All Forum Posts by: Chris John

@Aaron Pues

I'm hardly an expert, so hopefully you'll get a lot better answers than this.  I'd start with handymen (we've run across a few that were way more talented and versatile than I realized) to knock out as much of the little stuff as I could (painting, tiling, light electrical and plumbing, cabinet/countertop replacement, knocking down and putting up walls, etc.).  From there, I'd probably subcontract out the bigger stuff that they couldn't do.

It'll take a lot more time and effort on your part, but I think you'll probably see substantial savings.

Good luck!

@Account Closed

Totally correct.  In Cali, taxes are basically the purchase price with three zeroes knocked off each month.  So, an $80,000 house costs $80/mo.  A $400,000 house costs $400/mo.  Also, the rates grow very slowly because of Prop 13.  Basically, now my tax on the house I mention below is $94/mo. even though Zillow estimates it's value at 321k.

Also, you're dead correct on Capex. It's just not something I ever think about. Our houses were making about $400-500/mo each. On a bad month, maybe we didn't make money, but that almost never happened. Most months we'd get to keep most of the $400-500/mo per house. We'd let it build up and buy another. Then, when we'd get equity, we'd refinance and keep buying. I'm not sure if we have better tenants, better handymen, or California is just eternally forgiving, but I can't believe some of the numbers I hear set aside for Capex.

I bought my first house (owner occ) in 1999.  They told me that the hot water heater was about to go.  I never maintained it, drained it, etc.  I'm the worst.  It finally went earlier this year.  I've gotta say, our handyman is good quality, fairly awful in terms of reliability, but insane in terms of value.  We got our first kitchen tiled for less than the quotes for putting laminate down.  He's done roofs, french drains, repiped a house, renovated a kitchen and bathroom, painted inside and out, tiled almost every floor we have, etc.  We've been gentle with his rent over the years, and it's a relationship that's worked pretty well for all of us.

Anyway, the oldest spreadsheet I could find was from 2015.  By this point, we'd already refinanced a lot of the properties and were having to put more than 20% down, but I think this one still had an original loan.  It was later in the game (bought in 2012) and I'm guessing it's 25% down.

Anyway,

Purchase price:  87k

Loan:  62.3k.  It's about 2.5 years after purchase, so I'm assuming it was ~65k originally?  My brother would occasionally "round up" the mortgage payments back then, but it seems close to correct.

Into it for:  ~26 or 27k with fees and minor rehab (including painting the interior, removing carpet, and sanding/staining the hardwood floors underneath)

Rent:  $950/mo

Mtg:  $338/mo (4.625%)

Taxes: $81/mo

Ins:  $40/mo

Cashflow:  $490/mo

To reiterate though, you're correct. It's WAY lower taxes (at least property - they get us back on sales and income) and my unwillingness to set aside too much on Capex. Don't get me wrong, I stay liquid, but it's not organized.

@Katrina B.

Well, the first few houses I bought were for around 90k with $900/mo rent.  I think you can still get houses like these in some markets.  I was probably into those houses for around 25k with fees and minor renovations.  Mortgages were around $450, so I was making around 5k a year (or 20% on my down).  I never freaked out about capex because I figured that with inflation, debt retirement, tax advantages, etc. it was likely to at least offset capex or better (it turned out to be better).  It helped having relatively good tenants and pretty good handymen.

In the end, those houses skyrocketed in value, but I was more than happy chugging along at the 20%+ ROR.  haha.  I mean, sometimes it sounds like people won't get out of bed on biggerpockets for deals like these, but I'll take them all day long as I'm not "in the biz" or interested in wholesaling.  20+% means money is doubling every 3-4 years and if you can stay on that arc, it's pretty substantial (imo).  Basically, just refi every few years and keep buying.

I definitely don't disagree with @Account Closed though.  Those houses are now worth about 275k and rents are only up to around 1700/mo, so they don't offer the same buying opportunities that they did as a percentage.

Good luck!

I've never really thought about this, but my brother has been talking about us maybe getting into short term rentals.  Are there ever tenants that refuse to leave?  What do you do?  Is the "eviction" process faster than a standard renter?  I can't imagine renting a house to someone for 3 days and it turns out they won't leave and it ends up taking months to evict them...

Thanks and sorry for my ignorance!

@Kyle J.

Awesome.  Great info and thanks for posting. 

These next statements have nothing to do with you, so please don't take them as a personal attack.  haha. 

It's just the obvious and expected bs about only getting 80% and having to forgive the balance.  While they're forcing landlords to house tenants, etc. there's certainly no way that they could actually make landlords whole.  I mean, it's not like they're printing trillions of dollars and giving extra money to unemployed people, randomly sending checks to everyone, etc.  Way cheaper to cut corners on actual tax payers and continue the screwings, but hey, they've starved people long enough that I'm sure they'll be happy for anything.  So predictable and lame, but I'm sure it'll be cheered and lauded.

@Gayle Eisner

I know this is probably an unpopular view, but I'm a big fan of hard truths. 

For me, your statement "Know it’s now my fault..." hits the nail on the head.  If it were me, I'd say something like, "I screwed this up.  I'm not blaming you at all, but I need to fix it.  I hope you're willing to help me so it goes smoothly, but I'm cleaning up my mess either way."

Good luck!

@MarieChele Porter

Welp.  As I'm now emotionally invested, curiosity has gotten the best of me.  Is there resolution that you can share with us?

@Timothy Ray

This is a great question.  I'm sure you'll get better answers than this and I already know that some people think I'm too demanding/clingy, but I like:

-A quick rundown of areas they're comfortable with, neighborhoods they like and have success in, and a rough idea of expected rents for properties (if I'm looking to buy)

-Fair, but firm management.  I don't want to have my properties run like a slumlord, but I don't want to get bilked for any and everything.

-Good communication of issues as they arise so I'm not blindsided by unexpected expenses

-Aggressive pricing that keeps properties at market rents.  If I'm paying property management, they should be able to pay for themselves over my lazily not raising rents.

I passed on Birmingham, Al completely because I couldn't find a property manager that I was comfortable with.  The ones I spoke with wouldn't give me any feedback on properties pre-purchase because they weren't making money off of me yet.  I didn't feel like I could buy a house without knowing if I'd find a manager willing to take it on or an estimate of rents that I could expect, so I had to pass. 

My managers in Central California and Jacksonville seem happy to offer this service, have a decent amount of my business, and can expect more in the future...

I hope this helps at least a little and best wishes!

"Remember that time we didn't go outside or pay rent for a year and a half?  Or was it two years...?  Great times!  haha"

This is past being a joke.

@MarieChele Porter

My knee-jerk reaction is and was "heck, no"!  However, in the extremely UNLIKELY event that his story checks out (I mean, it shouldn't be that hard to verify a story like that I wouldn't think), I'd consider him a killer and not a murderer.  I get it's not a distinction that everyone's comfortable with, but I don't consider soldiers murderers and this would fall closer to that (for me).  More than likely though, he's a liar (among other things...) and a hard pass.