All Forum Posts by: Todd Radus

Yes and No, you should never limit yourself on the sources you can learn from, but I believe that finding someone local is a good idea. For instance as a wholesaler I work in PA since that is where my legal paperwork is set up to do business. As an investor I will look at properties with in a 1 hour drive of my office so that includes NJ. 

Again, it's important to gain any experience that will aid you later. It does not necessarily have to be with an investor. There are many aspects to real estate. Repair estimates, doing comps (comparable), understanding what a buy and hold investor does vs a flipper and so on. I think one of the best assets I have was the year I spent working as a handyman. I can now do repair estimates quickly for both myself and other investors and as a landlord I now know what things generally cost when doing minor to major repairs. I learned how to work with sub contractors, owners and renters. It was invaluable experience. Even something as simple as mowing lawns, removing leaves or shoveling snow will allow you to gain experience in working with people and learning what people expect when providing a service for them. Another invaluable skill. 

@Account Closed has said "be a kid", there is much to learn just by being your age. Since you are young there are setbacks and obstacles you will face that will give you a unique perspective later in life. There is no reason you can not do this except the fact that you can't sign contracts and therefore you can't legally deal in real estate. You can take that disadvantage and turn it into an advantage. Much of the advice here will do exactly that. 

I could go on for hours, I love this business and can't get enough of it. Here is what I would recommend.

Don't limit yourself in mentors or coaches but ensure that mentoring comes from people who are successful. They don't have to be successful in Real Estate, everyone will have something to teach you. Even those who are not successful have something to teach you, usually that's what "not to do," but they still have something to teach. 

Surround yourself with people of like mind and positive influence. This might be difficult especially in your age group, many young people are not going to understand what you are doing so be aware of this.  The five people you most associate with will have the most influence in your life. So choose those 5 people wisely by simply ensuring they are supportive and positive.

Enjoy yourself and have fun with it. Don't worry about making money right now, that will come, take advantage of the time you have to learn as much as you can. Some of those lessons will be difficult others will be joyous, all are worth experiencing. In addition if you truly learn this business, have the right associates and mentors you don't need any money to write deals. 

If I may ever be of service, feel free to contact me or send a colleague request.

This has evolved more into a collections conversation.

I agree with most of the comments, I was assuming (could be a mistake) that you did all the proper notices and legal steps and have legal ground. However, if they just vacated the property with out notice in most cases you just need to prove that. Any certified letters you do send for notice are going to go to the last known address IE your vacant property or your new tenants. Unless of course they have forwarded their address (unlikely) they don't want you to know where they went but you can check. Again these issues are why you contact your lawyer. Once you know what to do in that area it will apply to any similar problems you have in the future. Since you are billing for the extra tenant and they didn't destroy your property your not going to get a lot of extra's built up as mentioned a 1099 is a good choice. 

I however do believe that if you do your due diligence on tenants that a judgement won't be worthless. If you put people in that are judgement proof then that's the route you chose, the risk you were willing to accept, so accept it and move on. Use the tax code, recover what you can via write offs and keep moving. 

I feel that $2500 cash in my business account is better then $2500 in write offs. I also feel that $1250 cash and $2000 in write offs is better then $2500 in write offs. Why $2000.00 because you are adding the cost of collections, the $1250 for the collection agencies fees and your time and costs to do the collections. While these figures are not exact it's just to make the point. 

While this may not apply to your particular situation IE tenant having an extra person sub letting from them, I feel it's likely a good policy and practice to have in place. 

Too often people give up due to lack of knowledge or a fear or apprehension of the court system. It's like any other skill, collections is an art form like sales. Using the tools available can help you recover loses and prevent them. I have also found in years of doing business that persistence is necessary when trying to collect past due or owed money.  If you ask that a late bill be paid one time it's likely you are never going to get paid. This is why I stopped doing it myself and turn it over to a collection agency. The time an effort to make collections of small amounts is prohibitive, if you simply do your work and turn it over you are now free to move on while someone else does the persistence work. I let my CPA handle the tax issues.

I may have an edge here because my mother spent 20yrs as an office manager for a collections law firm. It was my exposure to this that taught me that wealthy people pursue money owed. Some amounts were small and others were huge in the $100's of thousands. Some had the law firm on retainer and could send as many cases for what ever amount was owed, others were on a case by case basis. I learned early in life that you pay your bills or someone will come after you for the money. Now I'm occasionally that someone coming after you and I have absolutely no problem doing it. 

"Be like the bank" is what Mr. Rich (great name right) the owner of  the the law firm used to say. "If someone owes you go after it, you're not a charity so don't give money away except to those you want to." He also taught me a judgement was key to maintaining a collections case. The fair debt collections act requires that if asked you must provide proof of the debt, itemized and in full. A judgement acts as this proof. If a debt repair lawyer contacts the collection agency they just simply send a copy of the judgement to the lawyer and then they are in compliance. Basically it's real hard to get a judgement removed from your credit report other then actually paying it off or coming to a settlement agreement. 

I hope this helps and best of luck to you.

Get a judgement then turn the judgement over to a collection agency. I had my lawyer add a letter I give with the lease explaining what will happen if they don't pay rent in detail. Yes the collection agency keep's a portion of the money but your previous tenants get a mark on their credit as well as a lower credit score. This way another landlord can see they have a judgement against them for failure to pay rent. 

In addition a judgement is easy to get, most of the time they wont show up for court and you will get a summery ruling in your favor. This ruling will allow your collection agency to garnish wages, seize bank accounts and assets until the dept is paid. All you need is the lease, a record of payments made and a summery of payments not made and a total plus any legal fees, court costs or lost revenue because of the tenant so add everything. Clean out costs, repairs, revenue lost for clean out time and vacancy (due to lack of notice of lease termination) back rent so on. Minus their deposit and hit them for all the rest. If they don't show up your going to get a ruling for everything you are asking for provided your T's are crossed and i's dotted. After you do this once or twice you will get the hang of it. You will likely be able to add a couple of thousand to what they skipped out on and collection agencies are persistent to say the least. They will hound these people for everything they can get and a judgement makes it possible for them to seize money. 

I can file a small claims suit in my area for less then $50.00, depends on the county.

What I take to court:

Summery of money owed (something the judge can look at quickly)

Lease

Payment History

Itemized list of payments not received

Pictures of property after vacated (all items I had to pay to remove)

Pictures of Damage to the property and repair estimates

Itemized list of lost income IE lost rent due to failure to give notice or early vacancy. If they leave the lease early, say 4 months and it takes 3 to clean and re-lease they will likely owe you an additional 3 months rent. Consult a lawyer to find out what you can charge them for. 

All known tenant information

All relevant documentation

Sorry didn't realize how long winded that was. The point is it works because of the system that's in place.

@Erik W. in response to not understanding maybe this will help.

I have developed a plan with some counseling from my CPA. Bought a fixer with 2 rentals, turned it into 3 plus my place to live. The idea was rent to both mine and my wife's business, company provides living space, and other perks that are perfectly legal and rent the 1 bedroom attached to a family member. Seriously lowering tax liability (IE More Capital), business pays the bills and income from the rentals is passive (IE Lower Taxes). Purchase price was $162 with private appraisal for after repairs before purchase at $225 open market estimates are $275k we put $16,800 cash into the down payment. The entire time the intent was to up the appraisal value and refi after repairs. Take as much of the $70k+ plus in equity and buy another fixer rental. In the mean time we have cleared all CC debt to have as emergency funds if needed in addition to our cash emergency funds of 6mo of bills and living costs (basics). Our strategy is a BRRRR strategy except we are working on the new investment property while it's paid for outright with the previous properties equity, then we can leverage the available equity in that property not just the over cost equity.

This gives us more latitude when doing repairs as the only bills are basics and there is no mortgage or private loans hanging over our heads while in the repair process because the tenant in the previous property is now paying the payments on the loan for the new house or property that is out of repair status. 

We will also be able to adjust our initial loan request on the paid for house that will be rented before a loan is even sought. So the loan structure will suit the rent rather then needing a rent to suit the loan. Ensuring we have enough cash flow to pay for everything prior to the next loan. This also allows us time to adjust if there are any sudden market changes and reduces our out of pocket risk exposure. It also helps us ensure that our cash flow from properties remains at certain percentages after loan payments are made. I'm basing the previous houses rent to cover both the costs of the property and the estimated bills on the future purchased property. IE Lights, Heat and taxes.

That huge debt should be being paid for by renters. My cash flow in controlled so I'm constantly building capital with the goal of buying more properties outright rather than having loans on every single house. Each house we can buy outright will allow us to start another branch on the tree. Instead of straight line each paid for house allows us to either start taking income or create another branch on the investment tree. 

The drawback to our strategy is; It takes more time and capital to start with, around $50k in our case which a lot of people don't have or can't come up with. We stopped all erroneous spending, paid off all our cars and credit debt. So we are living tight while we put the plan into motion. It took 6mo to find the ideal first property that met our financial goals. But we are not starving.

I think the short answer to your question is solid planning and quality help from financial advisors who can help you design a system that suits your needs. Our system isn't going to work for everyone, hell it might not work for anyone else but its working for us. We are currently in the market for our next property 6mo ahead of our desired time line because we have built more capital than expected due to our conservative numbers. 

I don't believe there is a one size fits all strategy, each situation is going to require a solid plan and system prior to starting. Different markets, different income, different types of rentals. I believe that we all have strengths and weaknesses, play to both and build a system with solid goals, financial advice and a workable system and stick to it. I'm weak in several area's so I hire people to strengthen me in those areas. 

I believe after years of business experience that the system is more important than all other aspects. A solid system that you have the ability and persistence to implement will carry you to your goals. If you read the responses you see that all the successful BRRRR investors have individual systems that are working for them. While the systems are not all the same, involve the same property types or even the same financial goals they are working because they have developed a system that works and they are sticking to it.

The short answer is a question. Why Not? If I have money parked in equity it's not going to make me any money. I'll move it out of equity and use it to invest. 

I agree with @Corby Goade If you're not comfortable then pass or offer a deal that would make you comfortable if he passes step back and keep an eye on the place. If it doesn't move you may be able to return later or he may come back to you and accept your offer. Having now bought two properties using owner financing I also agree that if they are saying no money down there is likely a reason. I passed on at least 6 owner finances before I bought my last one. If it's a decent property they usually want some cash up front. In both cases I ended up paying a larger deposit then the owner was asking for to get my price and/or terms. I have one I'm watching he rejected my offer which was about 25% below asking and half the deposit because of repair needs he thinks don't need to be done. Well it's 6mo later and he's still sitting on it. I will wait a couple of more months and let him know my offer still stands and see what happens then.

I have a friend who has student rentals. His deposit is the max and requires a full year lease. He is however in an area that is short on student housing so he gets what he wants. He usually ends up doing repairs after each tenant leaves and since the parents are usually the ones responsible he has had only a few problems collecting extra repair money. Generally he's pleased with the income from the buildings. 

Thank you everyone for the warm welcome, I'm looking forward to all my experiences here.