The $30k rental club.......

316 Replies

Originally posted by @Dan Heuschele :

 I have gotten mixed responses in your active level.  In one post you indicate you take a passive role and in this post you indicate you are a “hands-on investor”.  I continue to believe “Hands-on investors” can succeed in these markets for the reasons you listed.  

I am "hands-on".  I don't use a PM.  

However, managing my rentals myself doesn't mean I spend so many hours a week doing this that it is like an onerous "job", which is how you have tried to describe this scenario.  Once my units are rented, I spend very little time managing them.  There are very few unexpected repairs that pop up, because my properties are not time bombs.

Yet, during a rehab, being hands-on means being around the project and dealing with contractors.  That does take time.  But, I'm not a flipper, so it's not like I always have rehabs in progress.  Most of the time, there is nothing for me to do when it comes to managing the properties except collect the rent.

Once again, though, Dan, I don't want to give the impression that I'm trying to convince you that this route is a good idea for you or any other specific investor.  My sole goal is to dispel any inadvertent bad advice some people who don't have real first-hand experience in this segment are spreading.  I try not to speak about how to run syndication deals because I know nothing about managing syndication arrangements, and I know my information would likely be wrong and look foolish.  But people who have no real experience managing low-cost properties for working class tenants always seem to rush to warn investors away from the segment with unintentional halftruths and mistruths.

The reason an OOS investor (or any investor) has difficulty succeeding in this sector may be because they don't have the requisite experience.  Not because it is an impossible venture.  Please consider that possibility.  Or the possibility that many PM companies and Turnkey operators may have their own best interests in mind ahead of any investors'

Ashley, Linda, Jim K, and others have chimed in here to give their experiences.  There are others here on BP that have done it.  These investors are smart at what they do, diligent, motivated, and honest.  It's very unfair for anyone to try to erase the work they are doing by implying they have been lucky.  The simple fact is they have been SMART.  And others maybe aren't smart enough when it comes to this particular sector.

Stuart...almost by accident, you seem to have started a useful, substantial thread. I just wish you were a touch less confrontational about things you're actively asking to learn something about.

And your whole positivity all-the-time kick...it reminds me of propaganda shots of the Hitler Youth and the Soviet Union's Young Pioneers, all those teenagers in line with wide fixed smiles enthusiatically doing calisthenics in the broiling sun, not a hint of the death camps or the gulags about them as they focused on an ever-more-brilliant future to come, the Thousand Year Reich and the Worker's Paradise.

In this country, I have learned to deeply mistrust permanently positive people who melt into puddles and wail at the first sign of real hardship. Maybe it's just how I was brought up. Maybe it's not how you were, although the Brits I know are used to cloudy skies and expect the occasional bombs to fall out of them.


Originally posted by :
@Lisa
What investors SHOULD say is that "Im not into this price range, but you should learn from people who are doing it successfully" and that level of thoughtfulness doesn't come through when I read these comments.

 Exactly.

Originally posted by @Randy E. :
Originally posted by @Dan Heuschele:

 I have gotten mixed responses in your active level.  In one post you indicate you take a passive role and in this post you indicate you are a “hands-on investor”.  I continue to believe “Hands-on investors” can succeed in these markets for the reasons you listed.  

I am "hands-on".  I don't use a PM.  

However, managing my rentals myself doesn't mean I spend so many hours a week doing this that it is like an onerous "job", which is how you have tried to describe this scenario.  Once my units are rented, I spend very little time managing them.  There are very few unexpected repairs that pop up, because my properties are not time bombs.

Yet, during a rehab, being hands-on means being around the project and dealing with contractors.  That does take time.  But, I'm not a flipper, so it's not like I always have rehabs in progress.  Most of the time, there is nothing for me to do when it comes to managing the properties except collect the rent.

Once again, though, Dan, I don't want to give the impression that I'm trying to convince you that this route is a good idea for you or any other specific investor.  My sole goal is to dispel any inadvertent bad advice some people who don't have real first-hand experience in this segment are spreading.  I try not to speak about how to run syndication deals because I know nothing about managing syndication arrangements, and I know my information would likely be wrong and look foolish.  But people who have no real experience managing low-cost properties for working class tenants always seem to rush to warn investors away from the segment with unintentional halftruths and mistruths.

The reason an OOS investor (or any investor) has difficulty succeeding in this sector may be because they don't have the requisite experience.  Not because it is an impossible venture.  Please consider that possibility.  Or the possibility that many PM companies and Turnkey operators may have their own best interests in mind ahead of any investors'

Ashley, Linda, Jim K, and others have chimed in here to give their experiences.  There are others here on BP that have done it.  These investors are smart at what they do, diligent, motivated, and honest.  It's very unfair for anyone to try to erase the work they are doing by implying they have been lucky.  The simple fact is they have been SMART.  And others maybe aren't smart enough when it comes to this particular sector.

I understand what you are saying.  I think that the RE is probably more active than you are treating it.  We have rehabbed a lot of units acting like the prime.  They each take significant time.  Managing maintenance and repairs takes time.  Book keeping takes time.  I believe active investors can succeed with $30K RE.

I also have done the projected cap expense calculations for our units.  We are small unit count RE so no discount of scale.  I have done it for our past OOS units and our local units.  I have done it when we were more active and being more passive.  What it has shown me is that the 50% rule is optimistic in these lower rent units for a passive investor.  This is not the case for the active investor who is managing rehabs themselves or, even more efficient in terms of cost, doing some of the work themselves.

I have yet to hear one OOS passive investor who has stayed in the $30K units for as long as 15 years.  Again this is the passive, OOS investor, not the investors like you (or the ones you listed that I am aware of) that have a significant role in their RE. 

We currently self manage 12 units and have 6 units with managers.  My wife meets the criteria for RE professional which means she spends more than 750 documented hours.  I also spend some time on RE related activities.  That is the reality of our level of effort.  I could reduce my hours but many of my hours I use as teaching for my son and his best friend.  Also I enjoy many of the hours.

I really think we are of a similar mindset on this except for maybe the maintenance/cap expense cost to the passive investor.  it is my view that it makes the $30K RE produce little cash flow (or worded differently the 50% rule is optimistic on these properties for these passive investors).  Again this is not the case for the active investor.

@Dan Heuschele ,

I appreciate the response.

One last thing.  I think you (and others in your situation) probably don't work in this segment for the simple reason that your experiences with the tenant base may not be to your liking.  That's no crime or insult.  But, if an investor finds it easier to talk to people who are very similar to themselves, that can make a big difference in how they remember the experience.

I had a discussion with a landlord who had a disagreement with a tenant.  This was not a low-income tenant, but it was a tenant who had come up from a low-income childhood, and it was a landlord who had no significant real-world experience with that segment of society.   It should have been a simple discussion, easily overcome and moved past.  

The tenant had a legitimate complaint, the landlord had an unavoidable delay in addressing the complaint, the tenant voiced frustration, they landlord felt uncomfortable, the situation escalated and the landlord ended up evicting a long-term never late tenant over a non-issue.  It caused the tenant and his family distress.  It ended up costing the landlord thousands of dollars in turnover costs and left him with a bad taste in his mouth over the entire experience.  This was a good house in a well-respected middle class neighborhood.  He as much as said he wants to leave the B- segment for a more expensive segment because (he didn't say this outright, but his meaning was clear) he wanted to deal only with tenants who were like himself in socio-economic-educational background.

That sort of experience can happen often in the low-cost cost segment when the landlord has no real-world experience with people similar to the tenant base.

Investor, know thyself.

Originally posted by @Lisa Phillips :

@Jonathan R.  1350 a month is NOT a unicorn. My client Phillip and I was working with in NY (started 3 weeks ago) got this for a 50k duplex, and 1500 for a 50k - and found this in 1 week. It's fine, not that hard (but, experience helps with that, experience helping all sorts of people from all over goes into tha). Stay tuned to my channel since i am going to start interviewing the last few clients i've had the last couple of months - just because its soo exciting. But, it's like we are in different realms - when I work with people i have to purge them of the "these don't exist" and flush them out and start anew. They throw away a lot of that "standard advice" which really works for the top 20%, not the 80%. Will have the interview in about 6 weeks (we are finishing the closing process now, just got the inspection report).  

My other client, Arthur, is finding those returns as well ($1300 rents for a 30k property) (He is also in NY). But before I work with anyone, i have a frank discussion on their comfort level in class navigation - and not everyone is built to do that well, and I don't work with everyone - I am intentionally narrowing my focus to ensure success and that they have the right mindset. 

 Thank you for your input. I’m in the 30k club too if you have a chance to see my intro a few before this on page 6. The OP went off the rails and starting biting about everyone. :) I pulled a number of creative strategies from your online content. You certainly have helped me grow my business. I’ve watched many hours of Lisa Phillips videos. Thank you for inspring and for reaching out. 

PS I bought 50% of both sides of a duplex within the last year for 3k that rents for $1200 a month ($600 a side) after a good rehab. 

Originally posted by @Stuart Smith :

@Merritt S.......and your point is ??

 Well my raider friend, I didn't write it expecting everyone would get it. And, yup, I am biased and have a vested interest in what I said and why I said it. Our daily news is one murder after another and most don't make the news - only so much time in each cast. Gotta love the one from about a month ago. The police recovered a cell phone from a car involved in a high-speed chase. On the phone they found a self-video from the guy, who taped himself taking his machine gun, while he was driving down the street, shooting into houses as he drove. Can't make this stuff up. It aint make-believe, it's real. I wonder how many people live with PTSD in Milwaukee from nothing more than living there. Nobody is proud of this stuff. Nobody thinks hood culture is "cool" like Hollywood likes to make money from pushing. It aint funny and the people here want it to change. We need help. We need people to get together on it. We don't need parasites making it worse.

The points are two.

#1 - The numbers are not what you think they are. Run them again with all the right info plugged in.

#2 - Slumlords and raiders are not welcome.

I would be happy to assist anyone who is not a slumlord. For the rest, let me lead you right into the field of landmines and watch you go buh bye.

We need people who understand the brilliance of Henry Ford. Not the people who thought Redbeard was cool.

Maybe you can dig that, maybe you can't.

@Randy E.

That’s a good point for those of us investing in these areas . “ know your clientele “ if a guy goes into these places as a blowhard landlord or pm who acts better than them there is going to be tension and problems eventually. I don’t think tenants will respect a property management company the way they will a guy who is clearly a ma and pa investor coming over to work on the house or collect rent . Maybe this is one of the reason OOS landlords fail ?? In low income areas ( just like prisons) the name of the game is “ respect” it has to be earned .Just because they are broke doesn’t mean they are dumb . These people are street wise and will can sniff out a pushover or a prick of a landlord pretty quick . I take Jim Ks advise and learned to never outdress my tenants . When I show up it’s not a polo and khakis . It’s old nug hugger Levi’s with holes , worn out nikes and a beatup sweatshirt with bleach stains . I try to be relatable and oddly enough it’s easy to “fit in “ at times . Maybe that’s cuz I grew up poor on food stamps . I have found that in a strange way I sympathize with the area even though I would not want to live there today .

@Dennis M. Basically. This. I do find the people who do the best come from either some level of your background OR are just really open people who can navigate different socio-economic classes well. Thats a strength in this, not to be overlooked.

@Jonathan R. Nice! Glad I can help someone who cares and can navigate this successfully

@Randy E. Exactly. We need to bring the fact into play - if you're not comfortable (same as what Dennis was saying) they pick up on that. Doesnt mean there is anything wrong with this segment, it mostly likely means you may be a wrong choice for a certain strategy. 

Originally posted by @Dennis M. :

@Randy E.

It’s old nug hugger Levi’s with holes , worn out nikes and a beatup sweatshirt with bleach stains .

 I laughed out loud.  I'm still laughing.

I'll probably be laughing tomorrow when I think of it again.

Originally posted by @Dennis M. :

@Randy E.

That’s a good point for those of us investing in these areas . “ know your clientele “ if a guy goes into these places as a blowhard landlord or pm who acts better than them there is going to be tension and problems eventually. I don’t think tenants will respect a property management company the way they will a guy who is clearly a ma and pa investor coming over to work on the house or collect rent . Maybe this is one of the reason OOS landlords fail ?? In low income areas ( just like prisons) the name of the game is “ respect” it has to be earned .Just because they are broke doesn’t mean they are dumb . These people are street wise and will can sniff out a pushover or a prick of a landlord pretty quick . I take Jim Ks advise and learned to never outdress my tenants . When I show up it’s not a polo and khakis . It’s old nug hugger Levi’s with holes , worn out nikes and a beatup sweatshirt with bleach stains . I try to be relatable and oddly enough it’s easy to “fit in “ at times . Maybe that’s cuz I grew up poor on food stamps . I have found that in a strange way I sympathize with the area even though I would not want to live there today .

Well i can tell you when i was foreclosing on my landlords  IE investors who could not make it work.. I was the bank.. and as the bank

( private Bank) I spent most of 09 pounding on doors to figure out what was going on with my collateral..  so picture that one I show up in rental car.. just jeans etc.. and tenants just cower behind the door they think i am the FBI or something.. it was horrid.. some were fine.. but most of them Holly cow.. it was tough.  then i would ask to see their lease which they could never find.. then I asked who they paid rent to and they would say this person or that and of course everyone never missed a payment..  And one I distinctly remember to this day was a lady who said she paid the man in the Green truck  LOL.  OK 

Keep in mind as I went through at least 100 of these homes i foreclosed on most had tenants in them.  So somehow the owners just could not get it together..

This Niche as we are now calling it takes a lot of specialized training.. so If Ms. Phillips sounds like she gives some good advice.. and thats probably where folks should start before they venture out.

And lastly like I said there is a huge difference in a Small berg out side the main MSA compared to inner city urban core low end..  

A big majority of mom and pop landlords around the US do exactly what you folks are describing its their Job they are a business owner their stock in trade just happens to be running rentals.   I have met many many of these folks over the years.. Wife does the books and leasing Hubby does all the turn over and remodels.. its a nice gig out in the mid west and for sure elevates those who can scale it to a nice lifestyle for themselves..   However there is no denying the fact though that a majority of this inventory gets recycled right ? I mean they are not building new homes for these purposes.. And as such the inventory comes from those that wish to exit this niche for whatever reason.. I mean why would someone sell a 30k duplex that is a breeze to own and manage that is bringing in 1500 a month.. there is a reason for that.

Originally posted by @Jonathan R. :
Originally posted by @Lisa Phillips:

@Jonathan R.  1350 a month is NOT a unicorn. My client Phillip and I was working with in NY (started 3 weeks ago) got this for a 50k duplex, and 1500 for a 50k - and found this in 1 week. It's fine, not that hard (but, experience helps with that, experience helping all sorts of people from all over goes into tha). Stay tuned to my channel since i am going to start interviewing the last few clients i've had the last couple of months - just because its soo exciting. But, it's like we are in different realms - when I work with people i have to purge them of the "these don't exist" and flush them out and start anew. They throw away a lot of that "standard advice" which really works for the top 20%, not the 80%. Will have the interview in about 6 weeks (we are finishing the closing process now, just got the inspection report).  

My other client, Arthur, is finding those returns as well ($1300 rents for a 30k property) (He is also in NY). But before I work with anyone, i have a frank discussion on their comfort level in class navigation - and not everyone is built to do that well, and I don't work with everyone - I am intentionally narrowing my focus to ensure success and that they have the right mindset. 

 Thank you for your input. I’m in the 30k club too if you have a chance to see my intro a few before this on page 6. The OP went off the rails and starting biting about everyone. :) I pulled a number of creative strategies from your online content. You certainly have helped me grow my business. I’ve watched many hours of Lisa Phillips videos. Thank you for inspring and for reaching out. 

PS I bought 50% of both sides of a duplex within the last year for 3k that rents for $1200 a month ($600 a side) after a good rehab. 

Can you expound on you bought 50% of both sides of a duplex.. are you talking some sort of TIC situation ??

Originally posted by @Lisa Phillips :

@Dennis M. Basically. This. I do find the people who do the best come from either some level of your background OR are just really open people who can navigate different socio-economic classes well. Thats a strength in this, not to be overlooked.

@Jonathan R. Nice! Glad I can help someone who cares and can navigate this successfully

@Randy E. Exactly. We need to bring the fact into play - if you're not comfortable (same as what Dennis was saying) they pick up on that. Doesnt mean there is anything wrong with this segment, it mostly likely means you may be a wrong choice for a certain strategy. 

 this is very true.. Take a west coast and i will use Asian since there are millions of west coast Asian engineers that are into buying rentals. English is second language and their culture very different now send them to the Deep South and the deep south Accent alone will have both the tenant and the owner staring at each other not able to understand each other even though they are speaking English.. I know it takes a me a few weeks when I am in the deep south to understand the dialect first time time. I find myself say WHAT all the time and that gets embarrassing as folks have to repeat themselves becasue CA OR we are so accent neutral.   Plus we just know there are vast cultural differences as we simply dont know what we dont know.   

Originally posted by @Randy E. :

@Dan Heuschele,

I appreciate the response.

One last thing.  I think you (and others in your situation) probably don't work in this segment for the simple reason that your experiences with the tenant base may not be to your liking.  That's no crime or insult.  But, if an investor finds it easier to talk to people who are very similar to themselves, that can make a big difference in how they remember the experience.

I had a discussion with a landlord who had a disagreement with a tenant.  This was not a low-income tenant, but it was a tenant who had come up from a low-income childhood, and it was a landlord who had no significant real-world experience with that segment of society.   It should have been a simple discussion, easily overcome and moved past.  

The tenant had a legitimate complaint, the landlord had an unavoidable delay in addressing the complaint, the tenant voiced frustration, they landlord felt uncomfortable, the situation escalated and the landlord ended up evicting a long-term never late tenant over a non-issue.  It caused the tenant and his family distress.  It ended up costing the landlord thousands of dollars in turnover costs and left him with a bad taste in his mouth over the entire experience.  This was a good house in a well-respected middle class neighborhood.  He as much as said he wants to leave the B- segment for a more expensive segment because (he didn't say this outright, but his meaning was clear) he wanted to deal only with tenants who were like himself in socio-economic-educational background.

That sort of experience can happen often in the low-cost cost segment when the landlord has no real-world experience with people similar to the tenant base.

Investor, know thyself.

Our primary market is a C class market but, being coastal So Cal, the price point is a lot different than $30K per RE but I suspect the tenant base in our C market is not extremely different than many other C markets.  I spent my younger childhood in a neighborhood in the running for worse area in San Diego which admittedly does not compare with the worst area in some other large cities.  So I am unsure if by segment you means $30K RE (which I am definitely not) or class that is not A or B class (which we have many units that I would categorize C class area and fewer units in A and B class areas).

We have done fine in the C class RE.  We typically rehab to class B in the class C area.  We then screen well and keep our tenants for a long time in a nice home.

However, a C class RE that rents for $1700/month for a 2 BR has a lot more rent to cover the maintenance/cap expense.   In coastal So Cal, the 50% rule is conservative.  Expenses, outside mortgage service, for a little 2/1 should not cost $850/month even going a passive route.

@Dennis M. Another possible reason OOS landlords fail is because they aren’t standing in the yard painting graffiti off the fence when the neighborhood watch lady comes by to see what is going on. Or a leader from the church down the street that pays young parishioners to clean up trash in the neighborhood pokes their head over to see what the plans for the property are. Or they aren’t there when the neighbor is standing in the yard watching what is going on and asks if we would be willing to let him tend to the yard during our rehab for a few extra bucks. They aren’t driving their contractor to McDonalds on a regular basis to learn about their life and strategize for where things are at on a daily basis and where they’re going. They don’t realize the need to pay the contractor’s phone bill to ensure the lines of communication are always open. They don’t meet the neighborhood slumlord who is thinking about putting a property up in a local auction and offer to buy him out on the property across the street which it is being occupied by the wrong type of tenants (If nothing else this shows him someone cares). They aren’t there when a tenant is devastated that their tire blew and they don’t have a jack to change to a spare. Or, have jumper cables when the car won’t turn over. Yes, I’m hands on, but so far I haven’t lost a single tenant. If I ever do lose one it is likely they will be looking at one of my other listings online. They’ll remember the difference between a good landlord and a bad landlord. We’re building a brand. And brands are powerful.

So , we have had plenty of first hand experiences of people making this work, very successfully......and yet it continues, “it can’t be done” the negatives, the stories....I can’t for the life of me see why ?

Originally posted by @Jonathan R. :

@Dennis M. Another possible reason OOS landlords fail is because they aren’t standing in the yard painting graffiti off the fence when the neighborhood watch lady comes by to see what is going on. Or a leader from the church down the street that pays young parishioners to clean up trash in the neighborhood pokes their head over to see what the plans for the property are. Or they aren’t there when the neighbor is standing in the yard watching what is going on and asks if we would be willing to let him tend to the yard during our rehab for a few extra bucks. They aren’t driving their contractor to McDonalds on a regular basis to learn about their life and strategize for where things are at on a daily basis and where they’re going. They don’t realize the need to pay the contractor’s phone bill to ensure the lines of communication are always open. They don’t meet the neighborhood slumlord who is thinking about putting a property up in a local auction and offer to buy him out on the property across the street which it is being occupied by the wrong type of tenants (If nothing else this shows him someone cares). They aren’t there when a tenant is devastated that their tire blew and they don’t have a jack to change to a spare. Or, have jumper cables when the car won’t turn over. Yes, I’m hands on, but so far I haven’t lost a single tenant. If I ever do lose one it is likely they will be looking at one of my other listings online. They’ll remember the difference between a good landlord and a bad landlord. We’re building a brand. And brands are powerful.

So this is an excellent reality check.. how does an OOS investor who is 100% relying on the local PM  suppose to do what your talking about ?  and if the only way to really succeed at these is to go the extra mile like your doing ??  that in itself is a statement 

OOS landlords fail for 2 reasons.. 1 tenant does not pay or does not pay consistently thereby creating cash flow issues. 2. tenant beats up house and lots of turnover.. especially in HUD were leases are only one year.. a lot of those folks will leave for the fresh rehab down the street.. I know that for a fact. If the tenants paid all the time and took great care of the home. you would not have failure.

your failure point is those two things.

I was talking about how i was the 2nd builder to put new construction in a section of Charleston were 10 years ago you could buy houses for 10k to 20k and lots for 2 to 5k max.. 7 years later beater houses that need full gut sell for 200k not 20k and lots are 100 to 200k .. And the finished houses either full rehab or new construction like I build sell for 450 to 750k ... I found it by funding a flipper there and he kept getting robbed.   When i went into the market I brought MY OWN GC from Vegas and relocated him there.  He is great in any setting... when we started on 46 Aiken he went door to door made friends brought beer to some smokes to some whatever and they became his eyes and ears.. to this date almost 40 homes not one theft..  and some of these homes are across the street from public housing apartments..  I took a HUGE leap to break the barrier and create new construction there and we are super proud of it.. a few others followed us in and or were hitting it when we were and its just awesome to see the transformation.. of course some of the locals do complaining because their neighborhood is radically gentrifying but I can tell you the sellers i am paying 100 to 150k for their lots each.. WE TRULY change their lives.   And to me that is part of investing.. In my mind cash flow is OK but up side is very important along with neighborhood stabilization other than just having a clean rental. 

And we sold that house to Shep of Southern Charm he showed it on one episode ..  and thats who are moving in and moving out the old families its the millennial buyer that is really changing these areas. We are doing the same thing in Indy..  and of course Portlandia this has been going on for 20 years.. and When I lived in Palo Alto in the 80s we were already paying 500k for tear downs.. LOL

@Dan Heuschele it goes without saying that I also purchase everything with value add. Or just no value add, and buy it in market condition at well below market value (our business has a big deal hunting engine so it's easy to access these properties for my personal portfolio).

50% rule is not an accurate measure if you have actual numbers for expenses. Why not use actual taxes/utilities/insurance data and just use a rule of thumb vacancy and cap ex reserve? My property tax bill/water bill/and insurance bill are a much lower percent of my gross monthly rents than most properties with this rental price. 

The 600$ mortgage was a hypothetical number. I don't have a mortgage, but someone who buys this for 120k with 20% down is going to have a 500$ or so mortgage per my lenders numbers. 

Appreciation is a great play in p1/p2 of the market. It's a losing play today and I am a very active investor- I'm not buying holds in volatile markets right now, because property values are likely going a different direction in the next 5 years.  I'll buy CA property again when markets are in a different place, and make near no cash flow for an astronomical initial investment but sell them to a less astute investor during the subsequent peak market & make that type of profit then.

This thing with actual operating expenses + a 25% vacancy and maintenance reserve is still a 30% cash on cash return for an investor purchasing it with 20% down on a 120k sale price. It's a winner. I picked up 26 units in a similar neighborhood last year for 305k with debt (mkt val closer to 1M), invested 50k in rehab, and my gross rents are 18850/mo with similar operating expense ratios currently. 

Some of the more sophisticated MFR investors on BP have mentioned their best performers in 08-10 were smaller buildings in rust belt economies, while their CA assets struggled. There are short term strategies layered into the long term strategy, of course.

Originally posted by @Jay Hinrichs :
Originally posted by @Jonathan R.:
Originally posted by @Lisa Phillips:

@Jonathan R.  1350 a month is NOT a unicorn. My client Phillip and I was working with in NY (started 3 weeks ago) got this for a 50k duplex, and 1500 for a 50k - and found this in 1 week. It's fine, not that hard (but, experience helps with that, experience helping all sorts of people from all over goes into tha). Stay tuned to my channel since i am going to start interviewing the last few clients i've had the last couple of months - just because its soo exciting. But, it's like we are in different realms - when I work with people i have to purge them of the "these don't exist" and flush them out and start anew. They throw away a lot of that "standard advice" which really works for the top 20%, not the 80%. Will have the interview in about 6 weeks (we are finishing the closing process now, just got the inspection report).  

My other client, Arthur, is finding those returns as well ($1300 rents for a 30k property) (He is also in NY). But before I work with anyone, i have a frank discussion on their comfort level in class navigation - and not everyone is built to do that well, and I don't work with everyone - I am intentionally narrowing my focus to ensure success and that they have the right mindset. 

 Thank you for your input. I’m in the 30k club too if you have a chance to see my intro a few before this on page 6. The OP went off the rails and starting biting about everyone. :) I pulled a number of creative strategies from your online content. You certainly have helped me grow my business. I’ve watched many hours of Lisa Phillips videos. Thank you for inspring and for reaching out. 

PS I bought 50% of both sides of a duplex within the last year for 3k that rents for $1200 a month ($600 a side) after a good rehab. 

Can you expound on you bought 50% of both sides of a duplex.. are you talking some sort of TIC situation ??

Yep, lady was an OOS owner. She signed a contract for deed several years prior. The guy got locked up for whatever reason and was in state prison. He let family and who knows who else have a key. She couldn't evict the guy because he had been there for a handful of years, so she would have to do an equitable foreclosure while living in Florida, she didn't know how to navigate this. She offered to sell the duplex (both sides) for 10k but I wasn't sure I could do an equitable foreclosure without any paperwork. So she asked if I would entertain a partnership (after our many discussions) on this one and she would send a certified letter to prison to get the guy in jail to relinquish his rights for $2500. He was elated. He signed the paperwork with a notary from the jail. I agreed to do the rehab if we split any major costs with electrical, plumbing and hvac. The day I had his paperwork I approached the property, which was vacant, and changed both locks and put a sign on the property with my phone number. We let the property chill for two weeks to settle down. A lady called and asked about her stuff, claiming she owned the property, we told her her landlord signed it over and we asked if she wanted her stuff. She said to throw it out, she had an warrant and didn't want to get too close. I found the deal on Craigslist. My partner on this one has many properties and we are searching for more. We started an LLC and will continue buying on the same street we named the LLC after.

@Randy E.

Thanks for this: 

This was a good house in a well-respected middle class neighborhood. He as much as said he wants to leave the B- segment for a more expensive segment because (he didn't say this outright, but his meaning was clear) he wanted to deal only with tenants who were like himself in socio-economic-educational background.

In my opinion this hits the nail on the head for many people who are skeptical about investing in this class of property.  

I love this thread because it gives someone who is willing to work hard in this class some resources for information about how to build a portfolio and make some money.

Thanks to everyone for responding because I have learned a lot.

@Ashley Hamilton congrats on your success, you've earned a very solid monthly income taking on properties I'm sure others would have passed on.

Regarding condos in Vegas: what entices you about the condos out here?  Any specific area?  I just lived in one in Las Vegas Country Club which is a great option in this city.

Originally posted by @Jonathan R. :
Originally posted by @Jay Hinrichs:
Originally posted by @Jonathan R.:
Originally posted by @Lisa Phillips:

@Jonathan R.  1350 a month is NOT a unicorn. My client Phillip and I was working with in NY (started 3 weeks ago) got this for a 50k duplex, and 1500 for a 50k - and found this in 1 week. It's fine, not that hard (but, experience helps with that, experience helping all sorts of people from all over goes into tha). Stay tuned to my channel since i am going to start interviewing the last few clients i've had the last couple of months - just because its soo exciting. But, it's like we are in different realms - when I work with people i have to purge them of the "these don't exist" and flush them out and start anew. They throw away a lot of that "standard advice" which really works for the top 20%, not the 80%. Will have the interview in about 6 weeks (we are finishing the closing process now, just got the inspection report).  

My other client, Arthur, is finding those returns as well ($1300 rents for a 30k property) (He is also in NY). But before I work with anyone, i have a frank discussion on their comfort level in class navigation - and not everyone is built to do that well, and I don't work with everyone - I am intentionally narrowing my focus to ensure success and that they have the right mindset. 

 Thank you for your input. I’m in the 30k club too if you have a chance to see my intro a few before this on page 6. The OP went off the rails and starting biting about everyone. :) I pulled a number of creative strategies from your online content. You certainly have helped me grow my business. I’ve watched many hours of Lisa Phillips videos. Thank you for inspring and for reaching out. 

PS I bought 50% of both sides of a duplex within the last year for 3k that rents for $1200 a month ($600 a side) after a good rehab. 

Can you expound on you bought 50% of both sides of a duplex.. are you talking some sort of TIC situation ??

Yep, lady was an OOS owner. She signed a contract for deed several years prior. The guy got locked up for whatever reason and was in state prison. He let family and who knows who else have a key. She couldn't evict the guy because he had been there for a handful of years, so she would have to do an equitable foreclosure while living in Florida, she didn't know how to navigate this. She offered to sell the duplex (both sides) for 10k but I wasn't sure I could do an equitable foreclosure without any paperwork. So she asked if I would entertain a partnership (after our many discussions) on this one and she would send a certified letter to prison to get the guy in jail to relinquish his rights for $2500. He was elated. He signed the paperwork with a notary from the jail. I agreed to do the rehab if we split any major costs with electrical, plumbing and hvac. The day I had his paperwork I approached the property, which was vacant, and changed both locks and put a sign on the property with my phone number. We let the property chill for two weeks to settle down. A lady called and asked about her stuff, claiming she owned the property, we told her her landlord signed it over and we asked if she wanted her stuff. She said to throw it out, she had an warrant and didn't want to get too close. I found the deal on Craigslist. My partner on this one has many properties and we are searching for more. We started an LLC and will continue buying on the same street we named the LLC after.

that's a cool story..  when the capital outlay is so low you can take title risks etc..   I bought a old wreck of a house I Portland 9 years ago for 80k cash and gave the lady a life estate for free.. she passed 2 years ago.. I did not get any income on it.. all those years and paid her utls and tax's  but now I am building 3 600k homes on it  LOL.. So I like out of the box thinking.. Most of course would never do this when their mantra is its all about cash flow..  so up shot is the lots are worth 150k each.. So I don't know 80k turns into 450k Plus profit on the house builds.. it becomes a pretty nice deal for those with patient money . and of course No management at all. never even went back till she passed and we had to clean her stuff out.. Houses was bulldozed

Originally posted by @Jay Hinrichs :
Originally posted by @Jonathan R.:

@Dennis M. Another possible reason OOS landlords fail is because they aren’t standing in the yard painting graffiti off the fence when the neighborhood watch lady comes by to see what is going on. Or a leader from the church down the street that pays young parishioners to clean up trash in the neighborhood pokes their head over to see what the plans for the property are. Or they aren’t there when the neighbor is standing in the yard watching what is going on and asks if we would be willing to let him tend to the yard during our rehab for a few extra bucks. They aren’t driving their contractor to McDonalds on a regular basis to learn about their life and strategize for where things are at on a daily basis and where they’re going. They don’t realize the need to pay the contractor’s phone bill to ensure the lines of communication are always open. They don’t meet the neighborhood slumlord who is thinking about putting a property up in a local auction and offer to buy him out on the property across the street which it is being occupied by the wrong type of tenants (If nothing else this shows him someone cares). They aren’t there when a tenant is devastated that their tire blew and they don’t have a jack to change to a spare. Or, have jumper cables when the car won’t turn over. Yes, I’m hands on, but so far I haven’t lost a single tenant. If I ever do lose one it is likely they will be looking at one of my other listings online. They’ll remember the difference between a good landlord and a bad landlord. We’re building a brand. And brands are powerful.

So this is an excellent reality check.. how does an OOS investor who is 100% relying on the local PM  suppose to do what your talking about ?  and if the only way to really succeed at these is to go the extra mile like your doing ??  that in itself is a statement 

OOS landlords fail for 2 reasons.. 1 tenant does not pay or does not pay consistently thereby creating cash flow issues. 2. tenant beats up house and lots of turnover.. especially in HUD were leases are only one year.. a lot of those folks will leave for the fresh rehab down the street.. I know that for a fact. If the tenants paid all the time and took great care of the home. you would not have failure.

your failure point is those two things.

I was talking about how i was the 2nd builder to put new construction in a section of Charleston were 10 years ago you could buy houses for 10k to 20k and lots for 2 to 5k max.. 7 years later beater houses that need full gut sell for 200k not 20k and lots are 100 to 200k .. And the finished houses either full rehab or new construction like I build sell for 450 to 750k ... I found it by funding a flipper there and he kept getting robbed.   When i went into the market I brought MY OWN GC from Vegas and relocated him there.  He is great in any setting... when we started on 46 Aiken he went door to door made friends brought beer to some smokes to some whatever and they became his eyes and ears.. to this date almost 40 homes not one theft..  and some of these homes are across the street from public housing apartments..  I took a HUGE leap to break the barrier and create new construction there and we are super proud of it.. a few others followed us in and or were hitting it when we were and its just awesome to see the transformation.. of course some of the locals do complaining because their neighborhood is radically gentrifying but I can tell you the sellers i am paying 100 to 150k for their lots each.. WE TRULY change their lives.   And to me that is part of investing.. In my mind cash flow is OK but up side is very important along with neighborhood stabilization other than just having a clean rental. 

And we sold that house to Shep of Southern Charm he showed it on one episode ..  and thats who are moving in and moving out the old families its the millennial buyer that is really changing these areas. We are doing the same thing in Indy..  and of course Portlandia this has been going on for 20 years.. and When I lived in Palo Alto in the 80s we were already paying 500k for tear downs.. LOL

 The 3k purchase duplex deal is around the corner from WSU and blocks from our local major hospital. I hope the area gentrifies in my lifetime, I have a feeling it will one day. Many of the homes are very well kept on the block, we’re trying to figure out how to acquire the ones holding the neighborhood back. On the other side of WSU all the homes are $150k plus, many owned by doctors and others with collegiate involvement. 

I’ve watched every season of Southern Charm. Too funny.

Originally posted by @Jonathan R. :
Originally posted by @Jay Hinrichs:
Originally posted by @Jonathan R.:

@Dennis M. Another possible reason OOS landlords fail is because they aren’t standing in the yard painting graffiti off the fence when the neighborhood watch lady comes by to see what is going on. Or a leader from the church down the street that pays young parishioners to clean up trash in the neighborhood pokes their head over to see what the plans for the property are. Or they aren’t there when the neighbor is standing in the yard watching what is going on and asks if we would be willing to let him tend to the yard during our rehab for a few extra bucks. They aren’t driving their contractor to McDonalds on a regular basis to learn about their life and strategize for where things are at on a daily basis and where they’re going. They don’t realize the need to pay the contractor’s phone bill to ensure the lines of communication are always open. They don’t meet the neighborhood slumlord who is thinking about putting a property up in a local auction and offer to buy him out on the property across the street which it is being occupied by the wrong type of tenants (If nothing else this shows him someone cares). They aren’t there when a tenant is devastated that their tire blew and they don’t have a jack to change to a spare. Or, have jumper cables when the car won’t turn over. Yes, I’m hands on, but so far I haven’t lost a single tenant. If I ever do lose one it is likely they will be looking at one of my other listings online. They’ll remember the difference between a good landlord and a bad landlord. We’re building a brand. And brands are powerful.

So this is an excellent reality check.. how does an OOS investor who is 100% relying on the local PM  suppose to do what your talking about ?  and if the only way to really succeed at these is to go the extra mile like your doing ??  that in itself is a statement 

OOS landlords fail for 2 reasons.. 1 tenant does not pay or does not pay consistently thereby creating cash flow issues. 2. tenant beats up house and lots of turnover.. especially in HUD were leases are only one year.. a lot of those folks will leave for the fresh rehab down the street.. I know that for a fact. If the tenants paid all the time and took great care of the home. you would not have failure.

your failure point is those two things.

I was talking about how i was the 2nd builder to put new construction in a section of Charleston were 10 years ago you could buy houses for 10k to 20k and lots for 2 to 5k max.. 7 years later beater houses that need full gut sell for 200k not 20k and lots are 100 to 200k .. And the finished houses either full rehab or new construction like I build sell for 450 to 750k ... I found it by funding a flipper there and he kept getting robbed.   When i went into the market I brought MY OWN GC from Vegas and relocated him there.  He is great in any setting... when we started on 46 Aiken he went door to door made friends brought beer to some smokes to some whatever and they became his eyes and ears.. to this date almost 40 homes not one theft..  and some of these homes are across the street from public housing apartments..  I took a HUGE leap to break the barrier and create new construction there and we are super proud of it.. a few others followed us in and or were hitting it when we were and its just awesome to see the transformation.. of course some of the locals do complaining because their neighborhood is radically gentrifying but I can tell you the sellers i am paying 100 to 150k for their lots each.. WE TRULY change their lives.   And to me that is part of investing.. In my mind cash flow is OK but up side is very important along with neighborhood stabilization other than just having a clean rental. 

And we sold that house to Shep of Southern Charm he showed it on one episode ..  and thats who are moving in and moving out the old families its the millennial buyer that is really changing these areas. We are doing the same thing in Indy..  and of course Portlandia this has been going on for 20 years.. and When I lived in Palo Alto in the 80s we were already paying 500k for tear downs.. LOL

 The 3k purchase duplex deal is around the corner from WSU and blocks from our local major hospital. I hope the area gentrifies in my lifetime, I have a feeling it will one day. Many of the homes are very well kept on the block, we’re trying to figure out how to acquire the ones holding the neighborhood back. On the other side of WSU all the homes are $150k plus, many owned by doctors and others with collegiate involvement. 

I’ve watched every season of Southern Charm. Too funny.

 well if you caught the one with Shep showing off his new homes.. that was our build and my GC got on the show as well for a few seconds.. LOL.. we LOVE that market.. I have moved on to these infill projects and virtually every city has them going on.. I was going to do some in KC as well. but did not have the right ground partner.

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