All Forum Posts by: Al D.

No offense to anyone who has chimed in so far, but the OP said that what he has learned on this site so far has not worked for him. I think he is asking for help. In your replies, I do not see how he is supposed to put your wise words into actions - and safely enough for him to not lose his investments when the next correction/recession comes. I can talk about how properties I bought in the SF Bay Area in 2010 quintupled since then - while I was also getting 1-2+% on those. How I exited half of them by now. That is not going to help him today. I’ve been buying exclusively out of state since last year. I am staying away from Stockton, Sacramento, San Bernardino, Fresno, etc - where I have friends who are barely back to the pre-Recession levels (at least as of last time we had these painful for them discussions. Perhaps these areas again have boomed. But that’s even more reason for me to stay away from them.) Those areas got hit hard, and I don’t have enough money for a real crystal ball, having spend a large sum on Miss Cleo in the 90s. We all have opinions, and I know that they differ. I don’t know it all. So, for those who are telling the OP to invest in California - why, where specifically, under what terms? My reading comprehension skills tell me that this is what he’d like to read here. Thank you.

@ Mary L. That is an impressive achievement for California today. My hat is off to you. When you say that you’ve purchased some properties with negative cash flow and “it worked,” do you mean that you have since sold those for a profit? Refinanced into a lower rate that made them into positive cash flow properties?... I am curious what worked for you and in what years? Is this the same strategy you are applying to the latest purchases? It sounds like Suresh is just starting out. There are different strategies that work for different people in different markets - and at different times in economic cycles. But specifics of each property vary from its location to deferred maintenance to the ability to do some work and management yourself. Are you getting short-term loans that you keep refinancing and getting more cash out as values keep going up? Buying all-cash? And what is your exit strategy today? If all cash, you may have a leg up on others in that you don’t have to worry about the next downturn as much as they may... Have you stress-tested your portfolio for a 10-20-30% correction in valuation/rent for 1-3 years? Thank you.

Stephanie, I apologize for being presumptive, but you did not state how you came upon the property/whether there is a seller’s agent, and all else seems legit. And I am allergic to even hearing about potential fraud - my fists begin to clench uncontrollably, etc... With no pics and no (legal) way for you to get inside (“tenants have rights”) (btw, this also applies to an inspector,) has the seller asked for a deposit or much of your personal info? I hope I am on the wrong track, but would hate for anyone to be taken advantage of for not speaking up.

@Bryan C: this may be the one you asked about (two years ago - but I just got the news,) unless there is another Harbour Portfolio that deals with real estate: https://www.fox13memphis.com/top-stories/buying-a-home-lawsuit-says-company-takes-advantage-of-home-buyers/637267404

Unless there is another Harbour Portfolio from Texas that deals with real estate, this report from Cox Media Group is a warning about this one: https://www.fox13memphis.com/top-stories/buying-a-home-lawsuit-says-company-takes-advantage-of-home-buyers/637267404

I recently learned that Union Bank can do it in Northern California. They also have branches around you. Of course, you could also go online. https://www.unionbank.com Unfortunately, the branch I went to does not seem to be fully staffed, and the process since then has also been lacking. My case has limited w-2 income, and I am not sure that the underwriter understands how to properly account for other income. That is not unusual, but lack of willingness to tell you exactly what is lacking - rather than just deny you - is not a good business practice. The situation may be improved by having a loan officer as your advocate - could not find such in my case up here. Appealing to someone in charge at the moment.

PM costs vary by each market. And you must remember that everything is negotiable. And as you grow bigger in your market, you should remind them of that - unless you are absolutely happy with your PM (there are some great ones that are worth every penny. Unfortunately, that’s not always the case.) 1. Monthly fees: 7-10% of the collected gross rent. It may get you just the collection of rent and repair calls. Some will do a semi-annual inspection at no additional cost (these PMs are gems - they get it.) 2. Tenant placement: Some firms charge 1/2 to one full month’s worth to place a new tenant. 3. Existing tenant renewal: I’ve seen this as low as a flat $200 fee to as high as one full month. 4. Maintenance/repair requests: I’ve seen this from no additional fee to a 10% charge on top of the contractor’s costs (“why would they get you the cheapest contractor?” would be my suspicion.) I’ve also seen PMs claim that they have pre-negotiated (lower) rates with their contractors - and will still do from no additional cost to charging another 10%. That’s as far typical fees go. Some of my pet peeves with PM contracts: 1. I’ve seen PM firms have you agree that all legal costs in a lawsuit (with a tenant) would be your responsibility - that’s a non-starter for me. I can leave this in - if I must - but stipulate that any explicit violation of laws by the PM is not my responsibility. I’ve heard an excuse like, “If we get sued, you get sued.” Sure, but sometimes you get sued because you - only you - actually did something stupid/illegal. I refuse to be blanketly on the hook for that - and protection of my own interests does not always coincide with the PM’s. Why should I pay their legal costs? 2. Some want a minimum of a 12-month contract. If they expect me to pay them one full month to place a tenant to begin with, that absolutely has to be negotiated to a 30-day notice. A good PM is typically ok with negotiating anything reasonable. Sometimes I may go overboard. Maybe. But these are issues I’ve learned over time to deal with. Again, costs and details will vary by market. I still manage majority of my properties - even in other states - myself. I use local and trusted RE agents just to place the tenants into those - and I still retain the final approval right.

“General attitude?” From my comfy armchair, I can see how today’s situation in Kiev - far enough removed from the war areas, and being the economic and cultural center - could be attractive to those who know their way around the local bureaucracy to not have to pay an “overhead” under the table at every turn. I can see how the deeply devalued Ukrainian currency can make the purchase potentially even more attractive. But I am presuming that the purchase price will still be in/pegged to a hard currency, not necessarily reflecting the dire local economic situation. My own concerns, off the top of my head - putting aside the fact that the country is at war - would be: 1. Are these leases set in a hard currency or the hryvna? Given the history of the hryvna’s values, I could end up looking at 5% yields in no time. 2. I have not looked up Ukraine’s corruption ranking lately, but know it’s not low. I understand that the government has made it easier for foreigners to invest in Ukraine. I’d need to know I can trust the broker, the attorney (or is it a notary?), the title company, etc. And I’d need to make sure that the seller is real (and alive.) 3. Are these downtown properties in the center of the next color revolution? What type of property insurance can I count on? 4. Goes with the above question - will the next government be as “western-looking” as this one - will my ownership rights be protected in the future? 5. Goes with the above question - what are my taxes today, and what will they be tomorrow? 6. Am I buying the land/right to a say in the land also? If it is a condo-like property, where I own a specific share (like in the US,) that’s one thing. But if I have no say about the land, it’s another. To paraphrase @Greg Scott, there are similar/better yields in safer locations. Sure, the war may soon be over and the values will double. Or not. I missed this opportunity in post-USSR, especially in Moscow. I think I’ll miss it again. I missed it in the mid-90s Colombia, too, where I wouldn’t mind taking tax-deductible vacations today more than I would in Kiev - no offense to Klitchko (both of them.) Ukraine certainly has a chance at success. It is in the right geographic place for it. It is also in the wrong geographic place, as history has shown over and over. It has enough young, educated and entrepreneurial people who yearn for a better future for their country to make positive changes. But today it also has risks that I would not know how to properly evaluate. This could be a good play for someone with right/trusted local connections. I would actually be curious if you could educate me/us on the detailed situation as you are seeing it on the ground, @Sean Almeida. Are you investing your own/family money in the local real estate, for example?

If you are not married, here is a good case for marriage if I ever made one, Christine: each of you can get ten conforming loans. Of course, marry wisely- the spouse should have enough income and good credit to qualify for a conforming loan, good looks and dishwashing skills aside. Also, since this would be a business tactic, let us know if the IRS would allow you to write off the wedding and the honeymoon as a business expense... Unfortunately, I married long before I got into the business. At least I enjoy doing the dishes.

I am assuming that you are interested in the better terms that a conventional loan would provide over another type of loan. That is part of my own strategy. If your existing loans are in your name only, and your wife has income to qualify on her own, each of you can get up to ten conventional loans. Alternatively, if you have a small loan (your profile says you have properties in Memphis) that you are close to paying off anyway - and can pay it off now - consider opening up that spot in favor of a future more-expensive property.