All Forum Posts by: John Morgan

@Calum Bressington

I'd go $75/year. I've bought 18 SFR with inherited tenants WAY below market rent. I raise it fairly aggressively over the first 3 years. Then go easy on them. I tell them all they can stay here forever. However, I have a mortgage payment that is much higher than the previous owner so I can't lose money. They all understand and have stayed with me. These people know what market rent is. I will usually lob out what market rent is in case they don't know. And I offer to fix anything or do updates as soon as I buy the properties. I rarely ever have turnovers which saves me tens of thousands. Keep your tenants happy, and they'll stay forever. :)

@Aria Saha

I did this and my bank wasn't happy I moved 5 of my deeds from my personal name to my LLC. Luckily they didn't call the note on me because they all have 2.75% interest rates. And I didn't have the cash to pay them off immediately if they called the notes. Hindsight, I wish I never did this. Any attorney can pierce your LLC showing you're behind it. It's simple for them to do this. Especially if the mortgage is in your personal name. You're not fooling anyone. Just keep it in your personal name and get extra liability on your insurance. It's extremely rare for a lawsuit to go over 1 million. Get 1 or 2 mil in liability and you'll be fine.

@Brandon Morgan

I self manage my 29 SFR and run into this all the time. I've been slowly moving all my renters over to apartments.com to keep track of all these payments easier.

Been there done that with tenants like yours. I would give them a 3 day pay or quit notice. Tell them you’ll cancel your court date if they pay you the rest by the court date. Otherwise these people will own you.

@Chandra Faulk

I’m in Dallas and it usually takes me 2 or 3 days to find a good tenant. I list them on Zillow for about $100 under market rent. I get bombarded with inquiries and have lots to choose from. I would drop your price $100-$150 and see what happens.

@Marjorie Patton

I ran into this issue. I opened up a couple credit cards under my LLC (Amex blue and Chase ink) with 0% interest for 12-18 months. They both gave me back a few hundred in cash back if I spent a certain amount within a few months. I'll take free money anytime. I'm a fan of 0% interest for a year cc loans too. I've bought 7 houses with them. And don't rule out 401k loans for up to 50k. I've bought 5 houses from doing those loans too. Once my DTI got too high to get conventional loans, I found a great lender who finds creative ways to get me approved for conventional loans. He's an investor too so he knows how to play the game. lol

@Larry Nielsen

I’ve bought 17 properties with inherited tenants. They all wanted to stay but couldn’t afford market rent. I told them they could stay forever, but I needed to bring rent up. And I always offer to fix or update things for them as soon as I buy them. I slowly raise rent over the next 3 years. Maybe raise rent $100-$150/month right away. Then $100 increase over the next few years to ease them up. Most of my tenants are paycheck to paycheck so I slowly bring the price up. They all know what market rent is and they’re getting a good deal. I rarely ever have turnovers and try to keep everyone for many years. I’d rather keep a good tenant $200 under market rent vs a bad one at market rent.

Quote from @Bruce Yi:

Great feedback from this community as usual. Thanks for the insight. @John Morgan, are there particular areas of Arlington, Ft.Worth & Grand Prairie that I should focus on or stay away from?

No bad areas. East Fort Worth is a little rough in some areas so you’ll see prices low there. But I’ve got a few in this area. The property taxes are very low and rent isn’t bad, so don’t rule this area out. I like all of Arlington and all of Grand Prairie. No bad areas. Haltom city isn’t bad either as well as Richland hills. These are all working class areas that target. And most of these people will stay with you for many years if you keep them below market rent and let them have pets. lol 

@Bruce Yi

Hi Bruce, I'm in the DFW area too. I would buy now unless you're looking at homes in really good school districts. I buy rentals in Arlington, Grand Prairie and Fort Worth that are in working class hoods and below average school districts. I can find tenants for mine within 48 hours when vacant. There's a huge demand for affordable rentals. I have 18 SFR in the area and they are in the cheaper rental range (1800-2200) range. They get rented out fast when I have a vacancy no matter what time of year. Hit me up if you have any questions.

I bought 10 crack shacks out of state in the last year in Nowhere, Arkansas. I didn't know a thing about this town. Lol. Took 8 of them sight unseen other than a few pics of them. They all came with tenants and from tired landlords. Price range from 22k-75k. I found handymen and people to work on them. It's easy to self manage them so far. The cash flow is only 5k/month (not including cap ex, maintenance and vacancies), but it's enough to pay for my kids in college. However, appreciation is very low in cheap areas. So I'll be lucky to get 1%/year appreciation. I've got 19 SFR in a better appreciating area (Dallas). Those appreciate well but cash flow is only around $200-$300/month when I first buy them with 20% down.

I've got 29 SFR and I would say 27 of them are paycheck to paycheck. They barely make rent and can't save a dime. I work with my tenants to a point. I have had two get a month behind in rent this year. I forgave them the debt they owed but signed a new lease for $100/month more in rent on the spot. They agreed and are now paying me extra rent. Most of my tenants are renters for a reason. They can't manage money. Most have poor financial habits and won't ever be able to afford to buy or qualify to buy a home. My turnovers are almost zero because these people will never leave. Good for me and good for them since I keep them under market rent by $200 on average. Turnovers crush profits, so I keep these people in for cheap and they don't bother me for much.