All Forum Posts by: Travis Sperr

@Anthony Gioia I own and manage 10 properties in class c neighborhoods, I have found that it is all about picking the right tenant and has very little to do with the properties. I have had tenants I never hear from, pay on time and the place is spotless when I do inspections. Of course that doesn't mean it will be that way all the time, but at the same time I have witnessed high end rentals get trashed- and it is a lot of money to rehab a 4,000 sq ft house. You will pick your niche and have to build a business. No question that it is more likely that a higher priced rental should attract a tenant that can do some of the small repairs and not call you. 

Two things that stand out to me:

You mentioned traffic - as a property manager your highest value is not driving to the properties. I very rarely get in my car after a lease up - I make phone calls and every person I use for repairs gives me a progress report.

If you already have property management experience, why buy the franchise? why not find and close the leads on your own? 

@Clay Manship your assumptions are correct in that a typical lender is not going to lend to an LLC - although a local bank may do so with personal guarantees, likely requiring all three to sign in this situation. A good way to structure would be via an LLC with a clearly defined operating agreement - very specifically spelling out roles and responsibilities.

To go one more step outside of the financing piece i would really encourage you to take a look at what you are getting into. I don't know your experience but 3 partners on a deal this size where one is putting up the majority of the money, especially with financing involved sounds like a bad idea to me. 

@Mark Breaux the most challenging part about location like a busy road, is you never know how much it will effect the value until you get the property resold. A typical appraisal adjustment could be as little as 5% or over 10% of value. If you don't have a handful of deals under your belt I would take your agents advice on this one. Also good news the agent has your best interest on this one.

@Sammy Patel I would hate to see you refi a property you have already owned for 10 years into a loan that would extend your loan another 30 years! Tough to answer without knowing if there is any equity in the property, but 600 a month sounds like it is uncomfortable. Can you sell it? The equity position would also have a lot to do with your refinance options.

@Lisa Foster-Bryant on a deal like this I would focus much more on the rents than the sales comps. At this price point you are likely not going to see a huge amount of appreciation and a difficult property to resale because of the value. 

@Ryan Hubbard this is a decent deal, cash flow is pretty good for the basis invested. Good financing on this deal would make a killer cash on cash return. 

@Anthony Gioia as I am sure you are finding there are typically less rental or non-owner occupied homes in affluent areas. Immediately your potential client pool is smaller than a less attractive area. I think it is also misnomer that more affluent neighborhoods produce better tenants, that is not always the case. This is not to say that there is not money in this strategy, you will just have to find weather or not it is a good fit for your business plan. 

@Xin Z. depends on your goals and appetite for risk. Low rates make it attractive to borrow money, but owning real estate free and clear is a great accomplishment. Of course cash in hand makes it a lot easier to buy more property. 

I am a part of a team hosting a real estate investor event in Denver. This is our 9th event, there are no sales pitches - 10 speakers, a panel 25 vendors to help you grow your business. Local investors doing deals, no Guru's - Last fall we had 450 in attendance. 

It is $10 for all day and it includes free drink at the networking event. $10 helps us cover the cost of the space.

All details here: www.denveriss.com

October 25th, 2014

Radisson Hotel 

3155 S Vaughn Way, Aurora, CO 80014

Good suggestions above. I would look for a different lender and /or check with local banks. If you are claiming your tips and have 2 years of returns there shouldn't be an issue. Often times lenders who don't have experience with a specific scenario, like you described, do not know how to look at the deal so they just say they cant do it.