All Forum Posts by: Michael Totman

James if there was a magic formula none of us would be responding on this thread, we'd all be on our private beach! Persistence is the key, and organizing yourself.  People tell me I'm crazy all the time because of my strict scheduling and planning, but without it I'd get nothing done.  Even when I have a plan set out and time blocked, something always comes up.  Be flexible and fit it in wherever it fits. 

Three years old may be too young to introduce the business to the little girl, but maybe you can find a way to include her in some tasks you do.  If you're going to look at an empty house bring her along to get that daddy time, teach her what you're doing, then stop for ice cream on the way home.  

We buy and hold with a 9 - 5, but throughout the day I'm talking with tenants, lenders, maintenance, etc.  I find the time here and there. I figure if half the office can take 15 minutes every hour for a cigarette, I can make a call or write an email in that time!

Tim you say you're an investor, think of it from an investor standpoint.  You signed a lease that allowed her to keep one bay.  Did you read the lease? Did you think she did this simply trying to keep you from filling it with junk, or that she intended to use it and frequent the property to store/retrieve things?  If she's asking you to be her errand boy to retrieve items then politely decline, but you agreed to the arrangement. 

You've been there 8 months. You're a stranger to her. She doesn't know if you are competent to repair things or not, and she would prefer her own contractor to work on her house.  This is not unreasonable and you should go enjoy your "time off" from repairs. 

Does she pay for the electricity for the light that gets left on? If so, shut it off. If you pay, then I'll give you this one and tell her to go pound sand.

You rented a SFH, normally that would require you to do yard maintenance but she has agreed to mow your lawn. It sounds like it may be a large lawn and take a fair amount of time to do. The least you can do is pick up your dog crap so she doesn't step in it and it doesn't turn the lawn brown.

I suspect she is a PIA, but it sounds more like you acted just like any other tenant and rushed to get into the nice house without reading and realizing your responsibilities.  It doesn't sound like something an investor would do, but you did it.

Best of luck and maybe you should move on.  Definitely don't turn into a professional tenant with the lawyers, BOH calls, etc.  You're an investor, and karma's a B****. 

For anyone bench marking on absolute $$ per door you are missing the big picture.  Compare that to something we can all relate to; what if I told you my annual salary from my W2 job was $20,000.00 per year? I'd be below poverty for a family of four.  But what if I then told you that W2 job only required two hours of work per week? Would I prefer this job or the job that pays me $120,000 per year but requires 40 hours or more per week?

Looking for $100 - $500 per door without knowing what that $500 per door costs is a waste of time.  Said another way, I'll give you $500 for every front door you own as long as you give me $510 for every back door. 

As has been mentioned, financing plays a role. I prefer to even the playing field and use ROI, and for any real estate showing less than 15% I'd pass and just put that money in an index fund until I could use it for something better. I personally don't factor in depreciation, write-offs, tax issues etc into this number in the research stage as tax savings next April don't put food on the table this August.

Carpets have a limited life, and security deposit law in MA is tricky at best, so we don't usually charge for carpet items unless they were brand new when they moved in and completely destroyed when they move out.  Our lease does state they are to keep them clean, mop up spills, and use the cleaner we provide under the sink specifically for carpet or they can be charged.  

This week, however, we are removing our second to last carpet and going with vinyl plank. 

As for other security deposit items we specifically list what we charge for various common damage items and require they initial their understanding at move in.  Replace door - $xx.xx; Repair broken window - $xx.xx; Replace smoke detectors - $xx.xx etc. for about 20 items. Anything else would be listed as "Contractor Quote" based on the move out inspection.  

My list has held up in court as recently as last month.

There are certain flags that come up during the screening process that can help determine how difficult a person will be as a tenant.  Section 8 assistance is not, and should not, be one.  I have had personal experience with 3 section 8 tenants so far and passing conversation on many others. Two of these tenants are as nice as can be, currently pay on time with an occasional reminder needed, and generally take care of the property as best as can be expected.  The third was terrible.  I analyzed my screening process after evicting them to learn what went wrong.  Nothing I could have done would have led me to believe they were a garbage tenant.  The problem was her drug addicted, incarcerated, baby daddy who got out of jail a month after she moved in that she failed to mention would be living there on the application or housing voucher.  She ticked all the right boxes: had a part time job, good references, family support, was clean and well organized, etc. Regardless her income source, she turned into hell on wheels when lover-boy came home and started terrorizing the neighbors.  She was my first eviction, and it was a sweet, glorious day watching the sheriff pack up her belongings...

Bottom line is you can do all the tenant screening you want, sometimes the selection process is luck of the draw and that guaranteed payment is nice...

 Nick, I've run across this same frustration and what I've discovered is that even the lenders don't know every rule to every program. Sometimes the first guy you talk to at the bank just graduated last week, think he understands investment real estate financing completely?  No, but he wears a tie so you want to trust him.

We (yes, I partnered with someone which many do to get started) have bought 7 properties in the last 6 years by going slow, methodical, and calculating. The first 2 were originally primary residences, 3.5% down each. They don't cash flow much, but they do flow.  We saved some cash, took the 401k loan risk (yes, there is risk in this game), refinanced, borrowed from friends and family, and made it work to buy the others. 

Keep looking for lenders, typically the smaller and more local banks will have more options for you. I found a program from a local lender by listening to AM radio on my commute.  They do one on those daily 1 hour radio ads masked as an investment show.  That's how I learned about them, and our last deal with them went smooth. 

Keep at it, don't believe everything you read until you can back it up, and realize that most "gurus" are just repackaging courses and articles and ideas they took themselves without actually having experienced the real world.   What worked yesterday may not work today, and hence we have gone from rotary phones to iphones in one generation...

This is inspiring, I hope to do in the East what you've done in the West, starting today...

Great to hear about others stories. My first deal was over 3 years ago, after all credits and consideration I was out of pocket $5,995 at closing. That house now nets a cash flow of over $8,000/year. Small for sure, but the embodiment of letting your money work for YOU!

Craig, I take offense to your request to know how to "accurately" "estimate" something. In my experience an estimate is an estimate, and accuracy is up to your accountant to get right after you blew your budget...but seriously I had this same problem when I started.

You've got the majority of the categories you need to estimate, so just start plugging in the actual numbers on the project you're concerned with.

If you have HOA fees you should know this up front, so plug in the number. You can likely get a decent average of utility cost from your town or city. My utility gave me an average monthly use on a property I was looking at for the previous year. Of course that depends on what you know about the occupancy from the previous year.

Vacancy, I use 1-2 months rent the first year starting from when any reno is complete, then 1 or no months rent depending on the tenants history and my knowledge of how much he likes his apartment.

Landscaping, snow removal, maintenance, etc depends. Will you do it yourself, do you know anyone to do it? Landscapers are a dime a dozen in my area, so call a few and get quotes and references.

Capital expenses, well, if I had a crystal ball I'd be retired from my cubicle job by now. It's specific to the property, you gotta just look. Are the roofing shingles in multiple layers, dry, cracked, and peeling up? You'll need a roof soon. If not, get a contractor to estimate a remaining life for you. For my mechanicals (furnace, a/c, water heater etc) I have a plumber come do a clean/service when I first buy a place. I then ask him to give me an estimate as to when he thinks it will need to be replaced and a cost. He's pretty accurate in my experience.

Maintenance will also depend on the current condition and any rehab you do before a tenant moves in. Also, is it in a bad section of town? Likely maintenance will cost more as they trash the place. A higher quality tenant in a better area may be more careful.

I manage my four myself, so do not calc management % but rather look at monthly cash flow vs. monthly time spent. Most managers I believe will cost 1 month rent to fill it plus 10% gross rent/month and charge cost + 25% for any repairs needed.

I hope I could help. I'm not the most experienced on this blog and am new to the forums, but this is based on my real life experience. Sounds like you've done the homework, now pull the trigger and find out how accurate you were!