All Forum Posts by: John Madrid

Sounds like a good deal...you don't want to have a good deal and have it explode!  Your numbers are conservative, especially with minimum down.  The most important task at hand is finding a "GOOD" renter.  A bad renter will bury you.  I had one, good kids, good parents, I thought!  Anyway the Greenwalts stopped paying rent, damaged the house and after attorney fees and judgements the investment was a disaster.  Good renters can make or break a deal...if you move into it then you know the renter pretty well!   Look into Renters Insurance for damage and loss of income.  It will cost a few bucks, pass it on to the renter.

Keep in mind that with Section 8 you will get a certain quality of person with every hard luck story!  Additional "visitors" will become a problem.  Make sure that the Section 8 Lease has CAPITALIZED INCREASE IN RENTS FOR ADDITIONAL "VISITORS" STAYING OVER NIGHT.  Try and evict...deal with Section 8...NO THANKS!

Funny, that is what people were saying back in the late 1970's!  I wish I kept half the properties I owned COL...CRY OUT LOUD!   Anyway, bite the bullet for the best location, I did, check it out on vimeo at 1111 Strand Way.  Ignore the phone at the end, a friend thought he had it sold and made the video.  Good luck...just think where prices will be in 10-20-30 years?

Stop wasting time!  Tell the tenant to be out within 3 days or you will seek legal advice which will include, eviction, judgement, credit reporting, and future references.  The judgement will be good for 10 years and then, you will renew it for another 10, and another!  Remind tenant that every time they want to buy something, their credit report will be their and now many jobs require a credit report!

Don't forget to include the equipment!  Bonus!  Carry a note for the equipment ($500k - XXX?Equipment).  Or have them pay via SBA business loan?

You , Grandma, invested $500,000 and now trying to get $170,000!  Looks like a loss of $330,000! Even if you did get $170,000, the investment rental would bring in a small proportionate amount.  Turn it around with some footwork, "Pound the pavement!".  In your case, start eating out all meals.  What I mean is that you need to hit every restaurant that seems to be successful. Then meet the owner and make him/her an offer they can't refuse!  $500,000 at 4% interest only works out to $1,666 per month.  You bank them!  The food is good!  They end up owning their building!  Everybody WINS!   Find out how much rent they are paying, then adjust the interest rate 4%, maybe more, so that you will sell them the property with little or no down (they will put in the Tenant Improvements at their cost/now invested and have SKIN IN THE GAME).  End up with a nice 1st TD that you can enjoy the income or trade it as a down for a new property. 

Stay in your own backyard!  Managing from a distance is difficult at best.  When buying any income units get copies of:  leases, renters checks deposited to owner's account, actual expenses, 2 years tax returns verifying income.  Evictions will topple cap rates.  Try buying the best units near you and remember the holy grail....LOCATION, LOCATION, AND LOCATION! I have 3 units on the beach, Pismo Beach, Rents at $11,080, with expenses at $1,455.  When one unit goes empty, a Craigslist advertising for one week will usually get me 10 to 15 qualified applicants.  Try advertising in Craigslist "College Students Apartment $____ located ________"  and see what the response is.

Good luck John Madrid email me if I can be of help.

Think about minimal rent increase, to be held as reserve fund.  Also, have questionable renters get renters insurance policy guaranteeing rent paid and have co-signers.

Prorate bill based on previous months, look to charge other 3 tenants (the party>free ride is over).  I own 3 units on the beach, Pismo Beach.  Include 5% of rents as "slush fund" for unknowns.  This will give you cash reserves until problems can be resolved.  Unless contractors contract has a specific time of completion, you will most likely not get anything...remind the contractor of future work possibilities!

While on the subject...I just cancelled my contract with VACASA VACATION RENTALS who was enjoying a 30% commission on every rental.  A water leak was reported, I called the contractor to repair it.  When the contractor showed up, during normal working hours, it took about 3 hours to repair.  The  mold was repaired.  At that time the management company did not notify me.  VACASA DECIDED to reduce the weekly fee from $3,300 to $1,415.  I told them that had they called me and said that there was mold.  I simply would have said have them immediately vacate and my insurance will contact them.  Apparently the three more days were tolerable especially at that rate.  Caution, don't be afraid to simply say, my insurance will handle it.