All Forum Posts by: James Ma

The main issues I'm reading is:

1) Miscalculation of expenditures... Perhaps its bad luck with COVID and it is what it is but you should use a vacancy rate when running your numbers. The other issue was the lack of reserves for CAPEX which you should be deducting off the monthly cash flows.

2) Cash reserves... it sounds like you've had to dip into cash that you weren't anticipating using for your rentals. You should always have some liquidity accessible that is easy to access to help cover months of expenses

I wouldn't necessarily sell them off. It would depend what your cashflow numbers look like once fully occupied with good tenants as you did mention they would repay your capital you put in so it doesnt sound like its a terrible investment

Hard money lending, borrowing from friends and family, or finding a partner on the deals would probably be your easiest routes. Working a second job if possible can help too depending how much you're requiring

What value do you bring to the partnership? What makes you credible? If you can/t answer those questions well then it may not help to do much networking as there isn't much of an incentive for an investor to put their trust and money in your hands. Local meetups would be a good place to start as its always easier I find to put trust in someone when you can meet face to face especially if you don't have the ability to showcase a proven trackrecord.

Unless you find an amazing deal, I'd probably just wait another year and then get financing from the bank and only put in 20% down so you get more leverage with these amazing interest rates.

The biggest thing which is probably obvious is an understanding of the build costs and then having a good team to build it (architects, electricians, GCs etc.) 

I work for a telco and I see a number of developers who are green get surprised at how much it costs to bring in infrastructure to provide internet and phone lines so make sure you account for that too. Depending on the location and scope of the project, this alone can cost tens of thousands.

In my experience, property managers are ideal to avoid if possible. They are expensive and don't have the same level of care as you would for your own properties. There is also a bit of a conflict of interest typically as

1) They charge a fee (ie. 1/2 a month rent) for leasing up new tenants so turnover is actually a profit for them. Less incentive for them to pick the best tenant for you and to just lease to anyone who meets the minimum criteria. If they expect someone to move out sooner than later its even better for them.

2) They mark up for repairs as you mentioned so you're paying an added fee for maintenance. They're probably not using the cheapest contractors or best qualified either and likely working with the one who gives them the best kickbacks.

It hasn't been a big lift to self manage rentals and I imagine hiring someone to help if needed to arrange tradespeople wouldn't be difficult and much more cost effective than PM companies. If someone calls with an electrical or plumbing issue, I just call a trade and tell them to arrange a day with the tenant for the repairs.

The one area where I see a lot of benefit from a PM companies is the separation of risk for eviction process and lawsuits but I think the cost of hiring them is much more than what the lost rent would be and if you're properly maintaining your property then a lawsuit should not be a large concern plus insurance also covers personal liability.

Yes I have done it once. Saw a great priced condo listed at 210K when it should've been 230K. I was familiar already with the building and had viewed another unit in the building previously. I kind of know what to expect from photos (they'll make it look a bit nicer than what it is) and everything looked pretty good. 

My realtor put in an offer same day for just under asking at 209K and they accepted. There was a probate as the owner had passed away and their family was selling it which I was a bit hesitant about but luckily my realtor reassured me that if the sale didnt convey after 3 months he would help reimburse me interest on the loan carrying costs.

I bought it Jan 2018 and ended up selling it this past October for 262K so made a decent return and the property was cashflowing as well so a nice success story.

I would be cautious if I was unfamiliar with the area and doing long distance investing unless I have a realtor there I trust

Maybe see if he would be interested in being more cooperative if he got some cash to move out upon sale

Yes as an investor it was a great idea to find a realtor who specializes in investment properties. Reason being most realtors deal with the average purchaser who is someone looking for their own home so it is easier to please them by finding a property as its simply about price budget and most purchasers already the type of property and location in mind.

For a realtor to be useful to an investor, they need to be knowledgeable about vacancy rates, average rental rates, whether 1bd vs 2bd vs townhouse is more profitable a purchase, knowledge across multiple cities for the aforementioned and other know how to calculate metrics that investors may be interested in like cap rates, cash on cash returns. 

If they're also an investor in the same area, they probably can also provide you with a great trades person list and property managers