All Forum Posts by: Adam Johnson

How about going for ordinary and decent looking in lieu of flashy and expensive?  Go for a vehicle that gives neither positive nor negative impressions.  You aren't going to sell them on what you drive, you are going to (hopefully) sell them on your ability to help them.  Fuel efficient and functional transportation.

Definitely read those books too!  You will gain a lot of insight, especially reading the Thomas Stanley books.  You will also find how quickly stereotypes can be shattered.  His books are not speedd reading material, but worth the time in my opinion.

Glad no offense was taken!  I truly wish you the best of luck.  If you are interested in the investing side, learn how to think differently than the masses, you will go much farther, much faster.

@Ben Braddock - I think the answer will depend on your market.  You mention that you always have 2 or 3 vacants in a community of 220.  If that is all you have, I can't see anything broken in your system other than maybe your rents are too low!  95% or more is, in my opinion, considered high occupancy and may mean a different problem.  Staging won't fix that.  The other side of that argument is that you have fewer headaches and turnovers because your rent is below market.  If you are content with below market rents instead of more vacants, that may be ok.  Do the math a few ways to see what makes mathematical sense.  If you end up with 5 more vacants but can collect $ 20/door/month more in rent, does that make sense?  I am throwing around imaginary numbers here, test your market.

I would do a market "survey" and see what other similar communities charge for rent and do to prep units for showing.  Act as a prospective tenant and call, or go and take a look at a few.  My guess is that you are leaving money on the table.  I doubt you are doing something wrong with showing your places if that is all you have vacant at any given time.

@Brian Burke has quite a bit of experience with larger complexes and may be able to offer a couple thoughts here as well.  In my opinion, you are trying to fix something that isn't broken while standing next to something else and not realizing that IT is broken.

 Not to mention that some of these tenants don't want creditors to find them.  I am not endorsing this type of activity, but in certain areas and with certain tenants in certain types of properties, this is simply reality.  If I forced every one of my current tenants to get a bank account that doesn't currently have one, we would be at 50% occupancy over night and have a tough time filling up our apartments.  

Some of our tenants are also older and prefer to pay their bills in cash after they cash their Social Security check.  Not everybody is tech-savvy and wants to pay their bills with their smart phone while texting and Facebooking as they try to drive around town.  Some of them roll old-school and use cash and/or checks still the way it used to be in a simpler time....

I have found that adjusting to what my tenants prefer works better than trying to force them to do it my way.  I added texting to my phone plan several years ago because tenants would not answer my phone call asking where the rent was, but they would respond to texts right away!

It boils down to knowing your clientele and running your business to work best for/with them. 

I'm going to go against the grain here.  I think it is ridiculous to drive a certain vehicle to "look the part" unless said vehicle is what actually is making you money.  I am going to assume that since you posted on a real estate investing website that you are planning to serve real estate investors.  As a professional full-time investor, I am not impressed by what ANYBODY drives.  Know your business, do it well.  You could ride an old rusty bike to show me a property, as long as the property makes sense as an investment and isn't a waste of my time, you will get a lot of business from me.  If you are looking to sell pretty houses to primarily retail buyers, I'm not in a great position to offer you advice.

I have worked with professionals that drive fancy cars and flaunt them, but they don't have a clue what they need to do as a professional.  I have also worked with professionals that drive 15 year old cars that will knock your socks off with sharp advice.  The latter group gets my business every time.

I would encourage you to read a few books.  Try "The Millionaire Next Door", "The Millionaire Mind", or other books by Thomas Stanley.  You may also find several of the "Rich Dad" books helpful.  If you are going to be an investor and/or work with investors, you need to learn how to think like one.

It isn't my intent to come across as a jerk.  However, in my opinion, your approach to life and profession is seriously flawed.  I'm coming across on the harsh side to make my point understood!  Don't worry about the fancy car, the perfect suit, or the expensive watch.  KNOW YOUR PROFESSION!  Be a rock star first, then worry about what you are driving when you can write a check to pay for it.

Best of luck to you.

@Sheba Shimoji - I am going to disagree with @Rob Beland, BUT, I am going to advise you to seek the advice of your CPA before deciding how/why. Technically, what you are trying to do converts investment income into ordinary income as it passes from your investment company (or you personally) to your business. I personally am not familiar with rules of S-corps, I use LLC's, so I am not in a good position to offer a lot of insight into your question. The resulting conversion of income may actually work AGAINST you, not for you as ordinary income is taxed differently.

I can say that I am a member of multiple LLC's that own real estate. I am also a member of an LLC that is primarily a property management company. My management company charges the holding companies for it's services. The way that we do this is under the advice and supervision of our CPA.

Going back to your original post and question, be careful what you do and how much you charge.  If you can make a reasonable argument that what you are doing is not tax evasion, you will be in a much better position to defend against an audit.  Consult professional advice so that you do this correctly.  First, you don't want to be in a bad spot if ever audited.  Second, you don't want to inadvertently cause yourself to pay more in taxes than what you were originally paying! 

Good luck, happy investing!

 EXACTLY!  Thank you for saying that.  Having a license is viewed by many as an obstacle.  It has never been one for me.

I haven't had that problem...yet.  I have had to stand there in front of the judge and so yes sir or no ma'am a few times that I thought I was right and the judge was wrong.  I learned a long time ago that sometimes you just need to bite your tongue.  Generally, I do well in eviction court.  I have taken it on the chin a few times when the judge gives the tenant 3 weeks to "find somewhere to go".  Those kill me because I know in 3 weeks I will need the Sheriff there to throw them out on the street because they won't find somewhere to go, but I bite my tongue because I work with the same judges every time.  I once had a new server serve notice a day too early and managed to get it to go through the court because I stood there and took my scolding and didn't say a peep about it.  It is kind of like building up and saving favors when you go along with the judge even though they don't say what you want to hear.  I have watched other landlords get lippy and get shredded because they didn't dot all of their "i"s on the paperwork.  "yes sir, I could have done that better and I will make sure not to do it like that again", then be quiet!  Has saved me a couple times! 

@Brie Schmidt - we have a mobile home park almost 3 hours from our office.  We opened an account at a different bank that has several branches located around our property.  They had multiple branches in several directions, so it worked well for the tenants that might need to stop on the way to/from work in a different town.

@James Wise - you are correct, it will definitely vary.  Might even vary base on what side of the bed the judge got out on that morning!

If you are fixed for 10 years on a 30 year amortization you are doing well, in my opinion.  However, that doesn't necessarily mean that you have to be paid in full at the end of 10 years, it just means that you have to do something before the end of 10 years so that the lender is paid in full in 10 years.  This can be accomplished the way it sounds like you are currently doing (struggling to pay it off in 10), or you can simply refinance it before the end of 10.  If your mortgage allows, you may also be able to adjust the rate at 10 and keep going with the current lender.  The rate adjustment option is no unusual, so I would encourage you to read/understand your mortgage.  You may be causing yourself undue strain trying to pay it off in 10!  Just my 2 cents worth.

Fixed for 5 is very common in portfolio and commercial lending, fixed for 10 is less common in the same type of financing.  My experience has been that this is usually accompanied by description of terms by which the rate will adjust to the then current prime rate plus something.  It is simply a means for the lender to adjust what you pay for use of the money to be more in tune with the lending environment in the future.  

@Brandon Schlichter - as an extra precaution, we use a separate account ONLY for receiving these payments.  We go in every day or so (online) and move most of the money into another account.  We leave enough in the account (maybe 500-1000 to cover us just in case a tenant deposits a check and it bounces, but we haven't had that issue yet.  Most of the time the ones that use this option deposit cash.

As to @James Wise's mention about the partial payments, I have given that thought too.  What I am about to say is not legal advice!  I have thought it through though.  In the event that a tenant attempts to try this stunt, I will continue all the way up to the court date for the eviction and go to court with that exact amount of cash in hand, then explain to the judge that they directly deposited a partial payment into my account but I have brought it with me to court as I am not accepting their partial payment at this time.  I would think that a reasonable judge would allow this, worst case forcing me to hand the partial payment back to the tenant, which I will be prepared to do in cash.  I haven't tested this theory and this is not me giving legal advice!!!!  My experience with evictions so far is that once they stop paying, they stop paying.  Once I serve eviction court notices, I don't accept partial payments unless they show up to court with a substantial payment.  If they have been a pain in the a$$ as a tenant, then I just don't accept the partial payment at all.