All Forum Posts by: Tom Spackman

Welcome, Luke!

I'm sure you've already found this, but the podcasts and forums here are full of great support and information. I do have a word of advice, for what it's worth. It's pretty basic, but I have found that the extra cash flow from an extra apartment more than makes up for the extra cost of a 4 family as opposed to a 3 family. At least that's true in my market (northern RI). But you need to understand local rules for fire safety systems and financing in larger buildings. The rules for a 4 unit here are not much different than a 3 unit, but the return is much better. When you get to a 5 unit building, the requirements for fire systems and financing get more difficult.

For me, single family homes will be down the line - once I can afford to finance several. Then I will be looking at my portfolio in terms of net per door as opposed to building by building.

I hope that makes sense, and good luck!

Tom

I agree with all of the above! First, I don't think the market is going to crash. There are still not nearly enough homes on the market to meet the demand. It is getting better, but it is still a strong sellers market. That said, it is always a good time to buy something that's a good deal. I am a Realtor in Massachusetts and Rhode Island, so I see the listings. Great deals on multi families are not easy to find (they never have been), but they are still out there. You need to make sure that you run the numbers and have a good understanding of what you are looking for. Once you find it, don't be afraid to pull the trigger.  Good luck!

Hi @Timothy Davis -

I second the suggestion to check out the podcasts. The webinars are also a great resource. There were two other things I did when I was starting out.  First, I checked out the membership lists here on BP and I found local investors. Then I wrote and invited them out for coffee and conversation. I met some great people, and I learned a lot!  One of the things I learned from them is my other suggestion. Everyone I met with mentioned the local investors group.  They meet once a month, which provides a lot of great information.  Even more important for me were the other resources the group has.  There is a very active email list where members post and answer questions and offer deals. There is also a list of contractors and tradespeople which has been invaluable. You probably have a similar local investors group.

Good luck, and feel free to reach out,
Tom

Thanks, everyone!   When I listed my apartment, I believed everything you have all said.  If they don't want to pay a reasonable fee, they aren't serious. If they can't afford it, they can't afford the apartment. It's a level of screening.  All that may be true, but then my tenant said $80!! A $25 application fee is reasonable, but maybe $80 isn't. If these folks were rich and had great credit, they would be buying a house, not renting an apartment!

I like the idea of charging an application fee that I would refund if I didn't proceed with the credit check.  That gives me some assurance that they are serious, and helps defray the cost of the check, but still keeps it reasonable for the applicants. Does that sound like a good compromise?

I have one 4 unit property (so far) that my wife and I purchased. I didn't create an LLC because I heard it was too easy to call it a sham company and get at our personal assets anyway. The fact is, we use the income for monthly expenses, and capital needed comes from our joint brokerage account. I opted for good (I hope) insurance and an umbrella policy. Am I missing something?

@Rob B. - The property is in Woonsocket, RI.  I didn't charge application fees, but I moved forward with 2 applicants, asking them to pay the background check fee.  One dropped out, having decided they couldn't afford the apartment, and the other balked at the fee.

Do you pass on the cost of the background and credit check to your applicants? I just rented a 2 bedroom unit to a couple, and I asked them to pay the cost of the Transunion SmartMove Background check.  They balked at paying $80 for 2 applicants when they had no assurance they would get the apartment.  I liked the couple, so I backed off and paid the fee myself.  The credit check came back great, and they have moved in.  Have you had similar issues?

I am currently re-doing a shower stall in one of my units.  We decided on tile.  Properly installed, any shower system can be waterproof.  Tile is a bit harder to clean, but posts above have good tips, and it can be done.  Tile does not have to be expensive.  We went with an inexpensive over-sized subway tile.  The bottom line is that I want good tenants, and I want good rents.  You don't get that by using cheap materials.  I also think tenants won't respect a place that looks cheap.  They are more likely to take care of something that looks good and is well made. Or is that wishful thinking?

Why don't you want your tenants to have your name and address?  Just curious.  They need to contact me when that have issues, and I have done my best to make sure they aren't axe murderers, so I don't really see the issue.

I completely agree that the training and the people you with with and for are more important than the split.  Find people you can learn from and get along well with.  The rest will come with time.