dependent on other people to find the deals. Too often, the "deals" are not nearly as good as advertised. Luckily, I'm very skeptical and analytic and not likely to bite on some of these absurd claims.
2. Finding/building a trustworthy team. My last attempt to invest out of state in a rehab found me in bed with someone that took my money and ran. Shame on me for being so sloppy and not protecting myself - a mistake I won't make again. And don't get me started on the unbelievably poor property managers I've come across where I am more successful finding renters from another state than they are from down the street.
3. Knowing where to invest/not invest in a city. I don't want to be in war zones and I know where they are in my location but have no clue where they are in a city across the country.

Net of all this - I feel it's possible to invest remotely but you really need to work at it and get some of these things to fall in line for you - especially if this is more of an investment diversification strategy for you like it is for me vs. a career. Of course as a result of this, my portfolio consists of a mere 2 units that were purchased at retail and while I have been lucky with appreciation, I would be ashamed to show the marginal cash flow numbers on this forum. Basically, I'm one major expense (bad tenant, major repair, etc) from heading well into the red and as MikeOH points out, it's not a matter of "if" it will happen but "when". I understand that now (didn't when I bought) and am looking to take action to be out of these properties before the inevitable happens.

1. I would get it insured immediately - it's not so much the $20k investment in the property I'd be concerned about but the liability if someone injures themselves on the property.
2. I would get a new agent. If your agent believes it's worth $70k and nobody is even nibbling at 10% below that ($62k), I would say you and your agent have overvalued the house.
3. As I think was alluded to above, be flexible. If you're only in for $20k, you have a *ton* of wiggle room before you lose money on this deal. Since it sounds like you're in a panic and want to do something yesterday, find a buyer at $30k and I'm guessing after closing costs, financing costs, commissions, etc, you'll break even roughly. It seems that you're afraid that you're losing your shirt while not thinking about some simple steps to keep from losing it. If you're in such a tight financial situation, change your objectives on this deal from making $30k to making a nominal amount and learning from the experience.

I have one property that I have setup as rent-to-own with my tenants. The reality with them and most rent-to-own tenants is that they will never buy so while there is the possibility, don't view that as your way to a definite sale. My tenants can barely make their monthly rent so I already know they'll never buy it. The benefit to you of course is that you can charge a higher rent + a deposit which you keep if they don't buy so it's a good way to bring in a higher rent than you otherwise could.

I've found that it's definitely an appealing way to market your property to prospective tenants and I also approach it with a great flexibility. My current tenant didn't have the cash to put down up front as is standard in a rent-to-own so we came to an agreement where their rent was much higher than what I was looking for. This in essence spread out the deposit so they could get in the property and I could get the $$$ that I was looking for. In a market where similar houses rent for $800-$1000/month, I'm able to get $1650/month and would be happy to extend their option another 2 years when the agreement expires at the end of this year.

Bottom line, I would say establish a deposit plus monthly rent (with rent credit) that you want to offer prospective tenants as a negotiation starting point but be flexible in how you get to your end goal of maximizing return. You will most likely be dealing with people that have cash/credit problems so it's hard to find someone who will just agree to your terms without altering them somewhat.

I kind of made a decision by default, Contour. Last time the house was vacant, I marketed as both for rent and for sale (on Craig's List primarily) and found a good renter before a buyer so I'm holding for now and keeping my money tied up. I have to admit, I wasn't really motivated to put much effort into selling as I just didn't know what I would do with the cash and I didn't want the pressure of finding something as quickly as necessary to do a 1031. Maybe I'll be more motivated next time that property is vacant. In the meantime, I continue to look for other rentals that I can pick up as I still have access to other cash and credit. In other words, finding good opportunities is my biggest obstacle - not funding.