All Forum Posts by: James Mc Ree

I think Brandon Turner, in his book The Book on Rental Property Investing, addresses this point well and agrees with you.  Money is not a motivator for a great many people.  It is what money provides that drives us.

Brandon recommends thinking about your "Why?"  Why are you doing whatever it is you do?  That "Why?" is what will drive you.  Money may enable it, but so might relationships or other benefits of activities you pursue.  In real estate, for example, your "Why?" could be to provide great homes for people who might otherwise not have them.  It might be incidental that you profit from it.

Why do you invest?

Try contacting a local mortgage broker.  They get paid to find solutions and can quickly give you a "No" answer in pre-qualifying you if that is the only outcome; however, they are motivated to find a way to get to "Yes!"

It might be more expensive to refinance now though.  You might be better off waiting the 6-12 months you need to wait to get better financing rates if you are thinking of holding the properties for a long time.

Jim.

I wouldn't try to get tricky with lease duration.  You and your prospective tenant are at the start of building a trusting relationship.  A 9-month lease could convey an unintended message: maybe something is changing in 9 months.  Don't forget this can cut both ways too: you could have turnover in 9 months with a 9 month lease.  Ouch!

Many leases allow their terms to automatically extend month-to-month.  If that is the case, your well-planned end date could still be extended and the tenant leave at an inopportune time.  You can address that with a renewal term of 1 year, but that is not tenant friendly and may encourage turnover.

I had great tenants for almost 3 years in a property.  They were on a 1-year lease that extended month-to-month and moved out just before Thanksgiving.  That was a terrible time of year to find new tenants.  The property was vacant until March 1.  I certainly didn't like the 3 months of vacancy, but would happily have them back and would lease the same way.

Get great tenants and you will have little else to worry about with a "normal" lease.

Jim.

The specs of what you are dealing with vary considerably.  For example, I replaced a 1950 gravity-feed gas furnace with a new SEER 16, added central air and ducts for returns for $5,800 to a 3Br 1Ba rental townhome.  Shortly after, with a different contractor in the same geographic area, I replaced an existing heat pump at my home with a SEER 16 model and completed nominal ductwork for $11,680.  I was surprised at the cost being so much more.  Maybe I didn't get such a good deal on that one - I don't know.  It's jazzed up a bit.

I just added some kitchen cabinets for under $1,000 to the same rental, but they weren't top quality.

This might help cover more of the variations in a well thought out manner:

The Book on Estimating Rehab Costs: The Investor's Guide to Defining Your Renovation Plan, Building Your Budget, and Knowing Exactly How Much It All Costs (BiggerPockets Presents...)

https://www.amazon.com/gp/product/0988973715/ref=o...

I would Nest if I could figure out how to highlight the benefit in a material way to prospects.  You wouldn't want your prospects walking past it just thinking, "There's the lamp, the switch, the thermostat, the rug, etc."

You might want to put a little card on top of it or have a tabletop display with a 1-pager near it highlighting that it is a Nest thermostat, explaining what a Nest thermostat is for those who don't know and tie it in with all the other cool features of the house, as in "Here's another really cool feature...".

Jim.

Lots of great thoughts above.  Here's another way to look at it.

A property goes up for sale in your neighborhood.  The listing says it is super-duper, beyond awesome and is priced well above similarly configured properties in the area.  The reason might be the property owner is proud of the property, delusional, upwardly-influenced by a real estate agent or other reasons.  Who is responsible if a buyer makes an asking price offer?

Obviously, the buyer.

It should be obvious that previously unknown wholesalers require vetting, just like any newly offered property requires analysis.  The more you buy cash, the more likely you are to attract wholesaler attention because you are their target customer.

Wholesalers with whom you have a relationship are probably more reliable and you will also get a good feel for their strengths and weaknesses.  They won't be perfect in their analysis.  You can't expect perfection.  You can choose not to do business with those who are notably inaccurate.

I am not a wholesaler - can't help you there.  To me, an effective wholesaler requires practical experience.  Interview your wholesaler.  Someone who is just entering real estate and sending their first yellow letter is not going to be a reliable wholesaler.  A wholesaler with a strong rehab and marketing resume could be very helpful.  Ask for a resume.  Choose your partners wisely.

Jim.

Your question is specific to TX and your county/municipality.  I can't help you with that as I am in Pennsylvania and have no property in Texas.  However, at a higher level based on my PA knowledge which I assume is similar to TX:

PA's municipal planning code grants building code and other enforcement authority which would cover all of the items you mention in PA.  There is typically a Use & Occupancy inspection on property sale and on varying schedules with rentals, such as annually or on tenant turnover.  The municipality has the authority to investigate any complaints at any time.  They rarely do "proactive" off-schedule inspections.

You will likely receive a fine for operating a rental or whatever it happens to be without the proper licenses/inspections in place, plus you will then have to pay for those inspections.

Building good relationships with your local officials and complying with the ordinances is your best course of action.  You can escalate to your municipality's manager, board or other elected officials if you feel you are being treated unfairly.  Towns sometimes fall behind if they lose an inspector or two or have a burst of inspection demand.  It is good to talk with them about what is driving their schedule so you can best accommodate it into your schedule.

Jim.

You might want to check with a tax attorney if you think you've found a pot of gold.  Try Googling "rent house to myself":

http://www.accountantforums.com/threads/can-i-rent-my-own-house-to-myself.14044/

Short answer from several CPA-claiming posters: No.  It is called self-dealing.  I didn't read a lot of the search results.  Maybe there are some favorable ways of doing it that don't land you in jail.

Jim.

You might find the application is the easy part.  There is a 2 year wait in Philadelphia for people with newly approved applications.  Try calling your housing authority to learn about their backlog.

You should encourage/help him to apply for Social Security.  I assume he had a job and has been paying into the system for a while if he never took a dime from the government.  That alone could help him a lot.  You can convince him to do it by showing him it is actually "his" money, not the government's, as he has been paying into the fund for all those years....

Jim.

I have 2 Section 8 tenants now and a 3rd starting in the coming 4 weeks in Delaware County, PA.  Both seem likely to be long term tenants based on prior rental history.

I have appreciated the guaranteed rent, for sure.  The only time I had any issues was a stretch of about 4 months when one of the tenants could not pay her portion, about $150 of $1200 total, due to family job losses.  I knew they were looking for jobs and was flexible in letting her fall behind without evicting.  She quickly caught up when her family members got jobs and just recently got a full time job herself.  I was flexible because I thought it would be a short time until they were earning again and the Section 8 payment more than covered my costs.  I think I would move toward evicting a traditional tenant who paid nothing towards $1200 per month rent after the first miss.  Guaranteed rent is a wonderful thing and definitely helped this family last year (and me too - no vacancy costs.)

Tenant screening is your most important activity, regardless of Section 8.  You are in a good position if you get a "rising" Section 8 tenant who is working towards getting off assistance.

Jim.