All Forum Posts by: Chris Pelley

Thanks everyone so far!! Cash flow is the bread and butter, but appreciate is always a bonus. If I can get a property that has good enough cash flow but appreciates in 5 years enough to exit, then that would be a great deal. Everyone I talk to about Austin has nothing but good things to say. I have friends in the Tech industry and they all keep talking about the potential to move out there. As important as the money is, I also want to invest in an area I know will grow and do well for a long time and has good quality tenants. At least that's my idea, though I am fairly inexperienced....

My wife and I just sold an investment property in CA and we are looking for new markets. I keep fining my way to Austin and I am trying to get more information on the area before I make the 12 hour drive from NM. Looking at a price range up to $150K, seem to find plenty of options but I am not sure the areas to really focus on. Looking for a buy and hold property. Thanks!

It has been something my wife and I discuss. We have been throwing around the idea of having a PM list and rent the place, pay the 50% listing fee, then taking over from there. This way we don't have the bourdon of marketing and showing. She is a little apprehensive, but we haven't nailed anything down yet. 

After this I can't agree more about the landscaper, both the tenant and the PM both felt it wasn't their job, so nobody managed the landscaper. Next property will be much more renter friendly, the current one was a previous home for us so it was a little too high maintenance in my opinion. 

Thank you for the responses and advice so far! I figured the carpet was one of those ones we had to chalk up to "it's what happens." I may do as mentioned and seek for the depreciated value.

The shed one does seem easy when put as you guys did. It's clear damage and a detailed receipt from a repair man to fix it seems easy enough. Demo labor and hauling of debris mostly.

The landscaping like you mentioned is complicated... I need to read through my management agreement and double check the exact statements. I think all I can do is ask the company to fix the damage, and live with the result. The landscaper is a simple mom and pop company and there is nothing to get there, nor do I want them back on the property. This is the cheapest thing to fix probably, but bugs me the most because I feel like I could have mismanaged this from NM, got the same result but at least had a much better return from the property. It cash flowed decent, but that extra would have at least colored most of the damages... Lesson learned for us new investors. The good news is they have not scared us away from property investment, we are shopping for the next one right now!!!

Hello and thank you for reading and for the help! My wife and I have a rental property in CA and are currently living in NM. We recently choose not to renew the lease with our tenants and they just moved out. We are getting ready to list the property, but that's another subject. Because we are out of state we paid a Property Manager (PM) to manage our property for us, which we paid 10%. We just came to CA to see the house and handle other things. As you can guess, when we saw the place we have some issues. Below are our 3 concerns, please help if you can. #1 - Along with our 10% to the PM we have also been paying a landscaper $50 a month to go twice a week. Part of our agreement with the PM is that they would at least drive by the property once a month to check on the house. After the final inspection with the tenants leaving the PM said the drip irrigation in our flower beds was damaged, and there were some weeds in the front flower bed we need to take care of. Looking at it today, it's not a little damage, the whole drip system is junk, the shrubs are dead, and there are a ton of weeds. In my opinion this is the PM's fault, they have obviously not been checking the house, or holding the landscaper responsible. I feel like she is accountable for the damage and should pay the cost of repair for not managing my property. Am I way off here? If so, what can be done to help recoup the repair costs? #2 - The carpets are damaged what I feel is beyond repair. The carpets are 3 years old and were in great shape with almost no wear a year ago and now they are badly stained and in some places tattered. There are huge black paths coming out from the garage and good stains all over. At what point does it go from wear and tearer to legal damage? The carpets are scheduled to be cleaned in 2 days, but I am concerned that if I spend $200 from the deposit to clean them, they will still look thrashed, and now it's $200 more I have to try and get from the tenant. I just not sure where to go here? #3 - This is the fun one. The house has a wooden storage shed in that back yard. The tenant decided they wanted to turn this into a condo of sorts. They dry walled it, textured it, ran electrical, painted and installed carpet. It appears someone was living in it that was obviously not on the lease. So beyond the break in the lease agreement, what do we do here? The work is junk and the shed will need to be returned to previous condition. Also what does the break in the lease agreement mean for is and what we can seek for damages here? This one is throwing us for a loop on how to deal? Oh ya, the PM didn't even notice it... So beyond the obvious firing of the PM, what can we do to resolve both the issues with the tenant and the poor PM? We have a meeting with her tomorrow for the first time, so thanks for the quick help!!!

@Andy Collins thank you for the input as well. From what I am gathering from everyone, it seems like the safe bet is a money market or higher end insured savings account. Liquidity is going to be semi important. We are sitting on the money while we sort a couple things out which will allow us to get our budget higher to our desired range for the next property, but I like having the option to buy at any time because the money can be withdrawn when needed. Like I mentioned above, we aren't trying to find a get rich type thing, just a better spot to keep our funds while things come together.

Brandon Hopkins thanks for the quick analysis. We wouldn't have done anything that risky, but your input affirms that thought. Karl Dowden I talked to my CPA about the 1031. I was originally planning on doing that but after running the numbers it's not worth it, we would only save about $1000 and have the added hassle of doing one. We have a couple things working for us to help avoid taxes. First is we lived in the house for 2 years before renting it the last year. From what he tells me that helps keep taxes down. The other thing is our taxable income is very low. I'm in the military and half of my pay is tax free and when you add in depreciation from the property to our taxable income, it is in the lowest percentage. Because of this we do not have to pay capital gains taxes on the income. Our federal return remains the same but our state return is about $1000 lower than normal because CA doesn't have capital gains and it is taxed as normal income. With this strategy we can wait as long as we need to buy our next property, and we are able to pocket some of our gains with no strings or extra filings. I feel confident we are going the right way. Our CPA is a seasoned real estate investor and is very well versed. Thanks for the suggestions, I know 1031's are still a mystery to a lot of people.

Thanks everyone for the advice so far! Mitchell L. I would be tempted to do this but it seems rather risky. I will need every bit of it for the next investment property, not sure I want to risk that much... 10% is nice but is the risk really worth it?

Hello,

My wife and I will soon be collecting net proceeds from a home sale in the 5 figure range. Our plan is to sit on the money for ruffly 6 months while we deal with some other financial things before re-investing into a new property around April. I am seeking advice on a smart place to park the money while we wait so we can gain more interest then the standard 0.1% a normal savings account can offer. Thank you in advance for any and all advise!

I will look into the manufactured, but honestly I am not looking for the bell and whistle features. I would rather have a home that is built to last. I know the manufactured homes can be a little skimpy in that arena...