All Forum Posts by: Justin Hoggatt

@Leah Spurlock, I agree with @Nathan Gesner. You will want to check the leases on each of them and see if that's something already mentioned in the lease and the previous owner is just being relaxed, or if that is part of their lease that they can pay on different dates. When you take over the properties, give notice immediately that you will either be changing things and/or enforcing the lease.  If you like because you feel like there needs to be an excuse, make the bad guy the new mortgage company.  Explain that you have to receive payments by a certain day (the 1st) so that you can make sure bills are paid and the property runs smoothly. You can also likely start getting late fees if there are problems with them paying on time.

@Angela Yan, I think it depends on the ease of access, security at the property, any covered spaces? I think the security being the biggest piece of that.

@Mary McMillan, congratulations.  It's amazing what a bit of fearless cold calling can do.  For the bit about making an offer based on the outside, I hope that you're due diligence is showing you the returns that you're looking to receive off of these.  Cash flow is key #1.

For the specifics about transfer of ownership, you should be able to get a state approved contract in place, and then go to a title company and they can help you with that.  Unless it's more complicated, and then get a proper RE attorney to help out.  

Inheriting tenants isn't hard.  Create a good letter introducing yourself, you're now the manager and collect payments, call you for maintenance, etc.  If you want, talk to the tenants about how the property is currently being run.  When you do your walk-through of each unit, ask some leading questions so they talk to you.  From the owner, yes, get any contracts that exist, who's been doing any work, what capital improvements has he made, who's been doing maintenance (and talk to him separately), etc.  You'll find out a lot just by having some conversations, even with neighbors.  Of course, with DD, you'll really want to dive into the numbers and leases and make sure everything makes sense there in comparison to this rent roll.  If you have any discrepancies between his rent roll and leases, make sure you understand those - a talk with the tenant may be necessary.  Also, I wouldn't let him place a new tenant without your approval while under contract.  You are basically in charge and would need to make sure that you have the person you'd like to see in the property at the rent rates you would want.  Before closing, make sure that you have a good software ready and you'll be receiving all the tenant files (also part of DD), but you'll want applications, leases, notices, violations.

Hope that helps a bit more.

I have a good friend that deals with this all the time.  It's amazing how small of a hole they can fit through.  It depends on your location, but they could have come in from the cold.  Based on the infestation you're speaking of, it sounds like they have already been there.  I know they can multiple fast but that bad that quickly - not sure.  Get an exterminator/pest control out there quickly.  They will place bait stations around the property.  Usually they will exit and forage for food, and end up going to the bait stations and it will kill them within a couple days after they eat that.  Then, after you get the pests controlled, have a good look around the building and have them inspect for holes and areas that may be a problem.

About the tenants, don't let them get under your skin.  Tenants will say anything, especially when they may be looking for something (like a credit).  A humorous reminder that we all share this world together could help?  Just show them that you're working on the issue and responsive, the greatest trick I've had with tenants is to just acknowledge you're listening.

Hi, @Nikhil Raverkar!  Congratulations on going through the process on your first rental.  Do you have a good broker working for you on this?  I hope that they are doing their job and helping you out if you are.

To answer your questions, ALWAYS ask for safety related items, no matter what.  This would include the water intrusion in the electrical panel.  How old is the water heater?  Furnace?  How is the rotten wood happening?

I think it all depends on what value you're already getting out of the house.  Are you getting a good deal on it?  These are considerations when possibly buying the home as-is.  If you're paying a somewhat premium price on it, I think it's fair to ask for solutions, price adjustment, etc on items 1-4,6.  The second half of life on the roof might be still 10-15 years?  But if you're really concerned, ask the buyer to provide a roof certification of at least 5 years, otherwise have it replaced.  The furnace can be old, but still be a good furnace, so that doesn't always concern me.  I have furnaces that are old that are 50 years old and working but it depends on the area, renters, etc and what they might expect in terms of efficiency.  Water heater, if it's around 10 years old, get it replaced, they will go bad and aren't designed to last more than 10 years.  Water damage in bath sink sounds like it's old and not really an issue with the home, but if it's something active/leaking, then perhaps get it fixed. 

Ultimately it might all come down to how good your broker is, the price/value of the property, and the negotiating skills in play.

I hope that helps a bit.. Good Luck!

@David Lee, I can certainly appreciate your stance and know exactly what you're saying about easy and close.  I think once you decide what your true path is, then it will help determine what decision you ultimately make.  Do you want to be investors, or are you happy with where you're at?  I know that you pretty much already answered this in your post.  More often than not, people are looking to continue upwards with their real estate investing and the best way to do that is to roll the equity and continue to leverage that.  Obviously, that means selling and taking the equity out to buy something bigger. 

We recently did that on a property that had a very similar scenario as what you mention. We looked at it in terms of a refinance (also another option) but ultimately the sell of the property provided the biggest increase in property size and cash flow for the next property.  

When you get into a bigger property, property management is definitely apart of the Cap rate analysis and you can take advantage of that, create additional cash flow, and have a professional management company take it over - leaving it to still be "easy" in the end.

@Austin Cole, I like where your mind is at and thinking forward.  Although I don't know about the loan details you speak of, it sounds like many others do.  Personally, I think if you find a good deal/option/solution for yourself and the cash flow is good enough to pay the mortgage and loans, then you should go for it.  Money is so cheap right now and being able to utilize it to your advantage and have that money work for you is a great idea.  Good luck!

@Joseph Pedraza, I'm curious, what is your fear?  Why are you currently not ready?  What is that you need to overcome to get started?  I think addressing those fears and understanding what hurdle you need to cross is important.  The one bit of advice I've given to people over the years is to simply take action.  There is a lot to gain from real estate and I've heard many horror stories of people spending $10's of thousands of dollars on "training" to have never actually gone anywhere.  The best way to do anything is to actually do it and gain experience. 

There are a lot of paths in real estate and that's the exciting part to me.  There is certainly never a dull moment and always something to learn or another path to take.  I have changed paths a few times, and I enjoy every one and every one has provided me rewards.  Just know that picking one doesn't get you stuck in that and getting started on the path you pick is simply the best advice I can give.  You'll pick up the tips, tricks, and knowledge along the way that will make you successful.  

Another bit of advice is to find someone that might help you with your questions.  Get started with your local real estate investor groups and associations.  Never be afraid to ask questions - there will be many.

Good Luck!

I'll be honest, I've not been focused on SFH for awhile but have picked up a couple here and there in Pueblo, which is why I mentioned that market. I've been involved in the Multi-family sector and feel that Greeley is a good option. I don't know Longmont well. They might have some good home options there, Greeley, and/or Loveland? Ultimately, I think just keep your eyes open, find a good broker that deals in investment properties, and get someone else's eyes and ears open for what you're looking for and something will come up. Try to be patient, not anxious, and something will end up in your lap.

I have recently had some similar issues at a property in Denver.  The area in general is nice but I've either had an angry previous tenant or a culprit of the street.  They/He decided that it was a good idea to take the little bit of the copper on the A/C lines coming from the side of the building to the condensers.  Then a couple doors were kicked in.  It was a rough couple week stretch that had me scrambling.  It was actually seemingly happening during the middle of the day when everyone was at work.  So, I bought a few cameras that aim around the property on motion and received the help from a tenant, and then bought some motion lights for the darker areas of the property.  I have found that it stopped what's going on, at least for now, and I was able to make sure they didn't get to all the A/C's. 

I think in the end, it's important to help the security of the property.  Showing that you care and are willing to help the situation, will have a higher likelihood that you'll retain the tenants that you've so hard to get.  Plus, if you push the crime somewhere else, you're now in a much better spot.