All Forum Posts by: Carl Millsap

@Brian Nguyen when I found my agent / broker and primary contractor I listened to what they were recommending then got a 2nd or 3rd opinion. When I saw that they were consistently working with me, with my best interest in mind even when it was against their interest I knew they weren't going to take me for a ride. 

Example 1: Agent / Broker...I had a contract on a house with some repair contingencies built into the contract. This was back in 2004. I was going to walk away after closing with $5,000. The day before the closing I did a walk through and saw where the owner cut some corners on the repairs. I had the agent terminate the contract for what essentially would have been a $50 repair. 

Consider that I walked away from $5,000 at closing plus future profits, and the agent didn't get his commission for what amounted to $50. Years later the agent mentioned it and I asked why he didn't make that point at the time. His response, "it's what you wanted and since you were still learning I thought it best to not push you into a deal you didn't like."  I have closed every deal since 2004 with this agent / broker.

As for my primary contractor, in the beginning he was responsive to my calls / request. He was fair on his pricing. Starting out I would get 3 bids on a job, he consistently came in at the average or a little lower, but his work standard is excellent. He also did what he said he would do when he said he would do it. We've been working together 17 years.

When you start working with a contractor I  recommend you avoid giving a deposit. If they need supplies go buy them and have them delivered at the job site.

If you do give a deposit have a written contract that states when payments (to include the deposit) will be paid connected to a specific performance.

@David Bowles...@Corey Hawkinson is talking about me. 

I allowed a tenant to pay late and rarely enforced the late fee. I sold the property to a friend; he raised the rent and has collected the late fee EVERY month without issue. 

Lesson: Set the expectation early and follow through on what you expect / what the lease says.

When we purchase a property our policy is everyone starts w/ a clean slate. Tenants may have had an issue w/ the previous owner, and / or he may have had an issue with her. It's a relationship and you don't know where it broke down. 

Give her a chance and base your actions solely on what she does or fails to do. 

Glad you did a rent comp search. If you can get $750 then I'd give her 60 days notice (or when COVID ends) that the rent will increase. I would give her 30 days to decide if she wants to sign the new lease with the new rent amount. One day 31 the new lease would be executed. 

If you've done the numbers, and YOU are comfortable with the deal & terms then execute. We can all pick apart things we like or don't like about a deal. Execute and you'll be better for it.

@Brandon Pelfrey as @Charles Carillo stated a clause that says it superseded the previous dated lease or a memorandum signed and date by both of you stating you've agreed to terminate the lease dated XXX and for what reason if you think it could be an issue later.

@Brian Nguyen yes apartments are a good investment. There are pros and cons to apartments, as well as SFH.

I'm moving from SFH into Multi because it will allow us to scale faster.

As @Greg Dickerson mentioned it's best to pick an area where you know and feel comfortable with, that will help with your comfort / confidence level. 

There are a lot of books, webinars, and podcast you can learn from. I'd caution that you don't get analysis paralysis. Set a goal, do your due diligence and take action. 

I believe as @Melanie Johnston stated the market will become a buyer's market in the coming months. Don't rush into a deal, but don't pass on one because you expect everything to be just right. 

Once you find an area you're comfortable with I recommend you find an agent / broker and a contractor to build a relationship with. Again, do your due diligence on these people. They can help you reach your goal, or they can take you for a ride.

@Brian Nguyen here's what I recommend:

1. Each investor has their own criteria for investing, what is the "best" for me, may not be for you and vice versa. Define your criteria.

a. What is your goal? 

b. How much do you want / have to invest in a property? 

c. Do you want to self manage or hire a property manager (PM)?

d. How far are you willing to travel based on if you self manage or if you have a PM? 

e. What's important to you..... monthly cashflow or appreciation or potential for both?

f. Do you want to invest in SFH, small multifamily or large multifamily?

2. Once you answer the above, then weigh the pros and cons of investing locally or from a distance.

Every place is a good place to invest, just depends on what your goal is. 

@Julie Rolfe here's what I recommend:

1. Serve notice that eviction proceedings will be filed.

2. Also, serve notice that a small claims complaint will be filed.

3. Follow through on #1 and #2 by filing each as soon as possible and get the tenants served.

Here's my logic: Your friend is already out $8k, so why not help another landlord avoid the same experience with these tenants. An eviction on their record (which they earned) will at least alert a landlord who does their homework. 

Your friend can hopefully recover some of the money in small claims, hopefully they have banking / employer information as part of their record keeping.

@Pete Mathias I pulled our comps via Zillow, and Facebook Marketplace. I looked at houses / townhouses similar in size and amenities.

I sent the addresses / listing to housing for them to review and wrote up a justification why those unit were the appropriate comp. vs. the comps they wanted to use.

@Ronald Cooperman in our area 3 bedroom/1.5 or 2  bathroom townhouses / duplexes rent well with Section 8 and on the market. 

I don't approach Section 8 any different than I would someone not on the program. They still have to qualify i.e. income, eviction history, and credit. They still have to pay their deposits.

If you provide a nice unit, in a good neighborhood you'll attract qualified tenants and Section 8 will pay for it. 

Check with the housing authority who manages Section 8 in your area about the following:

1. What is the average number of bedrooms their clients need? This will help you determine what you should look for if you plan to focus on serving Section 8.

2. Do they have a place for you to post your units once they're ready to rent?

3. Request a copy of the inspection checklist. Ask how long does it take to get a unit inspected; here it's about 2 weeks once requested.

4. How do they determine the rent amount they'll pay for a unit? Is it market rent? Do use a formula or comps?

The key to Section 8 is ensuring you pass the inspection.   

We have several tenants on Section 8, some have been with us for years and I believe won't leave as long as the place meets their needs. 

@Bellman Tumasang I recommend you call your County and City Property Valuation Assessment (PVA) office. They will tell you how to pay taxes, give you the forms etc. 

Each government entity does it differently.

In my area our taxes are based on purchase price, it doesn't matter if it's an 4plex or large multifamily. The County and City determine the tax rate then multiplies it against the purchase price. Sometime in the Fall we receive a postcard with the property tax amount. 

The City requires us to have a business license. We submit our tax return and they calculate the fee for that license. 

Our bookkeeper does our taxes. Money well spent.

@Pete Mathias I would check with your local housing authority that manages the Section 8 program. 

In our market we pulled the comps when we requested a rent increase.