All Forum Posts by: Todd Jones

At a regular job, you are “guaranteed” income and benefits on a regular basis. Your can pay your rent and car note. When you get off work, you can relax and indulge in TV, foods, vices like drinking, etc. Why not?! You did your work today so you deserve to relax. You earned it. BTW: Your manager dictates how you live your life (bonuses, most increase, getting fired, etc).

Why start a business? You will risk a lot of funds and be in debt. What if it starts to fail? Am I smart enough to fix it? What if I fail? I’ll owe so much and may become bankrupt. My family would suffer because of me. Even worse, what if I succeed? I will have no free time. Working nonstop. Don’t I deserve to rest? In all, will dictate my life, which is scary!

These thoughts of negative use cases are why people don’t pursue financial freedom.

Now another perspective is becoming scared and angry of not becoming financial freedom. Knowing you will grow old discussing woulda/coulda/shoulda. Letting someone else’s (manager) subjective feelings decide your financial fate vs. your fate being determined by your drive. Relax? Working for your goals is your relaxation. Seeing how far you can really go. Family? They would be more proud of you being free/driven individual vs. just taking it from a boss. 

In summary, comfort, security, discipline, confidence, and perspective are the main factors.

Quote from @Ryan Arth:

There is a huge spread between property type and tenant attractiveness within that zip. The viability of an AirBnb strategy would also fluctuate widely based on where it was, ie at 116th and Kinsman vs on Dorchester in Shaker hts... Without looking, there is easily a 10x price variation in that zip. 

 10x agree!

For AirBnB, it really depends but I would lean towards "No".

44120 could either be near Shaker Blvd, Van Aken, and Chagrin Blvd.
The Shaker Blvd is made of historical homes (1920s). There are a ton of early morning joggers w/ dogs near the lake at S Park Blvd and there is a plaza that's not bad. There is one street that is rich in culture and restaurants (just can't recall now). Overall, it's a mostly all brick, historical older community that used to be well managed in the 90s. Unfortunately, stuff is slowly falling apart and the road are not the best. No upswing in sight. Still, the individuals there are high end earners depending on the specific area.

Also, there are no tourist attractions. The only way an AirBnB would work is because there are no Hotels close by (that I know of). Higher end relatives coming to visit would want to stay at a home.

Did you check AirBnB to see the calendars of the homes in the area? It can then show you the demand. 

Now, for long term rents I did not/would not pick it if the home is in Shaker Heights. The taxes are high and their building codes are strict to ensure the homes stay historic looking.

Note: You can definitely open an AirBnB in Cleveland but it would have to be a condo downtown for $240k or so that allows it. Beautiful views, casino, and you're never bored. There are some on there now.

Quote from @Account Closed:

We highly recommend to our clients they use some form of asset protection. See our "tier list" below: 

Worst:

– No coverage, held in your name.

Bad:

• Relying on insurance. This is the most basic level of protection and it is not very effective, but it is still better than nothing. Insurance companies have many exclusions and they may not cover everything, but they can help to pay for some of the costs of a lawsuit.

Good:

• Using one LLC for all of your rental properties. This is better than relying on insurance because it protects your personal assets from liability. However, if someone sues you and wins, they could take all of your rental properties.

Better:

• Using a separate LLC for each rental property. This is the best level of protection because it isolates each property from the others. If someone sues you and wins, they can only take the LLC that owns the property that was involved in the lawsuit.

Best:

• Using a combination of LLC and land trust to protect your rental properties. These are more complex legal structures that can provide even more protection than a traditional LLC alone.

Here are some of the key things to keep in mind when choosing an asset protection strategy for your rental properties:

• Your risk tolerance: If you are not very worried about being sued, you may not need the best level of protection. However, if you are worried about being sued, you should use the best level of protection that you can afford.
• Your state laws: The laws governing asset protection vary from state to state. You should consult with an attorney in your state to make sure that you are using the best asset protection strategy for your situation.
• Your budget: The cost of asset protection can vary depending on the type of protection that you choose. You should make sure that you can afford the cost of the protection that you choose.
  
  Please also keep in mind for your situation to consult a professional and share more details! 

Excellent advice!

On YouTube, Clint Coons really pushes a setting up a Wyoming LLC then have it own several LLCs as Wyoming has better anonymity laws. T tenants won’t be able to trace back to you owning the property.

Quote from @Mark Cruse:

@Todd Jones Iḿ a senior level investor doing this for many years. I´ḿ not sure of your level but there is no experienced investor that will tell you to go for price and ignore location. They will not tell you this because they have on the ground working knowledge and know it doesnt work that way. Newbies often fail because they believe this and are taking advice from the wrong people. No one said bad things cant happen in good neighborhoods.  However,  if a person is competent at this business, its little to no chance of them getting their condenser and appliances stolen over and over again in a Class B or A. Unless you have no ability to screen tenants there should be no plausible way  you consistently do evictions every few months. I have done all classes with tons of experience at this so I have no reason to comment on something I have not directly observed.  There are thousands of failed investors that believe price is everything who are broke or in debt because it’s very easy to fail this way. You honestly dont understand that some places are nearly unrentable, extremely unstable, excessively crime ridden with wide pools of potentially horrible renters? I dont know what to tell you because through basic research or just networking with people who know what they are talking about you will see the light here.  

Whoa. I didn’t say ignore location.
I said do both price and location as did you. Check what I mentioned:

Go for "price" primarily but change your perspective on "location" based on what you can handle and focus more on the street itself vs. someone's letter grade rating of a zip code.

So for location, pick what you can handle. If you can’t handle the examples you and I described in our posts (drug dealers in lawn chairs, kids throwing their pit bull’s feces onto your porch, etc), don’t invest on that house or that block.

I am against someone looking at ultra low prices on Zillow or Trulia in Detroit or Cleveland, not know anything about the block/street, and impulsively buying it anyway. What happens? They post the nightmares of their “can’t miss $35k investment” and then abandon it making it and the neighborhood look worse.

I am fully aware of streets in Cleveland and some suburbs that I’m not going to buy as I don’t want the headache. Yet, there are some areas oversimplified as “rough” where I say “oh, that street? That block is really good and quiet and has been for a while.”

These are houses in a permanent place. Can’t simply ignore its location.

Quote from @Bob Stevens:

Quote from @Jim K.:

@Bob Stevens

Bob, has anyone ever ODed in one of your rentals? It's happened to me, twice. Would you recommend the experience to any new landlord just starting out? Or is this more of a niche sort of experience to go through as a landlord building a portfolio?

 Oded, no but they blew up one my client's homes as they had a meth lab, yep you can google it. This happens. Bad tenants that were inherited. Things happen even in the better areas. I have had animals in a very nice house in Cleveland Hights nice area, wreck the place. **** happens everywhere. 

All the best 

This.

Its location and price but one weighs more depending on your desired outcome, what you can handle, and how you handle it. There are several, several variables.

You can buy a great deal but the city officials (i.e., inspector) are a joke, the roads are laughably bad, garbage collection misses the house every once in a while, your go-to contractors say "Sorry man, we don't deal in that area", the city tax rate is disproportionately high w/no credit, the adjacent home have pit bulls and the kids fling the fecal on the front porch for fun, basketball (a.k.a "yell ball") is played in the street until 3:00 am everyday so the tenant complains with a sleep deprived quivering voice and leaves, and the property value is "eh".
I know you're thinking "sheesh dude, speaking from experience?" ..yes he is.

Is it about price or location then?
Well, it depends. As the homeowner, all these these situations can be handled or ignored. But the question is can you handle this? If so and the detailed numbers look good, move forward.

@Mark Cruse
I get what you're saying. But "people are people".
Frequent turnovers, renovations, stolen appliances, etc. happens in good neighborhoods too. Cat pee embedded in weird locations "because they're sooo cute and I'm not fixing him", Ever had that time where you fixed something big like a clogged mainline, toilet completely unhinged, etc. and it breaks again because the folks keep doing stupid stuff.  That "I...just...fixed...this..." moment? Happens in the better neighborhoods. I still remember a post where someone put mosaic tile throughout the bathtub. 

Some homes in better neighborhoods may have more expensive repairs and housing codes. AC keeps getting stolen vs. "Gotta resurface that asphalt driveway due to 2 noticeable chips...violates code and its an eye sore".

My point?
Go for "price" primarily but change your perspective on "location" based on what you can handle and focus more on the street itself vs. someone's letter grade rating of a zip code.

Yea, they had a much more realistic schedule (every 3 or 6 months but I can’t remember).

I suggested this aggressive schedule vs the op practicality doubling the rent yet wanting to keep the tenant.

I haven't done this but I've seen someone post about it and on the Real Estate Rookie podcast.

Place in the lease that you will increase the rent by increments until it meets the market level/comps:

$500 for first month | $650 for next two months | $ 850 until further notice.

This will allow the tenant to adjust their lifestyle to based on their decreasing net income, they will be less angry, and be more respectable vs "pay double or leave". If they DO get angry, let them look around and see the prices + cost of moving. Oh, they will calm down quick.

Only do this if they are worth keeping since you are living in the same building due to the house hack. If they say "No", well, you tried. No guilt there.

Quote from @Nina Sid:

Quote from @James Wise:

Quote from @Nina Sid:

I was presented a property on the corner of 116th and Union Avenue, close to Mt. Pleasant and Union Miles Park. It is fairly new (built in the 2000s) which is quite rare and will likely rent out to a voucher Section 8 tenant for around $1300-$1400. They are asking $100k. Any thoughts on whether I should consider that area or stay away? Will the property be difficult to resell if I wanted to in a year or two? 

 It's the hood. If you want to own a property in the hood, go for it. If you don't, don't.

Thank you for everyone’s input! I have passed on the opportunity but if anyone comes across any similar opportunities in a better area please let me know! 

 Good move.

Agreed with everyone that its pretty rough and, more importantly, the city doesn't take care of the area. Serious pot holes, drugs, run down stores, etc. Yes, there are places even rougher but Mt. Pleasant / Union is in the top 5. 

Need proof? Go to Google street view.

Now, a few streets down are actually not bad.

Quote from @David Lee:

Quote from @Dave Skow:

@David Lee- can you get  more detail on their credit  histories  ( and not just a  vague  reference on what  score they dont have ...)  ...ask prop mgt  compnay for more  credit details and make a  decsion .....if  he has a  credit score of  480 - this is a lot diffrent than having a score of 619

 Already rejected, but thank you for your advice 

 Good move.

Let's say you accepted them. What would your PM think?  "Sheese, we said no but you're letting them anyway...so that we (the PM) will maintain them?" 

When they said "No", leave it up to them. You delegated this professional task to them.