All Forum Posts by: Justin R.

*Pro tip - If you can find a Rock star property manager that also holds a Realtors license, they will have more reason to find you the right rental property.

This is a competitive market, and sellers are calling the shots. In any market, a seller will prioritize an offer without contingencies as it is at a lower risk to fall out of contract. What your agent is saying, is there are so many competitive offers coming in without contingencies that you will have to do the same in order to get an offer accepted. This doesn't mean you are not allowed to have a appraisal or inspection contingency, but you must do something else to make your offer more favorable. Perhaps have a flexible closing time, offer to deal with the trash left behind, offer to not "retrade" on anything you find on the inspection contingency outside of specified items.

Markets are crazy right now. Here in the SF Bay Area the norm is no appraisal or inspection contingency (although sellers are usually supplying the inspection report.) It is a crazy market, but don't listen to the people that say to sell and not buy. Just buy smart. In a few more inflationary years we will look back and realized these prices aren't as crazy as we see on the cover. 

Best of luck!

 Great points and thanks for the feedback!

I created this as a broad high level visual of fixed and variable expenses so I wasn't going to break out categories. Now that you mention it, perhaps I will add another Pie chart with that detailed breakdown.

I of course track my Capex on my P/L, but perhaps I will add another pie, or add that to one of the existing two. Or are you just thinking a simple table to express the Capex?

Most of my corporate overhead is categorized into my "general" fund and not tracked within a property itself, so I left that off the pie chart. There is a bit of marketing and corporate costs (series LLC), which are small and reflected in the "Misc" category.

Thanks for the input!

I wanted to share something I created, and would also like to get feedback. Like many people do, I invest in several geographical markets, but wanted a way to visualize the expense breakdown of exactly where my money goes. I wanted to then take this visual product and compare/contrast all of my real estate markets. The main 2 things I wanted categorized were......

Pie Chart 1. A breakdown of where all my money is going, including my cut (before debt service.) This is important for me to see how much money is going to me, based upon a percentage, from each region. I don't include Capex because that is something that technically increases value of the property and typically done with my approval. I don't include interest/debt payments because I want an even playing field within all regions to compare, similar to why we don't use debt service for a cap rate.

- I  can also compare and contrast each region by expense category. Great to see what the property management cost ACTUALLY is after all fees. 

- Great for trending and keeping an eye on uncontrolled levels of repair/maintenance

- Future analyses

- Prioritize where to start cutting expenses or negotiating

Pie Chart 2. All expenses represented as a percentage. Neat to see them broken down, but offers less relativity because if all expenses are high in that region, it really mutes visual concept.

Im not super keen on the tables with the black labeled Revenue and NOI on the left, but I needed to add this both for my own reference and as a place to insert figures from my P and L.

The Revenue/Expense ratio is also neat to look at, and makes you second guess the 50 percent rule of thumb. This location happens to be in the midwest, with 100 year old homes so it was expected to be higher than my areas of higher rents, and newer homes.

Please use or modify this template as you see fit. If you can offer any suggestions on how I can make mine better, or word a category correctly, please do. Mine is far from perfect and I am not an accounting, or tech person by any means. If anyone would like me to add this to the template section of BP let me know and Ill gladly do so.

There is a simple trick for comparing rate buy downs.

1. Figure out your annual principle and interest payments over the first year with Par (no rate buy down)

2. Figure out your annual principle and interest payments over the first year at the buy down rate

3. Whats the difference? 

4. Divide the cost to buy down the points by the difference and you will find out how many years it takes to break even. If you hold the home longer than this and don't plan on another refinance than it may be worth while. I typically buy it down only if it pays for itself under 30 months time. 

@Zackarias Aitchison 

I suggest using a analytical approach, followed by a common sense/experience approach.

Cap rate is typically for a commercial deal, but still can be utilized in residential simply as a means of comparing apples to apples, basically know if your buying a decent performer.

Cash on cash is a great metric. It is literally your "realized" ROI. This is your return on your money that you can actually spend (if needed), not factoring in your wealth multipliers (appreciation, principle payday, tax advantages.)

Buying below market or with a value add play is also important, because everyone needs an out.

Combine this analytical method with common sense and experienced eyes will limit your risk. Understand where the local market is going, economic factors, school districts, crime, local demand, employment, nuisance factors (trains, traffic, cemetery, etc). This doesn't guarantee a homer every time, but if you meet your analytical and common sense standards with each purchase your portfolio as a whole will be golden.

@Josh Edelson I live in CA and have several properties and went down the research pipeline five years ago regarding asset protection. I decided on the DST structure. It's safe, easier than an LLC to maintain good standing order (which I also use for partnerships), and much cheaper in CA over the long run. Feel free to reach out with any questions on the DST. It's a newer structure (at least when used in this fashion) so not a lot of people have real experience with it.

Construction, property management, realtors assistant, appraiser trainee, home inspection company, sales/negotiating, investors assistant, Bigger Pockets is hiring as well!

CA out of state investor here as well.  After years of research and many talks with attorneys this is what I suggest. Don't forget everyone is in a different position so keep that in mind.

1. Do the right thing, and don't let an unsafe situation manifest.

2. Be property covered in your landlord insurance.

3. Have some sort of debt/leverage on the property. 

4. Be anonymous and get a property manager. 

5. If you have the personal assets then get a good umbrella policy.

6. If you have a decent amount of wealth that you want to protect, get an LLC or DST. Don't think an LLC (Especially a single member LLC) keeps you safe. The biggest benefit is anonymity, and its an extra hurdle for an attorney to pierce. If you live in CA, a DST can be a better option. Not cheap to set up, but much cheaper than several LLCS over the course of a few years.