All Forum Posts by: Carl Millsap

@A. Maldanado my wife and I received DR's Total Money Makeover as a wedding gift. Of all the gifts we received it was the best, the waffle maker was a close second. 

I've taught DR's FRU at our church for years and it's truly a game changer for those who execute it. 

I've had to work hard to convince my wife that his teaching doesn't apply when it comes to our investments, but only for the investments. As @Jason Anderson said "If it doesn't make money then I don't finance it."

Enjoy the class, develop a plan with the Mrs. you'll be better for it.

@Daniel Lozowy

What have you done with the ones who responded?

As for the others....there is a couple approaches..

You could send a 2d letter following up saying I wrote you in March 2020 about your property at 123 Main Street.

You could also send a follow-up Letter stating you have a couple deals in process but you’re still interested in their property.

In my experience the key is to personalize the letter, and keep it simple.

In marketing we can’t create the desire, we can only enter the conversation already going on in their head.

You never know when someone will be ready to sell.

We have a contract on an 8 unit now simply by writing:

Hello Mr. Xxxx, my name is Carl, I’m interested in buying your property at 123 Main Street.

I know it’s not on the market but if you’re interested in selling please call or text me at xxxxxx.

That simple letter got me an 8-plex off market. When The owner called he said “ I got your letter, I was thinking about selling. Would you like to look at it?”

Keep it simple.

@Ellie Narie here are a couple things to consider:

1. Some "off-market" deals are really deals i.e. lower than market price, and some "off-market" deals are just an opportunity to keep it from going to market you have to weigh the risk / price of letting it go to market.

2. In your case the comp says it's worth $500K. If the one up the street sold for $500k then the one you're looking at if it's close in age, amenities, rents etc. will be in the same ball park. That's the baseline.

3. Schedule a walk through of the units. What do they need? When were they last renovated? When was the roof, windows, HVAC units, and hot water heaters replaced? What other maintenance needs to be done? When was the parking lot last paved, sealed? Factor those repairs into your purchase price.

4. I don't think the market is going to reflect a recession for awhile so I wouldn't count on a lower price for that purpose, but you can negotiate a price you feel comfortable with. 

5. As for what you should offer....run your numbers, if you house hack will the $2700 cover the mortgage at $430k, $450K, $475K and other fees or will you still have to pay? If you don't house hack and get the the 4th unit ready to rent what does that do for your numbers? Run a few different scenarios, be conservative with your numbers i.e. if you house hack and 1 of the 3 units is empty or a tenant doesn't pay how will you make up the difference?

Is there an opportunity to raise the rent? If you improved (upgrade) the units could you generate another $50, $75 or $100 per month?

6. Offer what you think it's worth to you (what your numbers will support) all they can do is say no.  

@Andy Mejia I would do the following:

1. Do a market analysis on how much will you get in rent for the 2 apts. once you move out? You can check with property managers to see what a similar unit rents for, you can call landlords of vacant units to see what they're asking for rent of similar units to find the number.

2. Run the numbers on your refi. I.e. If you refi $550k @4% for 20 years the payment would be $3,333 before taxes and insurance. Add in taxes and insurance and let's say the new payment is $4k per month. Note: You can use a mortgage calculator online and play with the numbers i.e. loan amount, interest rate, and years to finance the money 15, 20, 25, 30 years. 

3. Once you know the payment amount will the rent for the 2 units cover the payment including taxes and insurance and allow you to put money in reserves for maintenance etc.?

4. When you re-fi do it while you are still living in the house so you can get a lower rate, and a longer term i.e. 25-30 years amortization vs. 15 to 20 for an investment property.

Hope this helps.

@Anthony Liguori I like the KY market. It's balanced for the most part, not too far towards tenants or landlords when it comes to the laws. 

You can still buy SFH or Multis for less than $50k per unit.

@Anthony Liguori @Justin Tam I actually live and invest in KY. I'm from Syracuse. My father invests in Syracuse, I'd be happy to connect you with him. 

@ Anthony Liguori from our discussions I can tell you: The houses are reasonably priced $30-$50K for SFH, demand is about to go up because they are closing down a housing project that has been around since I was a kid. I imagine there will be 750-1000 families displaced.

I don't invest in Syracuse because it doesn't fit my buying criteria......taxes, utilities, snow just to name a few etc.  

@Craig Hormes We've had several S8 tenants and the program continues to get better in our area. 

1. Tenants are now responsible for fixing damage they caused. There is an annual inspection, and the program use to make LLs fix holes in the wall, replace ceiling fan globes etc. that were created / missing because of the tenant. If the LL didn't fix within 10 days and get a re-inspection the payment was put on hold. Now the tenant has to fix the holes and replace the globes etc. or risk losing their benefit. 

2. You can get regular rent increases with 60 days notice. 

3. As @John Underwood said the government is depositing the rent on the 1st like clockwork. 

4. They tend to stay a long time, and for the most part maintenance calls are rare (it helps to tenant proof the unit).

@Megan Brooks check your local law, but I don't think there is anything that prevents you from not renewing her lease, and I don't think you have to give a reason. 

You could choose not to renew because you want to renovate the unit. 

I thought about the "new" tenant option as well, but thought it would violate the city code you posted. Now you could argue she was under the previous landlord's lease, and in theory she's a "new" tenant to you under your lease terms and conditions. I think it's a stretch.

Hopefully, you have a creative attorney who can help you.  

@Megan Brooks I'm not a lawyer, and this answer is probably more than you asked for but work with me...... 

You can put her on a month to month, 3 month or 6 month lease and step it up at the end of each period per the CPI. This way it works within the boundaries of the law, you get your increase and the tenant still saves. 

It's a little tedious in that you would have to "renew" the lease every month, or 3 to 6 months, but it doesn't lock you into a 1-2.5% rent increase for a year which is what I think the CPI increased last year.

Again, consult with an attorney or qualified professional but I think the above is well within the law. 

The other option is to not renew the tenant's lease let them move and lease it at market rate. Not an ideal option, as I prefer to keep our tenants even at slightly lower than market rate.