Steve- teach us all about real estate

[steveny]

How was this discovered? I'm sure this was quickly added to your stash right?:biggrin:

Taking down the smoke, co2 detectors and the cover plates is the first thing that is done before paint goes on the walls.

We took posesion back on this unit yesterday and it's almost ready for a new tenant today. By the end of tomorrow it will be occupied again. 3 days of down time = 90 bucks rather than screwing around and being pissed just get it filled again. All new doors, full paint including ceilings, new bath cabinets and medicine cabinets, new floors in the kitchen and bath, new toilet. new stove and fridge, new storm door, all new carpet, even a new bush by the front door, etc etc. Basically a brand new house in 3 days. Rent jacked 12%, edit 22%

 

[Matt_337]

Thanks for sharing Steve.

And it's always great that you share the horrors you have to deal with in being this landlord. Seeing those pics sicken me. Ppl who intentionally destroy property like that....anyway. Thanks again.

 

[steveny]

Thanks for sharing Steve.

And it's always great that you share the horrors you have to deal with in being this landlord. Seeing those pics sicken me. Ppl who intentionally destroy property like that....anyway. Thanks again.

More pics to come.

Not sure if I told you guys about the lady who has been chronically late for the last 9 years. I have been nice to her because she reminds me of my mother, struggling with 3 kids and won't accept public assistance. Well I put pressure on her last month to pay the rent on time. She calls code enforcement to complain I haven't fixed her bathroom floor. I tell her I will fix the floor after she pays the rent on time. Code has me fix the floor which I do. Today I get a letter in the mail from the tenant, she is moving out. It's a game with the tenant, they want to make sure the landlord doesn't make a profit. that's the game for them. Oh well I only paid 20k for her house and she has been there for 9 years now at 1k a month. Hope her new landlord calls for a reference baaawwhhaaaaa. The straw which broke the camels back was rent a center calling a couple of months ago to see if she paid her rent on time because she wanted to rent a big screen TV. I just laughed in the phone at them.

 

[jond]

Steve,

I have a few questions if you have a second. Please skip any/all if you want. It's a lot of questions...

- Paying for a rental in cash(after saving for 5-7 years) vs buying with a loan.
Is using a loan always the better option? Seems like there's added saftey to simply waiting and saving up for the rental property? Especially if by the time I'm ready to buy interest rates are back up to 8-9%.

- Townhouses vs houses.
Which do you think is better? With townhouses you don't have to worry about the outside, with renters cutting grass, etc, but you have ever increasing association fees. Any thoughts?

- Beachhouses/vacation houses vs normal houses.
Any thoughts on making your REI a beach house instead of a single family house?

- Long distance rental properties.
Do you have any properties that are long distance(more than 4 hours away)?

- Rental properties in bad parts of town.
It sounds like you may have some properties in bad parts of town? What is the benifit to this? Any draw backs?

- Thought on hiring a property manager.
Are they an outright bad idea in terms of making a profit, or are they maybe a good idea for someone just starting out? I know they eat some of the profit, but it seems like maybe they're worth it?

- Buying houses inside an LLC.
I heard someone talk about setting up an LLC and putting your rental property inside it to protect you from lawsuits. Is this even legal? If it is legal, is there any reason not to do it?

- Super Cheap Properties in 2009.
I did a search on realtor.com for Richmond, Va and Washington DC and there are several houses for under $50,000. Looking at zillows, these houses were close to $200,000 2 years ago. Are there scams going on right now, or are there legitimate good oportunies that maybe people should jump on before the economy recovers?
Example:
http://www.realtor.com/realestatean...pe-condo-townhome-row-home-co-op?sby=2&pgsz=3


Thanks Steve!

 

[pvmike]

I'm not Steve, but...

Steve,

I have a few questions if you have a second. Please skip any/all if you want. It's a lot of questions...

- Paying for a rental in cash(after saving for 5-7 years) vs buying with a loan.
Is using a loan always the better option? Seems like there's added saftey to simply waiting and saving up for the rental property? Especially if by the time I'm ready to buy interest rates are back up to 8-9%.

The rate of return will be greater with a loan, particularly at today's lower rates. Nothing wrong with all cash if the property needs work and is difficult to finance (code violations, no c of o, deferred maintenance, etc.)

- Townhouses vs houses.
Which do you think is better? With townhouses you don't have to worry about the outside, with renters cutting grass, etc, but you have ever increasing association fees. Any thoughts?

In general houses. No HOA to pay or deal with.

- Beachhouses/vacation houses vs normal houses.
Any thoughts on making your REI a beach house instead of a single family house?

Obviously the market rents for the vacation property would have to exceed that of a regular rental for this to make sense. I'm sure this depends on what you buy and where.

- Long distance rental properties.
Do you have any properties that are long distance(more than 4 hours away)?

This is a terrible idea unless you have reliable local management.

- Rental properties in bad parts of town.
It sounds like you may have some properties in bad parts of town? What is the benifit to this? Any draw backs?

See pics above. You may make more money collecting section 8, but you will have to deal with shit you've never imagined.

- Thought on hiring a property manager.
Are they an outright bad idea in terms of making a profit, or are they maybe a good idea for someone just starting out? I know they eat some of the profit, but it seems like maybe they're worth it?

They're a good idea if you don't know what you're doing or don't have time to do it, but the costs you expend will directly effect your bottom line.

- Buying houses inside an LLC.
I heard someone talk about setting up an LLC and putting your rental property inside it to protect you from lawsuits. Is this even legal? If it is legal, is there any reason not to do it?

This is legal and commonly done to protect the owner.

- Super Cheap Properties in 2009.
I did a search on realtor.com for Richmond, Va and Washington DC and there are several houses for under $50,000. Looking at zillows, these houses were close to $200,000 2 years ago. Are there scams going on right now, or are there legitimate good oportunies that maybe people should jump on before the economy recovers?
Example:
http://www.realtor.com/realestatean...pe-condo-townhome-row-home-co-op?sby=2&pgsz=3

That may be exactly what it's worth. What it sold for in the past has nothing to do with whether it is currently a good buy.

 

[Sarge]

Can I be denied an apartment due to my credit? Even if my debt/income is pretty good?

Are there any tricks to making this avoidable

 

[steveny]

Can I be denied an apartment due to my credit? Even if my debt/income is pretty good?

Are there any tricks to making this avoidable

Absolutely you can be denied. The best way to not get denied because of your credit is to lie on your application. .

 

[steveny]

Steve,

Your tenant Tenise just called my office & called my secretary a f-ing bitch. I'm not quite sure how or why she has my number, but her chances now of me sending someone over to take care of her problem are non-existent. I appreciate your work & am always ready to help you out, but am not going to subject my office or field people to ignorant tenants. Also, it would be far more economical for you to have us do your service work only in the one city we have a location in and not several cities across the state.
Jim

 

[gdae]

Any chance you can give Tenise the heave-ho? Looks like she just created so many problems it would induce a headache to contemplate them all.

 

[passline]

More pics to come.

Not sure if I told you guys about the lady who has been chronically late for the last 9 years. I have been nice to her because she reminds me of my mother, struggling with 3 kids and won't accept public assistance. Well I put pressure on her last month to pay the rent on time. She calls code enforcement to complain I haven't fixed her bathroom floor. I tell her I will fix the floor after she pays the rent on time. Code has me fix the floor which I do. Today I get a letter in the mail from the tenant, she is moving out. It's a game with the tenant, they want to make sure the landlord doesn't make a profit. that's the game for them. Oh well I only paid 20k for her house and she has been there for 9 years now at 1k a month. Hope her new landlord calls for a reference baaawwhhaaaaa. The straw which broke the camels back was rent a center calling a couple of months ago to see if she paid her rent on time because she wanted to rent a big screen TV. I just laughed in the phone at them.

"Priceless!" :biggrin:

 

[steveny]

Any chance you can give Tenise the heave-ho? Looks like she just created so many problems it would induce a headache to contemplate them all.

Tenise will sit in the dark until she moves out.

 

[passline]

I just got skylights put in my place. The chick who lives above me is furious!

 

[steveny]

I just got skylights put in my place. The chick who lives above me is furious!

HA, there was a landlord around here who was busted for installing cameras in his apartments and we aren't talking about the hallways.

 

[Ski_Banker]

Steve,
Not sure how much work you do in facilities management, but if you are in need of things like HVAC protection systems (in corrosive environments like upstate NY) or air filtration/sterilization (in corrosive environments like those of your tenants! :tongue then I'd highly recommend these guys www.blygold.com. Their work is Good and they can probably whip up any custom products you or your team might need.

Hope this helps. :biggrin:

 

[CBLude]

Great thread! I've been in the RE stuff for about 7 years so far. Smaller scale as I'm still working my regular job. I am actually looking at doing that vinyl florring in my unit. We already put down some of the Oak style in one of the tenants Kitchens. Here's a comparo pic for anyone who is interested.

 

[steveny]

that stuff on the left we just put down in several apartments. EASY.

 

[gdae]

Would you use the vinyl stuff in your own home? I'd like to put something down that is durable when we rip up the carpet, but if it is just apt. grade then I'll stick with the real wood.

 

[steveny]

Would you use the vinyl stuff in your own home? I'd like to put something down that is durable when we rip up the carpet, but if it is just apt. grade then I'll stick with the real wood.

Depends on the house. I see now they have the same product for garage floors and the stuff looks pretty durable but I wouldn't use it. If it's in my own house I know I am going to take care of it so I would use a different product.

 

[gdae]

Depends on the house. I see now they have the same product for garage floors and the stuff looks pretty durable but I wouldn't use it. If it's in my own house I know I am going to take care of it so I would use a different product.

Good point. Two adults here, nobody's going to beat on it.
Thanks, steveny.

 

[CBLude]

Would you use the vinyl stuff in your own home? I'd like to put something down that is durable when we rip up the carpet, but if it is just apt. grade then I'll stick with the real wood.

gdae,

I was going through the same thought process. I found another version of the plank flooring by armstrong called LockHaven. They have it at Home Depot as well but it a special order item. It actually has a hand scraped like finish like the newer styled hardwoods. I think it's a good step up and the closest hardwood look for the money. Its on one of those island things where you can page through the flooring. $2.19/sqft. The Allure is between 1.59 and 1.99 sqft. For the price difference I think its a very solid alternative to real hardwood. Much more durable too.

Heres the link for the LockHaven on Armstongs page...
http://www.armstrong.com/flooring/vinyl-tile/lockhaven/floors-14345.asp

Zoom in on the pic and you can see the hand scraped look.

 

[gdae]

gdae,

I was going through the same thought process. I found another version of the plank flooring by armstrong called LockHaven. They have it at Home Depot as well but it a special order item. It actually has a hand scraped like finish like the newer styled hardwoods. I think it's a good step up and the closest hardwood look for the money. Its on one of those island things where you can page through the flooring. $2.19/sqft. The Allure is between 1.59 and 1.99 sqft. For the price difference I think its a very solid alternative to real hardwood. Much more durable too.

Heres the link for the LockHaven on Armstongs page...
http://www.armstrong.com/flooring/vinyl-tile/lockhaven/floors-14345.asp

Zoom in on the pic and you can see the hand scraped look.

Thanks, CBLude, my girl and I will definitely go down there and see it in person. Of course, my role is more of an influential one. She gets to make the final call.:wink:

 

[gdae]

Found this, thought it was a pretty good read.

http://www.investopedia.com/article...e/09/so-you-wanna-be-a-landlord.asp?&viewed=1

 

[steveny]

I just bought a REO apartment complex, got a VERY fair deal. All the buildings need painting on the exterior. got an estimate, 22,500. In the last two days I have painted two buildings. I have ~2,000 in paint expenses. That is how you make money with real-estate. You can't make money sitting on your ass, you actually have to get dirty and work hard. I was up at 5am and just got home, shoving food in my face and getting ready to go to bed so I can get up tomorrow and do it all over again. I should have about 5k in paint when the project is all done in two week. So in the next two weeks I will make 17.5k, unless the Stock market falls apart and wipes out my positions I don't have time to monitor right now.

You know how when your at the car wash and the time up beeper is going and you don't have any quarters left so you are working really fast and hard to get it done? That is how I am from the minute I get up in the morning until the minute I go to bed. Hard core!

 

[whatisreal7]

Hi Steve. I have a condo in Dallas, that I paid $280K for, great location, with a loan at 5.5% 30-year. I am currently renting it out, and the rent covers the mortgage, taxes, and miscellaneous expenses. It is pretty much break-even (not to mention all the write-offs and depreciation, etc). My question is, given where the market it, if I have some cash sitting around, does it make sense to pay down the loan so I start generating some positive cash flow month-to-month? as opposed to investing that money in the market, or in a CD?

thanks.

 

[steveny]

Hi Steve. I have a condo in Dallas, that I paid $280K for, great location, with a loan at 5.5% 30-year. I am currently renting it out, and the rent covers the mortgage, taxes, and miscellaneous expenses. It is pretty much break-even (not to mention all the write-offs and depreciation, etc). My question is, given where the market it, if I have some cash sitting around, does it make sense to pay down the loan so I start generating some positive cash flow month-to-month? as opposed to investing that money in the market, or in a CD?

thanks.

It's all about what you are comfortable with. I prefer no more than a 70% LTV. Some people leverage to the hilt but if the property is at a 70ltv, here where I live the property could ALWAYS be sold for more than I owe. It really depends on your personal situation. If I were in my 20's and had some cash sitting around (especially in this market) I would be expanding for sure. But I am in my 40's and I am starting to want and need more time to myself. IMO to have 280k in an investment and just break even is crazy. I just spent 275k on a group of buildings that make 8,000 a month.