All Forum Posts by: Victor Baronich

Mitchell, I am at the top of the market for the most part. I am around $1.46/sq ft on most rentals, which is extremely aggressive for the area. My last 3 tenants have left because they bought a home.

I have not been. All my properties are managed. The manager is extremely competent, but is not aggressive in this area. How much are you raising every year? Do tenants not buck that?

Yes, and that part is good. That's why I want to hold for long term, as I know once they are paid off, the monthly cash flow and the balance sheet will be better.

Quote from Chris London:

-Cap-Ex: Others in the thread have said it correctly. The 'rules of thumb' to save for Cap-Ex are dangerous. You really need to know before you buy a property the life span of your roof, HVAC & hot water heater. If they are at half-life or newer then using the 10% rule of thumb can be fine but if they are older than half-life you need to factor in the $7-10K for a new roof or HVAC etc.

Good thinking. I have not done this. I usually look at the property and make an offer based on the condition of these items, but admittedly haven't taken them into account with the cash flow.

What do you shoot for with per month cash flow?  I believe rent is very high for the area.  I definitely could have goofed the numbers.

Do you mind sharing your requirements when looking for a rental?  Perhaps my criteria is too low.

 Will check it out.  Thanks!

 They do appreciate as we are in a good market for that (south ms, in jackson county).  I just sold one that profited more than what I originally paid for it in 3 years.  But my goal is to hold long term for an additional revenue stream.

 Yes as well as vacancy.  Pretty much what is in the downloadable form off the site, and what it talked about on podcasts as well as in books from this site.  10% on capex doesn't always cover the expense though, especially with a new property (4 years) as there hasn't been enough time to bank up.  Which is why I'm wondering if over long periods of time it starts working.  I have a mix of about 30% new houses, and 70% older homes.  Obviously I don't get many issues out of the newer homes.   Are you guys buying older homes and then completely redoing things like ac and roofs so that you don't have those expenses later?  Or letting it play out over time? 

I understand.  But I also read on these forums, people making huge incomes from rentals. Or at least that is how it seems to be presented.  Should I not expect an income from rentals?  I am open to the idea that I am the problem.  In getting into this I was looking for an additional income stream, and not worried about tax shelters.

Scott,

-I bought all 12 super fast, so I didn't have time to realize what was going to happen.

-My investors are very cheap.  I have a big circle of wealthy friends and they know I know business (obviously not rentals, lol) so they lend me money for whatever I want to do, since I have a history of returning.

No section 8, I would say mostly B.  They are nice houses in nice areas.  One or two are C's in low income areas.  I haven't seen a correlation between an area and the amount of repairs needed.

Thanks!

Hi, I have been into rentals now for about 4 years.  We currently have 12 rentals, all sfh's.  What I am finding is that essentially we make no money and probably lose money slightly overall.  I was very careful when buying to cashflow at least $200/month after all expenses (most are over $300).   The problem is when a tenant leaves.  Often I am replacing floors, or painting/pressure washing, and other misc repairs.  And while it is quick to turn around and rent again, that 3-5k in repair costs kills the profit.  One unit needed a new AC, for example.  I am blessed to have family that does that so I got it replaced at wholesale, but it still wiped out a year or more of profit. 

I keep thinking all I have to do is buy more and more and eventually it will show profit.  But is that a reality?  I mean if I had 50, well then I have 50 roofs, 50 water heaters, 50 AC's, etc to maintain.  So do costs just adjust right along side cashflow?  

Since a kid I was taught the Robert Kiyosaki mentality of use debt and OPM.  So I don't pay for acquiring my rentals,  I have investors do that.  My responsibilities are the repair costs.  Maybe I should pay them off to open more cash flow, but that means sinking a ton of money into the business that could be doing something else. So is that really smart?

To those that have been doing it longer and maybe have more units, what have you found over the years?  Is there a breaking point where you have so many you start profiting?

I have my rentals set up in a C corp.  I also own another C Corp business which I receive a w-2 from.  I would like to raise my income on the non-real estate business, but want to have the REP tax status first to cut down on fed income tax.  I already qualify for this status, but my accountant says that I cannot use it against my w-2 because the real estate business is in a c-corp and it would need to be in a s-corp.  Is this true?  She says that switching will eliminate our net operating loss which we are carrying forward.

Thanks for any help!

Been 4 years.  Has anyone done anything with them?  They seem to have pretty poor reviews, but then you can find poor reviews of nearly any place you want if you look hard enough.

That book is why I am retired today at 33, and have been for 3 years.  I was fortunate enough to be involved with people who taught me how to think (right siders).  It has enabled my wife and I to be stay at home parents and I can't tell you how grateful I am for it.  Read it, Absorb it, but most importantly...Apply it.  And do it TODAY.  The results are worth the effort!  I have started "passing the torch" and helping others in our community do what we have done.  If you have any questions, let me know!