All Forum Posts by: Kevin Nalley

Let me just add to this by saying, the people that rent in this area are MUCH more difficult to deal with than other areas.   I would be AMAZED if your new house was not trashed more than once in 5-7 years, especially if you're new to property management.  

I screwed up on the last property I bought in Portland and missed some expensive things (eg: electric, bad furnace, partial roof replacement, etc). I will most likely have $25k to $30k in this property and I feel like I've paid way too much, so when you talk about $65k in an Portland SFR, I gasped. I typically have under $20k in a Portland home and I typically get around $600 for a 2-3 bedroom home.

I could soooo kick myself in the rear for not buying Germantown properties in 2009 :(

I have 23 units in Portland, the people there can be challenging to deal with, and that alone is reason to buy in another area.  I bought in this area because in 2009 they were all ON SALE, no banks were loaning money, and I had enough cash to purchase properties without a bank loan.  I've learned several hard lessons since then and if I had to do it all over again, I would definitely buy in a better area of town.  Buy properties in areas where people WANT to live, not where they HAVE to live because they can't afford better.   I'm doing well because I've learned how to screen tenants well.   I don't count on appreciation, I'm strictly running my numbers based on cash flow.

In my experience, I've had many "wholesalers" attempt to push me crappy deals, I"m not sure if they are greedy or just inexperienced, though my gut says they are just new and don't know what a deal actually is.  One wholesaler offered me a Shively "fixer" at the sold price of the one next door, which was in excellent condition <shaking my head>.     I believe you would be better off using what you learn here and find those deals on your own, but that's just my two cents.

Contact Sam at Full Guard Roofing (google the name), he's done several repairs for me in the past and it's always been done right.  

Kyle, 

I have 24 units in the Portland area.  If I could go back in time and give myself some advice I would say, don't do it.  Buy in a better part of town.    I'll just give you some pro's and cons for you to think on...

Pro
- Cheap, Cheap, Cheap...  price to get going is not expensive, but you must get properties that do not need much work, otherwise you'll have more into that property than it's worth.  Remember, a water heater costs what a water heater costs regardless if it's going in a $20k home or $200k home.

- Cash Flow.  You can typically find homes for $20k and get $550 - $600 per month out of them.  

Cons
- Tenants.  You have to screen thoroughly.  I made many mistakes in the beginning by not properly screening tenants.  This can easily put you out of business.  Let me give you a scenario.  Joe Sixpack rents your $20k home you just rehabbed.  He pays his first months rent of $550 and asks you if he can split up the deposit (never do that) and gives you an additional $275.  You're doing great, got your first tenant!  Next month Joe is a little late and asks if he can give you half the rent on the first and the remainder on the 15th, except on the 15th he has to pay LG&E and wants to catch it up next month.  This cycle repeats until Joe is now over $1k behind in rents.  He finally stops paying... it takes you attorneys fees and 2 - 3 months before you get him out.  He see's the writing on the wall and decides to leave before the Sheriffs get there to set him out.  So now you've gone 2-3 months without any rent, he strung you along putting you out another $1k, you have some damages, not deliberate, just because he was nasty and left all his filth, broken furniture, etc behind, this costs you another month or two rent before its ready to show.  Now you're looking for a new tenant and hope you get one better than Joe.

- Maintenance, always something going wrong with these old Portland properties vs newer construction.

- Little to no appreciation.  These homes don't go up in value much at all.

I have made this work, but not without running across a few Joe Sixpacks.  Fortunately, I had a good income from my other business to weather the storm, and my learning curve.  After 8 years in the school of hard knocks, I've learned to identify those Joe's and steer clear of them, though every so often one sneaks through.

The only work-a-round that I recall is you must have an ownership interest in the properties you manage (eg: 1% ownership of an LLC may work?) I'm a single entity LLC and I'm permitted to manage my own properties. Not likely someone needing management would do that, but for the sake of being thorough, just thought I would mention it.

Most investors are not interested in that area, it's considered our "West End".  The west end is where 90% or more of our record breaking homicides have occurred this year.  There is a small niche of investors who will buy in these areas.   Just google 15th and Broadway, Louisville, KY... should tell you enough.

Try Michelle Rawn or Borders and Borders (Google for contact info).   Michelle would probably be cheaper, Borders has lots of experience with real estate.   I personally use Michelle for all my real estate transactions, evictions, etc.

Welcome @Trysh Wahlig, I have 22 doors in the Portland area, if I can ever help, just ask :)

I think it's reasonable.  Contact Michelle Rawn at Rawn Law Firm (also KREIA member), she would probably give you some free advice and put something together for you at a reasonable price.