All Forum Posts by: David Moore

I think one guy I know who has a good head on his shoulders is @Dan Coleman.  He is an investor like us, and is a realtor, meaning he has the credentials to be a property manager.  I'd try contacting him.  I've found Dan to be a great resource.

@Francis A.

I self manage, and boy, do I make some doozy mistakes.  Yikes!  Just  made one tonight.  I like the concept of someone else managing, but I don't like the cost, and from what I've seen  of them, I really don't think they know their stuff.  I haven't found a good property manager yet.  

@Davit Gharibyan

Thanks for posting.  Really enjoyed your comment and I concur.  

@Francis A.

I don't use them.  I know they cost $80.00 a month, plus they charge a good chunk of 1st months rent to find you a new tenant.  I've also observed, now in three separate cases, they have zero idea what an actual market rent should be.  I think if you don't care about lease loss or making any profit, they are fine.  

@Alexander P Minotte

Welcome to BP.  I think having funds is important in this business...if you are going to own real estate, you need cash reserves.  But there are lots of way to make money in real estate.  One option is to go to Kaplan, and get your real estate license.  Having a real estate license could get your some instant credibility.  Then search for deals.  I recommend two books....J Scott's book on Flipping Houses, and Rich Dad/Poor Dad by Robert Kiyosaki.   J Scott can teach you how to find your backyard.  I think this is key.  Look at many properties in your backyard, and get to know the area.  

Back to money. If you know how to price out cost of repairs, and can prove to an investor a realistic After Repair Value (ARV), you can earn money early on by wholesaling. Find the deal, get it under contract, make sure the contract says you can assign the contract to another investor.

The problem with most wholesalers is they don't make a compelling case for why their wholesale deal will make the ARV they claim. They don't make it easy. If you find a way to make finding properties systemic, and your wholesale deals make the investors money, you have a way in. J Scott is a whiz at this. When I look at SFR in my target area, I can spot value, but I'd much rather have someone else do the bird dogging.

Whatever you decide to do, I'd recommend getting really good at one skill, and be ready to learn.   This is a learning endeavor.  Kind of makes it fun.

@Kyle Kipka

Greetings and welcome to BP.  I think one thing that I haven't seen in your description is what your goals are.  Do you want to have multiple properties that provide enough cash flow, so you can exit the rat race?  Do you want to go for areas where you can achieve capital appreciation?  Are you a value investor?  

I recommend the J Scott book on Flipping Houses, and reading Rich Dad/Poor Dad.  The reason on book #1 is it helps you identify your back yard.  J Scott has a detailed history on why he chooses to invest in a specific area of his specific target area.  If you can get to know an area, and its trends, you can get to know where, for instance, rents are pressing higher, or where new employers are coming in, or new development that benefit a neighborhood (like a Microbrewery).  

I have found in reading and research, I've been able to narrow in on investments that make a lot of sense to me, and fit my goals.  At a recent Twin Cities BP meeting, I met a guy who invests only in duplexes, and only in uptown in Minneapolis.  His strategy was flat out brilliant.  He did the same thing over and over.  He just invests in what he loves.  @Marc Jolicoeur has a specific strategy he pursues.   

@Nicole Wahl

I have a single member LLC and the business itself has no profits. All the income is in rentals. I've been using Turbo Tax, but this is the last year I do it, as I'm switching back to an accountant. If you get the home and business edition, it is quite good at teaching you whether or not you should be treating your income as passive or if you are a real estate professional. The rule generally is that you have to spend more than 750 hours a year involved in real estate to be considered a RE professional, and be subject to SE taxes. I'm not an accountant or lawyer.

@Dan Wilson

I've done a cash for keys before, and the tenant, who was not paying, actually appreciated it.  The key is to be a human being when you talk to them.  Start with, "I understand from the seller you haven't been able to keep up on your rent".  Paint them in the best picture possible.  Talk with any lawyer you know, even for 5 minutes, about the situation, on the phone, even during a golf game.  Then say you've been talking with your lawyer about the situation.  Say nothing else.  Then tell him you've got his damage deposit, and the apartment looks pretty good.  "How about we find a place better suited for your needs".  If you can move out on the last day this month, I will give you your damage deposit in cash after I just look through the place.  2nd carrot, I'll even throw in $100.00 to help you with moving expenses.   Do you have someone you can stay with for a while that is a better situation?

You can always go adversarial at the next level.  And make the seller pay for your fees.  You are taking on his problem after all.  

@Hubert Washington

First, I am in agreement with @Erik Nowacki. Start with one because you don't know if this is really your thing. I started with four SFR, and all four pretty much run like clockwork. The tenants stay, for the most part long term, and handle most issues themselves. Great for my personal time. I recently bought my first 4 unit, and I've found the time commitment has been quite stepped up. You may inherit some problems like we have (the building has some pest issues we are dealing with). People are similar, but how you handle things changes. There are differences between a SFR and MFR.

Another thing I wanted to ask is, do you own a house now?  I learned much about the expenses of a home just by owning one for a long period of time.  I learned that structurally, homes generally hold up pretty well.  Roofs last a certain amount of time, water heaters, furnaces, etc.  

Another consideration is determining your backyard, such as mentioned in the J Scott book 'Flipping Houses' (its on BP).  Knowing an area is important.  I invest only in areas I know.  My 4 unit is in a neighborhood where rents are exploding, close to shopping, restaurants, and a job corridor.  Eric is also right about learning.  I learned my multi unit acquisition strategy from a book on buying multi-family properties.  

I have found some of the platitudes mentioned at my REIA and on BP are not necessarily accurate. Money will not always find you, even if you have a good deal. It is important to find a lender that knows you...I recommend portfolio lenders. They save me my most precious resource...time.

Finally, patience is very important in this business.  I can tell you that I went to my PO Box recently, and collected 8 rent checks.  Some people collect a lot more, some fewer.  But those rent checks are like slow motion fun.  It is a great feeling to put those into the bank, knowing I did not punch a clock to get them.  Real Estate, for the most part, pays off slow.  But slow is good.

@Julie Nordendale

Being a landlord is not as much about knowing which books to read as it is screening the tenants so that you get the right one in the property from the start. The forums and books do help, don't get me wrong. But at my REIA, there are over 100 people there, and the interest is on the topic at hand, and buy and sell opportunities. It is not the forum for such discussions. And careful on choosing your mentors. If you screen the right tenants, and by this I mean, get tenants with 3 times rent income, good employment history, good credit, and call on their previous landlords, you will find a tenant that views being in your property as much of a privileged as you feel in them being your tenant.

If you can put yourself in your tenants shoes, that is also one step in the right direction.  Would you live in your dwelling unit?  

One other huge key I've learned is that doing this will reveal things about yourself and your tenant you were not aware of.  My wife and I share landlord duties.  We have learned through experience that some tenants work better with having my wife be the landlord, and some work better having me be the landlord.  

Also, pick the comments on the thread you like and connect with those folks. I have colleagues who have SFR I ask stuff of, and multi-family properties I bounce ideas off of.

@Dan Kelley

I like all of @Dana Dunford 's points, because it really is important to get everything back to the numbers.  But another thing should be considered.  What are market rents for the area.  I often see comments that we raise 1%, 2%, etc.  That can result in serious loss of income.  Check market rents using (www.rentometer.com) and check actual rents in Dubuque for similar properties on sites like (www.hotpads.com).  I just checked, and the median rent on a 3 br is in the 900 range.  That is a lot of lease loss.  I recently increased rents in a 4 plex I purchased by 16%, and I have not lost a single tenant (well, yet).  Because I set my higher rent in the lowest quintile of market rent for my area.  Hard for tenants to find a cheaper place.  Try to keep emotions in check, and stick to the math.