Starting out? Ask me anything.

91 Replies

I once started out on this site asking tons of questions. If you’re starting out feel free to ask me questions and I will answer the best I can. Below is my experience for context.

Experience

6-7 years

Single family rentals

- Duplex house hack

- Renovating

- Self managing

- Hiring property managers

- Out of state & in state rentals

Looking at a property at a tax deed sale in CA.  We did a lot of due diligence so far, drive by to make sure the house is still standing, check out the neighborhood, possible resale value, etc.  During the drive by we noticed the house was still occupied.  is there a way to tell if the house if occupied by the owner or a renter? If the renter, does that mean the rent now goes to us?

ilmar

@Erik Berg

None! I have done both local and out of state. It’s not just about the numbers on the spreadsheet. Operations and management are critical. These will dictate your profit and stress level. Local only.

@Joseph Schweizer

I will never do out of state rentals again. I have hired various property managers and too many things can go wrong. You need to be on the ground and involved in my opinion. I used to be a believer of not self managing, but this is your business. You cannot be hands off. I may have only done this for a few years, but I’ve had a lot of insane things happen!!!

If you insist on investing out of state you must set extensive expectations upfront with the PM. For example, tenant criteria, approvals, costs, etc. Expect things to go wrong and prepare for the worst. Eventually something bad will happen. If you are prepared mentally and have procedures in place you’ll handle it better.

Originally posted by @William S. :

I once started out on this site asking tons of questions. If you’re starting out feel free to ask me questions and I will answer the best I can. Below is my experience for context.

Experience

6-7 years

Single family rentals

- Duplex house hack

- Renovating

- Self managing

- Hiring property managers

- Out of state & in state rentals


When a renter moves out, how much turn around time do you have on average before the next renter moves in?  Are you able to market the house for rent and find a new renter before the current renter moves out?

It seems like most people have to wait till the current renter moves out, then spends a week or two painting, routine maintenance, then start showing it to renters and typical a month or more of rental income can be lost in between renters (assuming they find someone quickly). 

 

Originally posted by @Ilmar Molder, sr. :

Looking at a property at a tax deed sale in CA.  We did a lot of due diligence so far, drive by to make sure the house is still standing, check out the neighborhood, possible resale value, etc.  During the drive by we noticed the house was still occupied.  is there a way to tell if the house if occupied by the owner or a renter? If the renter, does that mean the rent now goes to us?

ilmar

Go to your local assessor's website and put in the address. I believe California has a homestead exemption, if it shows there is a homestead exemption then the people living there should be the home owner. If there is no homestead exemption, it is likely not the owners living there.  Between the tax assessor's website and the county clerk of court property records, with a little research you should be able to find this out. 

 

@Will Sifert

I’ve began online marketing “coming soon” before someone moves out, however not showing the property in person while the current tenant is there. You are correct. Loss of 1-2 months rent plus rent ready costs. The turn around time is typically quick 1-2 weeks. I haven’t had a problem getting a unit rented. 

Originally posted by @William S. :

@Will Sifert

I’ve began online marketing “coming soon” before someone moves out, however not showing the property in person while the current tenant is there. You are correct. Loss of 1-2 months rent plus rent ready costs. The turn around time is typically quick 1-2 weeks. I haven’t had a problem getting a unit rented. 

That is what I have experienced from rentals I have owned in the past and from talking to other rental property owners. The main problem being trying to show the house to a potential renter before the current renter moves out. Either they have the place a mess or don't want to cooperate with showings.   What if you advertised a 3D virtual scan of the property to potential renters even before the current ones moved out. Are you familiar with matterport? If not you can see an example here: https://my.matterport.com/show...

I know people can show pictures, but seeing the property 3D with them having control to move from room to room and zoom in is as close as someone can get to being there, with out actually being there. Do you think someone could agree to rent the house after looking at the 3D video, before seeing it in person.

I am trying to get feed back, if this is something of value to rental owners I am going to start marketing it in my area as a service they could keep the video on file and start using it to market the property as soon as the find out when the current renter is moving it. With the exception of a fast turn around for paint or any other maintenance needed, try to cut down the amount of time it stays vacant in between renters, which of course would save the rental property owner money.

 

@William S.

I’m 20 years old and a second year at the university of Louisiana at Lafayette. I’m going to do a house hack there in the next year or so. I currently make all of my income through side jobs/ working for cash. I pay all of my tuition in full on time and have been building credit Sadie about a year. I have only one year of w2 job experience and don’t know how I could qualify for a loan! I’m do you have any advice besides getting a job and waiting two years?? Than you

@Will Sifert

I have seen this experience for housing on the market, especially when covid hit. I would suggest the home being staged for this. They need to imagine what the home could be (bedroom size with beds, etc). In the past I've used photos and recorded videos of a walk through. I think it is an excellent way to show the property. In addition, it shows that you are a professional.

@Taylor Gant

If I am house hacking a duplex. That was my favorite by far. I bought a nice duplex in a very desirable area near bars, restaurants, and a medical campus. My tenants were nurses, or med students. It was smooth... When you combine a hot part of town, solid pool of tenant, and you're onsite it can't be beat. You can invest in renovations for your rental and your own home at the same time as well.

@Bruce P. Bellott

Have you tried to get pre-approved yet? Find a local bank and see what they can do for you. Do you have family members who can help you out with the loan (co-sign)? 

@Josh Fleenor

I think this starts with the property itself. Like I mentioned above, having a property in a desirable area that looks well kept is key. In regards to the posting, make it look as professional as possible. High quality photos, good description, etc. Keep in mind who is your ideal tenant. What do they want?

Originally posted by @William S. :

@Will Sifert

I have seen this experience for housing on the market, especially when covid hit. I would suggest the home being staged for this. They need to imagine what the home could be (bedroom size with beds, etc). In the past I've used photos and recorded videos of a walk through. I think it is an excellent way to show the property. In addition, it shows that you are a professional.


 Good suggestion and there is virtual staging that can be done to cut down the cost of physically having the property staged, which can be expensive. 

There is one other benefit I think this would be to rental property owners and would like to see if you feel it has value...  When the renter moves out and there is damage and you keep all or part of the damage deposit. The 3D scan done before they moved in could be used as evidence of the condition of the property before they moved it. It literally picks up every inch of the house and is time stamped. If they claimed they didn't do it, a quick look back at the video, zoom in, and verification could be made that the damage did not exist prior to them moving in. 

@Will Sifert

Documenting before tenant moves in is key. The biggest issue is actually collecting for damages. I always get my deposit back for this, but often it can exceed the deposit amount (1 months rent). I suggest increasing the deposit amount. Don’t forget other things that aren’t as visual. Verify the plumbing, mechanicals were working correctly before and after the tenant.

Another tip... I recommend having a service agreement with a local hvac/plumbing company. It prevents problems down the road but is also an extra set of eyes for you. These are 2-3 visits a year. It also demonstrates that your a taking care of the property and not a “slum lord.”

@Matthew Costello

I purchased a turn key single family in a c-class neighborhood. Big mistake. I thought it’d be a good entry into the game. Back then I solely thought about cash flow and minimal work. Wrong! You need to think what works best for your personality and lifestyle, also what your ideal tenant is.

@Matthew Costello

If I did it all over again my first deal would be a duplex house hack with the following criteria.

1. Desirable part of town (restaurants, bars, cute neighborhood, etc)

2. Cosmetic renovation. Just enough to bring up rents but not get over your head

3. Good tenant pool. This comes from #1.

It may not look great on the spreadsheet in the beginning, but the debt pay down that your tenant will do is key. Also being in a good area will have better appreciation. Why? If you decide to sell you’ll have a good margin between purchase price and debt. Also you can always refinance to pull cash out to add value to the property.

Originally posted by @Lawrence Barnes :

@William S. Built a duplex in Pensacola, FL . my partner and I formed an LLLP in the State of Florida. I am the general partner and live in Alabama, do I need to register my LLLP in Alabama? Thank you!

I believe you only need to register in Alabama if you are transacting business in Alabama.  This might help:

https://www.nolo.com/legal-encyclopedia/qualify-foreign-business-alabama.html#:~:text=According%20to%20Alabama%20foreign%20entities,in%20relation%20to%20foreign%20registrations.