All Forum Posts by: James Paine

I own rental properties in 5 different states and everyone does things differently.  In most of the ares I have more than 5 rentals so I am usually able to negotiate a good deal.  

My question is about a re-lease fee....

What is a release fee:  When your current tenants lease runs out, you pay the property manager a fee to have them sign a new lease.  (LITTLE TO NO WORK, IN MY OPINION.)

My thoughts against it:  It is almost no work.  Like you send a easy 1 page doc-u-sign to them.  Done.  My managers in IL and PA are charging 1/2 months rent for this. 

My thoughts for it:  Mostly I don't trust that people won't act in their own self-interest and if I negotiate it the re-lease fee out of the deal I think they will try to get tenants to move out after their lease so they can make a full lease up fee.  This will cost me way more in the long run. 

What do you think? 

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Some profit may but if you agree in advance to no change orders and his bids are in line or cheaper than other contractors you should be ok with him making a little money.  You hope that because he is in on the long term of the deal he cuts less corners and the work is done to last.  Build to last, not just pass.  (Inspections that is)

@Kris Johnson  

Typically TK (turn key) providers charge full market value it is how they make their profits.  There are some TK companies that will work for a fee.  So for example:  Purchase $50k, Rehab $30k, TK Fee $15k.  You'd be all in at $95k.  The provider will source the deal, manage the rehab, put a tenant in place.  TK providers will do that to ensure a quick deal and because they still make a little profit on the deal.  

Double check all your options:  B2R, Colony, FirstKey.  I can make any intros needed. 

The way we have done this is we have had several GC's bid the job.  We got our GC partner to a good price that we could live with.  Then that amount of his total bid which is also the amount he invoiced after finishing the construction is the amount of the GCs investment.  I don't know if the GC made a profit or took a small loss but we got that out of the way in the beginning by having the other GCs bid the same job. 

The best ways I have found to build a buyers list for wholesaling: 

1. Pull up all new flips on the MLS, email the realtor and tell them you are a wholesaler and you'd like to be connected to the folks who flipped the deal so they can do more deals.

2. Show up at all other wholesalers open houses

3. REI clubs

4. Have your title guy pull the top 100 all cash buyers for the last 12 months and call them

5. List a fixer property WAY WAY below market on the MLS, every acquisition guys that checks the MLS daily for good deals will call you.

1. There are a lot of banks in FL that will lend to you with the name of the property in the LLC for sure. Check the FDICs website for a list of small banks.

2. I own a lot of properties in my name and a lot in LLCs I agree and disagree with the lawyers on this one. I think if you own properties in your name then make sure you have a good insurance policy on them. If you own them in an LLC then you still could lose everything in that LLC so get an insurance policy on it and the properties.

I acquire properties in 1 LLC, renovate them, rent them, then transfer about 5 at a time to a new LLC and get a loan from a local bank on private equity firm. I also own 5-6 high end properties in my name.

 Everyone has an opinion.  I respect that. 

- What does the book suggest that is illegal?

Some people love this book, some people hate it. I get it and I am ok with a debate on this post. I have thick skin. Personally I feel like I have to disclose that I read 40 or so books a year and often read books that I don’t like looking for at least a nugget or two to add value to my life and my business. 

Here are the 3 main lessons I’ve taken from this book:

1. 1. A simple but beautiful definition for my friends without a CPA or MBA: Assets vs Liabilities. Assets are things that put money into your pocket. Liabilities are things that take money out of your pocket. The best example of how this impacted my life is from the first time I read this book at I think 20 years old. I have never owned a personal residence and may never own one. The last house I lived in was in La Jolla, CA on the cliff, beach front. The house was worth something like $5MM-$8MM. The property taxes if purchased when I was renting it for the last two years would have been about $50k-$80k/year. The maintenance of the beautiful yard would have been about $3k/year. Insurance about $5k/year. If you were able to mortgage the entire thing your mortgage payments would range from $240k-$400k/year. I rented that house for $8,500/month. I took the money I saved and instead of putting it against mortgage payments like I always see realtors advertise “why are you paying someone else’s mortgage” and I bought cash flowing rental properties.
2. 2. Wealthy people do not work for money. They make money work for them. This is a lesson learned in almost every biography of the mega-wealthy investors I have studied. It is broken down into simple terms that anyone can understand. This book helps normal people think about money from a different vantage point.
3. 3. The most important thing you can grow is not your asset column (that’s second) but your financial education. I couldn’t agree more again I am reading about 40 non-fiction books a year. If you study Mark Zuckerberg, Bill Gates, Warren Buffett, Elon Musk, etc they are all fanatic readers. The more knowledge you are able to accumulate the better informed decisions you can make.

Over all I give the book a 4 out of 5-star review for the average investor and a must read review for any non-investor. 

I want to help my friends and family build long term wealth through cash-flowing real estate but it has been hard to get most of them off the fence.  Sometimes it has been difficult to get them to even consider owning rentals as a good investment at all. 

Personally I have more than 20 SFR buy and hold rentals and really believe in this investment. I have opened my books up to them so they can see the real numbers, showed them comparison charts against other investments, recently I even started purchasing them books that inspired me to invest. A lot of my friends have even invested in my fix and flips but they are afraid to buy rentals.

What have you done to either get buyers to buy their first investment property or convince your friends to start investing?