All Forum Posts by: Tony Castronovo

Just seeing this and looked up the event.  Seems it just wrapped up.  Interested to hear any summary or reflections.

Where do I begin ha ha! Well, my challenges have varied over the years and types of properties. My SFH's had different issues than my MF apartments. With my latest apartment complex we are in the early stages (just took over a few months ago)...so plenty of issues (I mean "opportunities"). But from an operations perspective we have a few interesting ones:

1. Trash - Our tenants have a hard time picking up after themselves.  Trash is everywhere.  Not a day goes by without seeing someone's bag of trash that could not make it into the dumpster.  We are working on signage and security cameras but I'm pretty irritated we have to do so much for something so basic.  Right now I have a guy I have hired to clean up trash 3 days a week.  Even with security cameras I am not sure how easy it will be to pinpoint who is violating the rules.
2. Kids gone wild! - We have so many unsupervised young children that are causing havoc.  They bang on and kick their front doors until someone lets them in.  They throw rocks...and we even saw a kid swinging a hammer at our newly stucco'd stairways.

There are plenty of the other 'typical' problems we are working through.  But these are a couple unique ones that we've been struggling with.

Tony

Hey @Chris Hopper.  Intriguing post. "End game" seems a bit terminal...but I will infer this to mean what my "ultimate objective" is.

My goal has never been about retirement but rather a new career. I have been in the management consulting space for the last 24 years and the corporate america thing just doesn't excite me like running my own business does. Real estate has always been an interest and passion of mine. I got into the construction business back in my early 20's and it's part of my DNA. It's hard for me not to get hands-on with my properties. But the business consulting skills translates well to deal analysis, capital raising, and networking...all valuable skills in REI. I want to do more of it!

Ultimately, I am not looking to drive a Bentley (love my F-150) and don't need to travel the world.  My wife and I share a passion for the outdoors...specifically in the mountains.  We want to buy a place in Colorado and split time throughout the year with our homestead in Houston.  I want to live a healthy lifestyle focused on more outdoor activities such as running, hiking, and skiing.  And reduce some stress from juggling a demanding job, work travel, building a business, etc.  To just gain more focus on the business, my family, and my health.

We aren't just daydreaming about this.  We are taking action.  Of course we are building our business.  But it took some time to realize that "replacing my income" is like a dog chasing his tail.  I have a job that pays well and I annually get increases and bonuses.  So the focus really needs to be on "covering our expenses".  To accelerate this we are looking for ways to cut out the fat.  We are planning to list our 5BR house this summer and settle into a more modest 3BR...which means reducing our overall housing costs.  We are also reducing other unnecessary expenses.  

Another HUGE element of the action plan is mindset (often overlooked).  I've been pretty vocal about the plan at work.  I used to think it was risky to tell people but I believe you have to hold yourself accountable if you make your goals transparent.  Another important aspect is to ensure my wife is onboard.  

It's really scary to think about dropping the W-2.  But the quality of life and ability to live life with passion rather than waking up every day to collect a paycheck is driving me to take action each and every day.

@Ralph Justiz I am curious if you left the W2 because you reached that "financial freedom" threshold we all talk about...or if you just burned the boats and went all in on being a real estate entrepreneur.  

I have a good paying W2 and lenders like me.  I do consider if that would change (or how much it would change) once I no longer had the W2.  I've managed so far to balance a demanding job with my two multifamily properties (as well as family, marathon training, ongoing education, and a modest social life).  I'm just ready to go all in on real estate and think I could grow my business much faster.  Just know it could be a detriment to drop the W2.

Curious how your decision-making process went.

Great to hear!

The tenant needs to switch electricity into their name.  If they don't do it timely enough you can bill them for whatever days you paid for.  But you should make it part of the lease requirements that they get it switched over within your specified number of days.  The only time you should need to put electricity in your name (your business name) is when you first acquire the property.  Just make sure you have it setup to roll back to you upon tenant move-out.

Hi @Alex Juarez.  Some thoughts...

1. Utilities - For water you are going to have to find the utility district that serves your home.  This is always fun...not to hard to find who, as that can be found on the county tax site.  But finding a phone number or website can be challenging.  Most of the water utility districts are pretty old school and you may literally need to drive there and bring your closing documents.  Your tenant will need to do the same once they have a signed lease with you.  As for electricity, I used to always just call my preferred provider (I always used Reliant)...tell them it's a rental and sign-up for a basic plan.  If you are doing renovations and have alot of contractors you can get a plan that offers lower rates during the day (when they are working).  But regardless, you will not have the plan long so it doesn't matter too much.  Ask the REP (retail energy provider) to set you up with a CSA (continuous service agreement) so that when the tenant moves out it will roll back into your name (you don't want to lose power and have to pay re-connection fees, etc.).  You shouldn't need to worry about the contract too much as you are not penalized for a "move-in".  You are only charged penalties when you switch providers before your contract expires.  No need to look for month-to-month plans.

2. Advertisement - Cozy syndicates to several sites including Realtor.com, Hotpads, etc. It's been awhile since I used it, but don't recall they syndicated to Zillow. But you can just set that up manually if needed. Where you advertise depends on what target market you are trying to reach. The most traction I ever got in my single family homes was through Facebook. However, that was also where I got the most tire kickers and flaky people. Never had much luck with Craigslist...but probably doesn't hurt. The real question is whether you want to use a real estate agent and list it in the MLS. My wife is a realtor and always gave me a hard time about NOT using an agent. Even though I would save on her commission I never wanted to pay the buyer's agent. But you have to weigh the amount of opportunity cost if you are sitting on your property for 3-4 months trying to lease it on your own vs paying a commission. There are some flat fee listing services and you can offer whatever you want. Just know that agents are likely to show properties where they can actually make a buck. Personally, I did a bit of both. When I had properties in a hot area at the peak of the season I marketed them on my own. When it was the slow season (yes, you are in it) I would sometimes list it in the MLS and pay the commission to get it rented faster.

3. Timing - No one says a lease has to be an even 12 or 6 months.  I would sometimes create 10, 14, 15 month leases, etc. to try and get the end date within peak season.  Some tenants may not go for it but just don't try to thread the needle...even if you can get between Mar-Sep you are doing ok.  You just don't want to be in the same cycle every year of having turnover in Jan/Feb.  But you also don't have to do it all with one tenant.  For example, if your property gets leased in Feb and you can squeeze a 13-14 month lease...and then if you get turnover you do the same with the next tenant....you will get to where you want to be fairly quickly.

4. Rent Collection - When I first started I had tenants mailing checks and even once had a tenant put a check under my doormat at 11:59 pm (NEVER have tenants come to your home...it was a huge rookie mistake...but live and learn).  Once I found out about Cozy I never looked back.  All my tenants were on it and the entire process was automated and seamless....from advertisement, applications, background checks, leasing, and rent collection.  Tenants liked it too!  They appreciated being able to set reminders and automatically debit their accounts.

I hope this helps!  I've since moved on to multifamily and third-party property management but really valued all the things I learned by self-managing my SF rentals.  Best of luck!

Tony 

Thanks @Mark Sewell.

@Brian Mangus  feel free to connect with me if you want to share more specifically what you are looking for. I’m a multifamily investor/syndicator in Texas. I’m pretty hands on and enjoy sharing what I know and also learning from others. 

@Tushar P.have you considered sponsoring your own MF deal...maybe with a partner(s). I inferred from your post that by “rentals” you were considering single family. Unless you plan to hire property management then I agree it could be a fairly active role. I always found it challenging to find SF deals that would cash flow well when including PM.  

Thanks for hosting the holiday party @Vijaianand Thirunageswaram! It was good to meet so many BP’ers in the flesh.

My primary goal is to stabilize the 60-unit we recently acquired. Ideally, if we achieve our targets as planned we will look to acquire our third MF property.