All Forum Posts by: Joe P.

Justin -- relax. It's normal. You didn't buy a 100k car which loses 20% of its value driving it off the lot. You bought a property that likely has the same value it did yesterday. If you sold it tomorrow, all you'd lose is your closing costs front/back, a super expensive lesson but ultimately most of your money is still there.

Now, the purchase is done, but I assume you ran your numbers on this? Why not share it with us and we can provide feedback on your evaluation and what to expect.

What's the smell on the other unit? Is it smoke, dead rat, urine? There's companies that fix everything. 

What's your estimate on rehabbing one or both units? Do you have that cash set aside and ready to go? If so, just start executing. Fix whatever is broken, replace what's needed, do it quickly, validate the work, and work on getting your income rolling.

This is an operations and execution business. You just executed the sale. Not start operating the business. What goal needs to be met with this tenant moved out? Providing a clean, safe, and ready rental to your next tenant. Make a checklist, start delegating items to yourself, a GC, or a PM, and focus on one, two, or three of the biggest items until your checklist is down to zero.

Breathe.

This is a short term rental I assume? Do you have an agreement with the company you use in these cases? I'm assuming this is "act of God" territory.

Consult whatever agreements/arrangements you have in place before deciding. If you're on AirBNB and there is no agreement/arrangement, keep in mind whatever decision you make may affect your rating.

Also be proactive, perhaps seeing if you can gather more detailed info on the power restoration timing. Information is key for any decision-making -- if they think its going to be days, consider a refund since the unit is likely not going to be livable. If its a couple hours...they can suck it up.

Theoretically, you could buy a houses at the .5% rule and 2% rule and not make any money with the latter. But its a good gauge to determine whether or not to look more closely at a property.

Lets take your 310k acquisition (assume 25% down, 5% closing) and conservative rent of $2600 as you described. This means your monthly debt service is $1127 (4.125%, 30 year, YMMV). Now set aside 40-50% of rent for all expenses -- CAPEX, maintenance, vacancy, management, utilities, city/licensing costs, et al), somewhere in the $1040 to $1300 range, and you still haven't factored in the taxes/insurance. One could argue the 40-50% setaside for expenses is high, and that could be, so you need to run an independent evaluation on the property to see what's needed.

Also, prepare for 5-10k of an "oh crap" budget for the first year. I bought a duplex that looked fine and even home inspection wise turned up nothing imminent, and then a bunch of imminent things happened. Best to be prepared and ready when it happens, or pleasantly surprised when it doesn't.

Going through a BRRRR now. Purchased with cash, using a HELOC on my primary residence to fund the rehab. When I refinance (6 months plus 1 day "seasoning period" from your purchase date, then approximately a month to close) I'll be able to (hopefully) pay myself back for the cash and HELOC funds use for purchase/rehab, respectively.

I discussed HM loans with lenders and I think they're a great idea if you've got experience in this field, both for you and for them. Nothing has gone to plan with respect to my rehab in terms of timing, rehab, et al, so I'm glad I don't have a lender breathing down my neck.

What's the trajectory of rent/sale prices in your area? My gut tells me while inventory is low, prices will continue to rise. If you speak to a local agent to find out how much inventory is out there, perhaps it would be a good time to sell. Your proceeds can be used for other investments that produce cash flow.

It also depends on your long term goals -- if you want high-appreciation properties and this build signals an influx of residents/businesses, it might bring up the local property values and continue your appreciation climb.

If you invest strictly for cash flow, this probably isn't the right property for you. Its easy to say "sell" but "sell" should be inline with your real estate goals.

Unless you're independently wealthy, or know a trade of some sort, you need seed income to start in this business. Sure, it would be a viable path to do contract assignment to start as a wholesaler, but that assumes you want to wholesale full-time. Personally I think its easier to establish oneself and then begin investing with money outside of what you need for living expenses. If something goes wrong, you've invested "extra/saved" money not "desperately need to eat money"

I wouldn't go to college just to go to college - while I don't think RE investing is inaccessible, I just think its a difficult path to jump into without some financial stronghold behind you. It is a risk, after all.

If you're 100% into the business and all aspects of it, consider roles/training/education within the business itself that would interest you and can help you make money (as well as reduce costs for you otherwise). Examples could be becoming a PM, handyman/handywoman, learning a trade, architecture, RE tax/financial consulting, mortgage business, et al, would all be great ways to have stable income and get you closer to your RE goals. Some of those require college, some don't.

60 days I initiate a renewal conversation and they have 30 days to accept/reject. If they reject they have 30 days until move-out. I visit the property at that time and evaluate the condition based upon the move in -- and I remind them upon lease signing that the way it looks upon move-in is the way it looks upon move-out to get the full deposit return. Simple, easy.

This is a systems and operations business. The more you have protocols, timing, and standards/expectations, the better the outcome will be.

I did an extensive thread on my first rental after a year plus, to include financial numbers and advice to my future self and future investors:

https://www.biggerpockets.com/forums/432/topics/768334-a-year-of-progressor-maybe-not-deal-analysis-after-1-year

In short - spend some money up front and ensure you have reserves, self-manage for a year to learn how to manage (and what your next PM should and should be doing), and account for everything in your analysis including property management. Above all else...if a property seems solid, you bring it here and a respected investor walks through the analysis and shows you why it's solid, and you're buying the property as a "deal" e.g. undervalued...you've got to take the plunge.

I'm a firm believer of "live, and let live".

But I'm also a believer in "keep your f*3&(&# head down".

And I'm a firm believer in "you reap what you sow".

I think what's happening here is a solid lesson in it all. There's some crazy people out there who would love nothing better to do than tear down another human being. Some people need to be torn down and they aren't -- the world isn't fair in that way, which is why I invest in real estate in the first place. I'll do my best to make my own luck, so to speak. But I also don't want to be too communicative about it -- If you bullhorn a "look at me" post, it's going to attract some attention, both positive and negative. I personally like congratulating people on their personal successes, but I guess there are wackos out there who think differently.

I, personally, don't believe the post or this individual got you fired. I bet both of those were building blocks to the end. You said it yourself..."My employer never liked me doing RE deals as it was. Whether a tenant would drop by their rent check or he knew I was flipping a house, he wanted me to be 100% owned by him." Well, lets look at what is probable from that statement -- you spent time at your W2 likely talking about hobbies/interests not related to your W2. And then you were conducting business for your non-W2 at your W2. That alone would most certainly get most of us here dropped like a bad habit, or at least reprimanded.

Its entirely possible, Todd, that your manager is just a jealous, petty person. There's plenty of those out there. But I've got to be honest, if I ran a business and paid you to be an employee, and you were conducting your own business during business hours at my place of business, right in front of the manager...I mean...put yourself in his shoes for a minute. I'm paying you to do a job for me, and you're spending time doing something else. Maybe this only happened once, but once is enough to cast doubt for most managers. I don't agree you should have been fired, but I'm also not the owner of that business in what I assume is an at-will employment state. If you run your own business in an at-will employment state, then its up to you to decide how to conduct your business.

I'm also a bit taken aback, respectfully of course, that you commented about the pandemic and how it "caught you off guard". In the same breath, this pandemic which you see as a "challenge to happenings in your professional career", became a "tenants live free" mantra. Nope. Sorry. Not buying it, dude. Goes back to the world not being fair -- you lost your job in a pandemic and so have others. For you to approach it as a personal struggle for you, and a "taking advantage and living free" opportunity for a tenant...no. We're all in this boat together. Sounds a bit selfish on your part, frankly. You're not the only dude struggling. Food for thought.

I think one of the more interesting lessons I've learned in my career is that while its entirely possible external forces impact you negatively, you should be the owner (and ultimately, the responsible party) for what happens to you. You are the ONLY person watching your six. That's a fact, especially in our professional lives. You could be better, faster, stronger, smarter than your manager ($20 says you are, no doubt) and yet, you're the one with the short end of the stick in this particular situation.

You seem like a smart, ambitious guy, and I'm glad you found another job and were hopefully not seriously impacted. Chances are you'll look back on this moment as a blessing in disguise, as others have indicated, where your manager did you a favor cutting you loose. But common sense would dictate you shouldn't have tenants coming by the job to pay you rent, you shouldn't be performing RE work while you're at your W2 (or at least hide it better...use your personal phone/tablet and don't connect to company servers), and always check who you talk non-shop with.

Good luck on your new job...coming right up on the 5th!

I listed my duplex in Gloucester City some time ago on Zillow, FBM, et al, and there are a TON of tirekickers out there. Some people need a place so bad that if he looks like its not falling apart, they'll click the interested button and you get an e-mail lie "So-and-so is requesting information about 123 Main Street".

Use this as an opportunity for a canned response to weed out those folks. Here's my standard response to any tirekicker e-mail or inquiry I get. Usually at this point, you'll drop 70% of applicants with this message:

"Thanks for your interest! The property is available. and we are looking to place a tenant on September 1. We are showing the property tomorrow (Friday August 23rd) at 6:30 PM for multiple applicants. Can you make it at that time?

Please note the minimum income requirement is $3000 per month (3x the rent) and the lease deposit is $2500 (first month's rent and security deposit). All applicants will have to complete a credit, criminal, bankruptcy, and eviction check as part of the process."

THEN you'll get a better idea of who's actually about to move, who hits your income requirements, who's going to pass a background check, etc. You'll whittle this down to a few folks who are actually going to be able to be in the property and move in within your expected timeframe.