All Forum Posts by: John Morris

I would definitely look at several area where you could have major problems: 

- Foundation - ensure the house is sound, the rafters and headers are secured and not rotted, and see if any load bearing beams are damaged which is common for old buildings. 

- Plumbing - how it was run and if it is functional. Codes have changed over the years so it may not even be to current code and you may not pass a safety inspection. 

- Electrical - this is a big one.  Depending on how the house was maintained and what materiel was used, you may have to redo the entire one. 

- Roof and termite damage. Both can be costly repairs.  

I have allowed my tenants to pull their own report as long as it is recent (within 7 days). But for the most part like someone mentioned, you can use Experian or some other services that allows them to pull their own report but it is not a hard hit since they pull it and you get a copy.  Also, I agree that $35 is a bit high. It is not about affordability, but if they apply at 1-2 other places that's $100 and 3 hits on their credit that could be avoided. Plus after the 3 months if they apply again somewhere, this will again be a hard hit. Any savvy person that worries about their credit score will be concerned.  

I think Experian is $15 or so that they pay themselves and you get a copy of the report. You have to set it up yourself and enter their email address at which point they get a notification to enter their personal info. It is less than the $35 and is not a hard hit, so certainly they would be more prone to do it. 

I would say it doesn't matter where you are, as long as the numbers add up and you have a good ROI. I agree with someone that said 3-4 years is good for ROI, but with solar even 7-8 years would make sense. Anything above though may not be worth it. The inverter warranty is generally 15-20 years, plus the technology is evolving quick. It also depends on your usage. The higher the electric bill, the higher the savings and faster ROI.

I think Dwolla is more of a payment processor than a rent collection application. They are like Paypal. I would suggest trying Cozy or OKUPIED (we used to use Cozy and now OKUPEID).  Cozy is free for 5 day settlements but charge $2.99 per transaction for 3 day settlement.  The free version is bad, because we had to wait 10  days sometimes just to get the money in our account (it's 5 business days, so if there is a holiday, and weekends, it can go to an extra 4-5 days).  Okupied is a a mobile app and they charge us $5 per property for unlimited transactions and next business day settlements. It also notifies you on your phone when a rent is late or if a payment is made right away. 

I used Cozy before and it was good, but switched to an app called OKUPIED. It simpler and it is on my iphone all the time. They include next day availability as opposed to Cozy's 3 days express settlement and the price is almost the same if not cheaper ($5 per property for unlimited payments and i think Cozy was $2.99 per transfer for 3 day settlement). You get reminders when a payment is made and also take pictures of receipts for expenses. Maybe not as good for 30+ units but definitely an amazing app if you have several. 

If you sell the property and the property is the collateral for the loan, then it has to be paid off at closing. If you are referring to buying another property and using the proceeds from the sale of the first one to buy the new property outright or take a mortgage on it, then this would depend on other factors, such as your investment goals, financial situation, etc.  For buy and flip, you may want to use the cash, for buy and hold, you would most likely finance it. 

In my opinion it is never too soon. You can use something that would make your life easier even if you have only 1 property. I use a mobile app called OKUPIED, which I think is only available on the Apple Store, but compared to all other ones I have tried it is by far the simplest to use and their support is on point when you need something.  I referred it to 2 of my partners and they love it too. 

Regardless of what you choose to use, it will be far better than juggling Excel sheets, receipts, and collecting checks from tenants.  Any app will save you a lot of time and frustration. I would suggest using something simple rather than any of the big, complex property management applications. Once you get to 20+ units, then you may want to look into those ones.  

I highly disagree with the assertions that the curve will flatten in a couple of weeks and we will get back to normal. It is just starting to grow.  If you see China shut down all businesses and imposed draconian measures in Wuhan in January, and is only now starting to reopen some of their factories (about 2-3% of all businesses). This is 2 months after the initial closure, which we started only 10 days ago.  Their measures were far more drastic and overreaching (for various political reasons), so in best case scenario, if we followed their footsteps, it means we will be clear to open our economy around mid to end of May. However, we have to take into account that we cant just go ahead and expect life to be back to normal. 

This will have an impact on a lot of businesses, and we all know how long it took to recover from the recession even with $700B poured in the economy and record low rates.  With the rates practically at $0 now, there isn't much more adjustment to be made. To add to it, our deficit was already at $1T and now with the talks of a $2T bailout, it will double. This cannot be ignored either. I would say it will be about 3-4 years to recover from this. 

As far as the bottom, I think we will reach it in July - August. Companies are yet to post their quarterly results for Q1 and then Q2 will be a slaughterhouse. It is easy to lay off workers in an event like this (not saying this in a bad way) but companies will be very cautious rehiring them afterwards. It took less than 18 months for the US unemployment rate to go up from 5% to 10% in 2009 but 7 years to go back to that (in April 2016).  

You will find a plethora of products that people recommend, such as background checks, credit checks, evictions, maybe even DNA tests.  The fact is that for a small landlord, those could be an overkill.  You want to establish a good relationship with your tenants from the get go so they are happy, you are protected because you have done your due diligence, and they feel right "at home". 

There are a few basic things to look into when making a decision, which are simple yet efficient: 

- Of course, the number 1 is credit report with history and evictions.  You want to see that people are serious about their bills and don't miss them. However, in certain cases people may be late on a payment or two, or sometimes have a bankruptcy on their record.  If you see anything, just ask them for an explanation. You will be able to tell right away if they are genuine or making up some story.  As far as evictions, this is a completely different animal. If any are showing on the report, then that is a big red flag. They are almost impossible to justify as they are almost always avoidable. 

- Employment and income verification- this is also important to understand whether the tenants can afford paying the rent, and also protects not only you but them as well from trying to get a place they cannot afford which will put a financial strain on them. As someone mentioned, the general rule of thumb is to ensure their household gross monthly income is at least 3 times the rent amount. 

- Character evaluation- ask them a few questions such as: Where did you live before?  Why are you trying to move? How far is your commute to work? Who did you live with? - you are basically trying to find out their situation and see if they are making up stories or are genuine.  Then once they answer, ask for landlord references and just cross check some of the facts with the landlord.  

- The last thing is more for you to know whether they will keep the place tidy and clean is if possible to look at their car, and more specifically - the inside. It doesn't matter if it is old, new, or the make and model, but whether it is clean and clutter free inside. You can tell a lot about a person's tidiness by their car. If there are empty cans and coffee cups all over the floor, clothes and boxes of stuff strewn on the back seat, and junk everywhere, it shows how the person will not take care of your house either. 

Hope this helps.  I own 8 properties and my tenants have 0 tenants move out going 6 years now. And my properties look as good as when they moved in. In 2 of my properties I put tenants with bankruptcies that everyone else rejected. Once was a due to a nasty divorce, the other was for medical bills. The credit report confirmed it, as prior to the events they mentioned, all bills were paid diligently on time. 

Hope this helps. 

I would say MLS is probably your best bet, and Zillow as a second option. As for any active listings, I would consider $50-$100 less on average. A property would never rent for higher than listed in Zillow, but in many cases the "ask" amount gets discounted. There are also other factors, such as time of the year, property lucrativeness, target market (what type of people you are looking to rent to - single, young family, empty-nesters, etc.), will all play in the price you are looking to charge.