All Forum Posts by: Wes Brand

@Nick Sabat everything you've said is against the law in certain jurisdictions. If you tried it you'd get fined pretty severely. Here in SF tenants are legally allowed to sublease to anyone per the landlord's written approval(no matter what you say in the lease) and the lack of creditworthiness is not an allowed reason to reject a sub-tenant. Pets must be allowed if they're registered as a 'help' animal(I refuse to say service for the emotional support hamster). Further, direct dependents have additional 'advantages' that make it harder to refuse them. Occupancy limits must still be observed, however. Now, SF is pretty far on the tenants rights side of things, but I do not know where her city falls, hence my suggestion to find out her legal rights.

You missed the most important question: What are your goals? You said cashflow but seem to still be looking in an area that doesn't have good cashflow, so what are your actual goals? A place to live that covers itself? NN/year passive-ish income? Maximum wealth building? Something else?

If you care look up the law in your city. Some cities impose rent increase limits(rent control, I don't think that applies in FL), but more likely there are limits to how often the rent can be raised in a given time period. I don't know your area, but if it matters you should know your rights. Additionally many cities have a free or low cost tenants rights hotline that you might want to search for.

Not sure how it works in Canada, but in the US you can just call the utility company(s) and ask for the average heat/water/electric bill for the past year.

 This (I can't afford to buy at 5% cap rate) is exactly what @Account Closed means by investing for cashflow is for poor people or poor investors. You're looking at cashflow only not because it's going to give you the best return on your money over time but because you can't afford to consider anything else: a poor person. Not in a negative sense but in a you have cashflow needs sense. 

And on the other side: 

If you could afford to invest in the 5 cap areas but chose not to, because they didn't cashflow, that makes you a poor investor. Your investment should be dictated by your predictions of the market at this point. Declining an investment that will double your money from 1milion to 2 million in 10 years because it doesn't currently make money is a poor investment decision. On the other hand, declining it because you think the market is about to drop, or because you want to deploy your capital in a market where the rate of appreciation is higher/chance (or cost is lower)is better could be a smart move. 

The bottom line is you need to consider the 5-cap market and evaluate if it's right for you. Not just knee-jerk 'it's 5 cap, stupid move to invest there'

@Christy Harris Am I missing something? GRM is price / gross rents. Unless you're using that as an indicator of the area, I'd think you want it as low as possible.

10,000 price, rents for 1000/yr

10,000/1000=10

10,000 price rents for 2000/yr

10,000/2000=5

Edit: oh, it's the at least 100 that was confusing...when read as 'at most 100' makes sense :)

People tend to take the money they're not charged for granted. You might want to raise his rent to market and give him a credit on it for 500/mo for the building-super duties. I'm unsure of the legalities of doing this, but then he sees the benefit he's getting. I'm also unsure doing so would mean you need to be careful of having him presumed to be an employee. 

You may also want to just offer him market rent and no other duties. (But remain professional when you do this -- not when he's complaining or you're complaining about something)

Some investment strategies don't make sense in some markets. If you're investing for cashflow, that investment probably won't make any sense, but you don't have to be investing for cashflow (appreciation, wealth preservation, wealth building, etc). That said, if you're coming in with 3.5-5% down you're doing it as a primary residence, so you're actually spending 1100 (800 because you're owner occupying a unit, 300 because that's the negative amount) and getting a place to live and building semi-liquid equity (as long as it's a primary residence you shouldn't have much trouble pulling the equity back out with a HELOC or cash out refi).

 No, it just takes 208 properties and one year. And if you do my $1 buy in and $10 per door...it'd cost...$4,160 and one year. Beat that investment with your appreciation games! 

While I'm sure you're not making this mistake, I'll say it again since it seems a ton of people are: The $/door number is completely, entirely, utterly meaningless. I'd invest all day if I found properties that gave me $10/mo for every $1 I put in. I could take out massive amounts of debt to do so if I was reasonably confident that it'd continue. The number can *only* ever make sense if you also include the buy-in price; even then you need to look at the rest of the costs and expected other sources of returns on the investment.

You'll also want to do a detailed analysis of the historical financials before relying on them. Realize that you probably won't run the place like the current owners do. Your costs might be higher (they don't advertise and you will, for example) or lower (they're paying 5 people to do the job of 3, unlikely with a 10 unit park, but...it's an example ;), but they're almost certainly be different. You should rely on what you think your capex/maintenance/vacancy costs will be, not what the current owners have.