All Forum Posts by: Carl Millsap

@Lindsay Zane looking at the property it's a single family house correct? If so here are a few ways to adjust your numbers:

1. The chances of you having 50% of the monthly income as an expense is low on a single family. Factor 25% for after the rehab and see what that does.

2. Once you rehab the house /depending on what you do, you can reduce the amount of money you save for repairs. i.e. If you replace the roof, hot water heater and /or HVAC during rehab then you'll have 5-20 years before you would have to address those.

3. Tenant proof during your rehab. Install flooring that looks nice but is durable. We install ceramic tile floors throughout our units except the bedroom. Carpet goes in the bedroom. This reduces your cost going forward because you don't have to keep changing flooring which is another area to save $ long term.

4.  When it's all said and done. For a single family $5-7k in reserves should cover just about any repair you would experience after rehab. If you can reduce the amount of money down from 25% to 15-20% that difference should be put in your reserve account. Make the adjustments in your calculator and see if the cashflow meets your criteria.  

@Dexter Tiggs the numbers and your criteria will determine if it's a good deal. 

Would I put a tenant who is receiving assistance (Section 8) in a property to reduce risk...absolutely, as long as that person met all of the other screening criteria. 

@Celeste Nadal there is a recent thread on the pros and cons of Section 8 (S8) that will give you some good insight on how to proceed and what to look for as well but here are a couple things to consider:

Screen S8 tenants like any other tenant. 

Consider in most cases a 50-90% of rent will be paid on time every month by the program. Each participant gets a different level of assistance.

The things to look out for: 

Ensure the housing authority that manages the program holds the tenant responsible for their end of the bargain i.e. tenant has to make repairs to damage they caused, and that they pay their portion of the rent on time. 

In our area if a tenant doesn't pay their end we can evict although a portion of the rent was paid. If a tenant on S8 is evicted they lose their benefit which is a huge help to ensure compliance. 

Take a look at the thread it's beneficial.

https://www.biggerpockets.com/forums/52/topics/823505-section-8-housing-great-idea-or-dangerous-in-the-current-market 

@Matthew Otero buying a property with M2M tenants is a good thing. 

First, check your local and State laws to ensure you are compliant, but here's what I recommend.

1. Address any maintenance issues they have. 

2. Get an updated tenant information sheet i.e. employment, contact numbers, etc.

3. Give them 30, 60 or 90 day notice that you intend to raise the rent (if that's the case) and have them sign a new lease. Giving them notice does a few things:

a. It's probably required by law, but it's also a courtesy.

b. You have time to evaluate and see if they pay rent on time and what type of tenants they are.  

c. You have time to plan if they decide to move in lieu of a rent increase / new lease, but remember a paying tenant in hand is better than a potential future tenant. Weigh the cost of moving on. 

The best thing you can do is communicate your expectations clearly and then follow through.

@Paul Moorer try this link: https://www.biggerpockets.com/files

You will have to search through the different documents but I've seen a few different versions that should be helpful.

@Paul Moorer you'll have to determine if it's a deal or not based on your criteria, the numbers, and your end goal. Questions I'd ask / next steps:

Ask the owner:

1.  What repairs was your contractor working on? Why were you having it fixed / repaired? This will help you understand if it was an issue or if they were simply upgrading to sell. 

2. What do you think it'll cost to finish what they started? This gives you a ball park figure to back into your offer price.

3. When was the roof, HVAC, Hot water heater, windows replaced? These are capital intensive expenditures. If they haven't been replaced in the last 5-10 years then factor the replacement into your cost.

4. Why are you selling? You want to uncover why they're selling if you can. 

Based on their response to the above it'll give you more question but these usually get the ball rolling. Also check (search) the files of BP there are question worksheets wholesale /flippers use when talking to owners.

Once you have the above information ask the owner if you can do a walk through (if the place is vacant) to look at it and gather more information. 

When you walk the property take a contractor with you to look at the work that was done, what still needs to be done, and get an estimate of repairs. 

Once you have the repair estimate, get a pre-approval for what your bottomline number is and then negotiate with the owner. 

It comes down to your purpose and numbers. Are you buying to live in it? Use as a rental? Wholesale? Flip?

Confirm your ARV / adjust for current environment / risk and don't get emotionally tied to buying the house. Sometimes the most powerful thing you can do is make an offer and walk if the numbers don't work.

Good luck

@Adi Bajaj from my experience the simplest way to get business credit for your car is to track your business related miles and write them off on your taxes.  

I imagine (check with your tax professional / Lawyer /insurance agent) if you write an agreement to use the car for business w/ the LLC you will have to get commercial use coverage which will increase your premium as I understand it.

There are a few apps that you can track you mileage on, or good ole paper and pen works as well. The thing is when does business mileage start and end, and what is considered reasonable for your business. Again consult the respective professionals. 

@Ryan Nastase We've been using Cozy for the last 6 months to collect rent payments and manage maintenance request. 

We recently switched our record keeping / property management system to Housters. Housters is easy to navigate, provides all of the reports we need, and has an app. 

We haven't switched rent collection and maintenance to Housters because the tenants are already set-up and verified so no need to have them go through another process.

I recommend you take a look at Housters.

As for advertising we place available units on Facebook marketplace, and Zillow. 

@Ty Doke truth be told every real estate investor has been burnt at some point or another. The degree of the burn varies.  

If the property is bringing $2400 consistently and will cover the mortgage / expenses while you renovate and add units then go for it. 

You've done your homework, you have a plan and know the risk. He is biased for all of the reasons mentioned and thus can only provide value by telling you what mistake he made so you can learn from it. 

 Truth be told every stock market investor has been burnt as well. Go forth and do great things.

@Gia Broussard 

Cozy is good as the others have stated. Tenants can submit maintenance request etc.

Not sure how you're planning to manage / keep up with expenses etc. but that's the only drawback I've found. 

The reporting isn't what I'd like. It'll give you payment and expense reports for taxes, but not a P&L etc. 

But again it's free so....you can't go wrong.