All Forum Posts by: Tom Kaider

I love this thread.  I would buy 10 units from someone, no problem.  I'd rather just have the contracts than their "company".  

"Push them into a corner", in my opinion, is a dangerous and burden-shifting concept.  Tenants sign contracts.  The tenant alone can push themselves into a corner.  The landlord isn't pushing anyone into anything.  If they stop paying, then the prudent thing to do from a business perspective is to issue a 5-day notice and keep emotion out of the situation. 

There are an infinite many ways to participate in charity: donate, work at a soup kitchen, coach kids, volunteer at church, etc.  Or, if one's rental property genuinely is their way of giving charity, then simply lease it out for well below market rent to some deserving family. Or charge no rent.

However, if the intention is for one's real estate investing to be or become their business, then treat it like a business. I've worked with many hundreds of investors. The ones who treat it like a business earn 20%+ ROI.

I am not Selling, Buying, or offering a Job in this post, but BP wants it in the Marketplace anyway.  The intention of my post was social networking, which is what I thought BP was.  The intention was to find local partners and let them know my progress as an investor, no matter who has what to bring to the deal.  I was simply sharing info about Xactimate and my new hire, looking for input and trying to network.  This is the text of my original post which was taken down from the forums: 

I'm in the Chicago Northwest Suburbs. I think I hit a homerun by finding a winner guy who has 10+ years experience as a claims adjuster. He used Xactimate, which blows away any repair-analysis app. I've seen because it populates the cost of every piece of wood, screw, everything. He even has the laser measurement tool that just scans the inside then produces a 3D model. His version costs $400/month, but there is a renovation version which seems to be only $90/month.

The way his mind works is exactly what I have needed, as much about limiting liability as building ROI. He talks about septic tank failures and foundations a lot. I like that.

My purpose for posting is also to say that we are ready to take on more deals. So if anyone is near the NW Chicago Burbs, and agrees that my guy is a tremendous asset, then let's partner up. He actually lives near McHenry, so think like far NW 'burbs for now, but I like partnering, and at one time or another we all have different aspects of a deal to bring (and varying amounts of those aspects).

*Note, I'm not selling anything in this post. I'm not offering for you to hire my guy. I pay for advertising in BP if I want to post in the Marketplace. That is not what is going on here. What I'm saying is if you find a potential off-market, ugly house or building, in the NW burbs, ugliest property on a nice block, but you are not confident with the analysis, then let me know, and my team can take a look at it, for free, to potentially partner on the deal.

But please, not MLS deals. Those are not deals (to me). Try to find distressed private sellers, dealing with divorce, job-transfer, death in the family, etc. We'll solve their problem together. But by the time it's listed on the MLS, we are immediately dealing with realtors, etc. It's just not what I'm into right now. So, please none of those.

I own a property management firm.  So, I'm saying this out of love.  Remove yourself from the no-rent, late-rent, spouse-lost-his-job, dog-died, etc. scenarios.  Hire either a bookkeeper or a manager or some buffer.  I give you permission to treat your rental like a real business, and your children, church, nieces, nephews, etc. whatever, are the shareholders (eventually).  You are not doing any favors to your generational wealth-building by even knowing when or why a tenant is late.

What we do is pull out of the lease the exact language that discusses two important points that most tenants do not really understand, and we make them sign, again, on this addendum, that they are specifically aware of these two important points:

1. The owner or manager may enter the unit upon reasonable notice, but that no permission is required of the tenant and the tenant being home is not required.   - Many tenants cannot wrap their minds around that so they sign again, under that paragraph. 
2. The tenant will pay all accumulated legal fees if the landlord is successful in court.  -  This may seem obvious to you, but many tenants do not really understand what this means.  They think they can just squat in the property and a worst case scenario is that they don't get their deposit back.  Um, no.  We've helped our clients successfully sue for every penny spent to evict them, successfully garnished wages from their employer, etc.  We point out to the tenant that their burden doesn't stop with the deposit... that they will ultimately pay every penny of legal cost.  They effectively will pay to evict themselves (eventually). 

Those two aspects are on a separate sheet of paper.  If the case ever gets to judge, the position of the property owner is that much more powerful.  Also, it gives the property owner more confidence to hire an attorney and go after the tenant 100%.  Why not?  They will get it all back eventually, unless the tenant moves to another country or goes to live off the grid.

So, that's actually how we talk about the application process internally.  We role play it.  "Do we need a co-signer?  Is this potential tenant capable of disappearing off the grid?  Did we call their employer?  Is this an employer from whom we can garnish wages, or are they just writing in babysitting income as their job?"

Your rental property is a business.  If you make every decision with at least some reference to a possible worst case lawsuit-type scenario, then you will be making better decisions.  

Yeah, we just did this for an investor. We manage his 6-unit building. He is a big time investor from out of state. We know what the really nice units in that complex can earn, $1,100/month, but his average $800. So, have been accumulating contractor quotes. They are coming in around $20k, which is a lot to spend on a 2-bedroom condo, but, when you divide the $300 increase in rent by the investment, it's 16% ROI.

He has not responded yet, so it will be interesting to see if 16% is even considered a good ROI in his world. I meet people who don't even look at decisions that don't exceed 20% ROI.

My friend asked if she could buy a condo under the Freddie Mac Homestep program, with cash, but then immediately install tenants.  

My mind tells me that when she tries to apply for parking stickers, the HOA Board of Directors may take notice and take some sort of action. However, they may not. They may not know or care how some new buyer acquires a condo.

That brings us to the real question, which is: Are there any government violations, fines, etc. if it is discovered that the purchaser is not owner-occupying the unit?

Has anyone on BP bought a condo during the Freddie Mac Homestep first look period and then immediately leased out the unit? 

We are a management firm that uses a really need service called ShowMojo to automate screening.  So potential tenants find the listing on some site, then they call the number and are prompted to enter in the street address.  After that, texting takes over.  It even asks them qualifying questions, anything you program it to, like, "How many smokers?  Do you have a credit score over 600?"  It's like an automated interview.  It leads them through the leasing guidelines, and they cannot move forward if they do not meet all the minimums.  If they do, it prompts them to pick a time for a showing.  So you are literally only showing the unit to those who meet your requirements... AND, you didn't even actually schedule the showing, they did!  It's so helpful.  ShowMojo has really helped us not have to deal with no-shows or nightmare potentials.  Feel free to contact me anytime about management questions.  

@Chris LumLee   Try to find the listing yourself.  We do some management in and around Detroit, and we usually send screencaptures of what our client's listing looks like compared to other similar units.  Also, try to find out if your PM has listed it just on the popular sites like Zillow, or have listed it on every site in existence.  

@Lue C.  You may be ready for management software.  We use Buildium, but any of them will really help.  You can let your tenants pay through the software, and then that information flows into the bookkeeping of the unit.  

@Domingo Santana  I have family and clients in Apopka, Altamonte Springs, and Longwood.  If you get into a deal and need a partner, I'd love to hear about it.  I need a reason to get to Orlando more often.