All Forum Posts by: J. Martin

David, I work full time at a 9-5 job, and even travel out of town about 30% of the time. Many other investors on here also have some w2 income. I'm a 'fix and hold' investor, owning and managing 6 units, and property managing myself, with the help of a trusted handyman. If you have the cash or creative financing sources/partners to get it done, this is what I recommend (or buy a 4plex with FHA). It takes the least amount of ongoing work for the cash flow, once you set it up right. The purchase, rehab, and lease-up were time-consuming for me because I was buying vacant units that needed work. But that's also how I got in at a good price..

@Elizabeth Colegrove , I've been there too. Started running with the ball before I caught it..!

@Troy Fisher , thanks for jumping in with the thorough list! Sounds like tenant selection (avoiding people you know!?), PM/agent selection/management, and some miscellaneous. I considered posting my units at my work (State of CA) to see if any coworkers or families/friends were looking for a place, because I had 3 units to rents. But then I thought, will I be ready to evict these families of coworkers if worse comes to worse? I was not prepared to do it, so I decided I would not solicit tenancy from anyone I knew. Let's keep it business..

Troy, I would add that I like the kwikset smartkey locks, so you can reset the locks yourself quickly. They're about $30-40/set upfront, but then there is no marginal cost to re-key in the future. And you or your trusted employee can do it anytime you want, in about 30 seconds. I've had trouble with 1 or 2 of about 30 I've used, but you can always take it back to HD if you need to. Discounts for 10+ at HD too...

For myself, I would add:

-not putting in enough offers
-not networking enough (making up for that now!)
-not firing contractors more quickly when they repeatedly perform below expectations
-not being more firm on what I want/need, expectations etc.

@Sam Leon , do you try to time the real estate cycle? I'm a 'fix and hold' investor and plan on holding for longer-term, but I wonder if I will have the foresight to sell, or at least deleverage, if things get crazy again. I wrote a blog about it the other day.. curious about your thoughts..

http://www.biggerpockets.com/blogs/4579/blog_posts/32645-if-ca-h-is-king-then-leverage-is-god---loans-cash-roe-roi-and-risk

@Arthur Banks , @Brandon Turner is right that 2% is the "standard" figure used for long-term growth rates, and that it's prudent to make sure you will still be getting a decent return if it is not exactly that. (I believe the 2% comes from the FOMC's long-term inflation target of 2%..) I recently wrote a forum post about looking at a range of returns, because while your estimates may be the average, it's unlikely that your return will fall exactly there.. It's good to know what your returns might be with a plausible deviation from your expectations..

http://www.biggerpockets.com/forums/88/topics/109330-using-range-of-expenses-in-your-profit-roe-estimates

I second @Ned Carey 's considerations. If you can determine whether or not you think they are good and low-maintenance tenants, that might also play into your decision. Either way, $40-60 is not likely to hurt too much relative to the cost/hassle of moving. Over $100 might have 1 or 2 of them thinking at that price point, even if market..

Since we're throwing out a few silly ones...

I can't believe I hadn't heard this earlier, but a few months ago, someone told me the agent's answer on when is a good time to buy:

If the market's down, it's time to buy.
If the market's up, it's time to buy NOW!! lol

Seriously though, it's all about finding the deal in any market..

I love to see the success stories on BP, but it’s also important to learn from mistakes in the past – and better to learn from someone else’s mistake than your own! Without sounding negative, lets spill some of our worst of 2013, and hopefully have everyone learn a little in the process. Share your mistake, failure, or pain of 2013, and the lessons you can share with the rest of BP from that experience. I’ll kick it off:

Took Bad Tenant – when I knew it!

I had just purchased and began renovating a completely vacant REO 4plex when the neighbors next door came over to inquire about the units, and wanted to move in as soon as possible to the same-layout unit in my building from next door. They explained their building was leaking, weren't getting along with their landlord (a family member of theirs), and were ready to move in immediately without any rehab. (The unit was in overall good shape and we put on new paint, but cabinets were old/facade starting to peal. Needed cleaning.) The bad relationship with the landlord/family member, urgency to move in, and bickering amongst the multi-generational family were all red flags. But I was in the midst of bigger projects sucking down my reserves on the other units, had 3 units I would need to market, and could use the cash flow in the meantime..

So I decided to go against my better judgment and rented it out to them. The caveat I included to mitigate my risk was to get a 2-month deposit, the max allowed in CA for an unfurnished unit (typical in market is 1 month). I hoped this would provide me more cushion and an exit strategy in the case they left – and they came up with most of it a week later, despite being in a low-income area. Sure enough, 6 months later, they get in a fight, leaving the mother/grandma to split, and inadequate cash flow to pay rent, and they needed to downsize. The saving grace was the 2 month deposit, and a little save from the market. I told them if they left by the end of the month, I would give them the remaining month’s deposit to go get a new place, avoid any eviction, and they would have to clean, touch up the paint, and work with me to show the unit before the 1st.

I ended up getting lucky here - renting the unit with 1 day turnover at a higher rent than previously, to a better tenant, w/ no out of pocket except my time. But I realize I got lucky this time (partially with my 2 month deposit mitigant, and partially by a strong rental market). My biggest lessons learned here were:

1) Have more than enough reserves than you think you might need (or quick, reliable access to other cash)

2) Know your standards, and stick to them

3) Don’t give up long-term goals for short-term gains

4) Have an exit strategy/mitigant in place for weak(er) tenants if you do accept them or are in your tenant pool due to geographical location.

@David Krulac , the points he makes in this article are the main thesis behind owning it, especially the finite supply and distributed (decentralized) nature of it, among other reasons. But the very first heading at the top stating that it is the only investment with cryptography is incorrect. There are many, including several others of which I personally own.. LiteCoin, PeerCoin, FeatherCoin.. etc etc

And it's true that there is much more liquidity than gold as far as converting it quickly. But the BTC market fluctuates a lot more because it has nowhere near the depth or history of the gold buying market. Just like it does not have the depth or history of the stock market.. Any big players jumping in could cause big swings up or down..

@K.

@Account Closed , I think you are both right that the escrow would be difficult or impossible right now until a trust-worthy bitcoin escrow shop opens up because there is demand for it.. We might be years off still, but early creators of bitcoin exchanges made a killing as the movement developed. I think we're still closer to the "bleeding" edge than the leading edge on the BTC topic, and there might be a lot of money to make in the BTC industry (and a lot to lose!) before we hear the last of it..

@John Ellis , I think @Andrew S. is talking more about using the secure office as a "nicer" storage facility for documents, rather than as a traditional office to have visitors in. Andrew, there are secure document storage facilities that are somewhat similar to what you are talking about. I guess you're thinking of something like Iron Mountain does, but rather than the storage place picking them up and dropping them off, you would be able to go as a customer to the local facility and access your storage room..

http://www.ironmountain.com/Services/Records-Management-And-Storage-360/Records-Storage.aspx

Sounds possible, but people who are busy want someone else to do it. Law firms use this type of service, but at local storage, all the time. But they don't want to go get it themselves.. You might be able to do it, but the location would have to be both cheap enough and central enough to make it work. And if it's that cheap for office space, why won't they just store it at their own cheap office?.. Not trying to be negative on it, but you would have to figure out the pricing dynamics and the value added, demand, breakeven, etc..

I second @J Scott 's comments about having your inspections, plan, workers, everything lined up before you close. 2 days before close, I start buying the materials I need that I won't be ordering (actually, have my handyman do it) because I've already inventoried all the jobs and timelines. I use the kwikset smartkey locks so i can give contractors keys, then change it again anytime at my leisure, match security door to front door, etc. My last seller got mad at me, the buyer, because *someone* did some light landscaping work on the property before close (when close got pushed back a couple days due to title..) Must have been a miscommunication with the push-back of close.. :-/

Then confirm/finalize inventory of everything to be done/performed now that you have the place empty. Then get started as laid out above.. Time is money! Don't rush to the point you blow it on something. But it's all about pre-planning..