All Forum Posts by: Tom Degroodt

Your job is to know what the rent should be. The estimators are just that. They may get you in the ballpark. In my area there are quite a few fully furnished apartments throwing off the projections. We watch when homes get advertised, their finishes and how fast they rent. 

There is no value to you on making the guy next to you pay more. There is value to you, by not pissing someone off that is closer to your asset 24/7. My mentors advice would be to stay in my lane and only deal with things in my control. 

If you need to paint during a turn we usually get away with using an 18” roller and rolling any walls not cleaned up with magic eraser. If using same color/brand paint you shouldn’t need to cut the paint in. Typical 2 bd should only take a couple hours to do most of it.  

Cash flow certainly adds runway and reduces your monthly needs. Wealth is created kind of under the waterline. It’s amazing what time value adds. 

I look at the IRR for principle pay down as fodder, when people tell me why RE investing is bad. If there is cash flow and principle reduction you have locked in a higher average rate of return than the stock market for 20 years. Add to that tax advantage and appreciation and....

Also I find it easier to identify a house that is on sale over a stock that is on sale. If you can add 5% equity at the start of the equation it starts getting even more exciting. 

Perfect answer.  Run the business, not the tenants.  Put a clause in the lease so you get paid for any amendments, your time is not free.  Everyone on the lease is responsible for the rent.  That should be clear at the first signing.  We work with tenants all the time, but the bottom line is the lease needs to be followed.  If someone wants out, is everyone that is left still qualify financially?  If everyone qualifies without the additional income, it is an amendment to the lease.  If they don't qualify the option is everyone is responsible to lease end, or they give notice, pay the lease breakage fee and the property gets new tenants.  We also specify that rent will be paid with one transaction.  We are not taking 4 partial payments, it sets the precedent that there are 4 agreements.  

@Coreyell Lincoln - A 401 K loan is not reported to the credit companies.  You do need to put in on the loan application, so if you are paying $400 a month for the loan, that goes against your Debit To Income Ratio.

I believe if you take a 401K loan it needs to be paid back in 60 months.  If you take it for the down payment on your personal home I believe you can get a longer term.  

I bought my first home in 1984.  When I told the loan officer it was going to be a rental she told me it would be better if it was a personal home.  Then she nudged me and said " If you plan on it being your personal home and the day after closing your situation changes you may need to turn it into a rental"

2 years ago I got sniped on a HUD home that went to an owner occupied bidder. The bidder was an out of state real estate agent. She let the house sit for 6 months, then renovated it for a flip. When I asked a friend that is connected to HUD about it ( I was pissed off that the woman committed fraud in my mind ) my friend said " If she planned on it being her personal home and the day after closing her situation changed she can flip it no problem"

You Mileage may vary, but make sure you know your options for the 401K loan.  For sure it is better than getting hit with a 10% penelty and taxes if you rip the money out of your retirement.

For 21K you may look at a commercial loan with a balloon, or see if a local bank will give you a HELOC on it. 21K is almost small enough to just do a personal loan on.

I once saw some instructions another landlord had, but I was too new to realize that I was looking at gold.  I was new and didn't know what I didn't know.

In his instructions it said at the top ( I am Para-phrasing )

"If you think you will clean the apartment with just Windex and paper towels, the apartment will not be clean enough"

"If you think you can do a final cleaning in 2 hours, the apartment will not be clean enough"

He then went about giving instructions from start to finish on what he wanted, but I can't remember it.

Does anyone give their tenants detailed instructions.  We do take pictures and part of the lease signing has a checkout price list of sorts.  Just trying to get better.