All Forum Posts by: Anthony Gayden

Marcus Auerbach You are a good landlord. I also like to consider myself a good landlord. The majority of landlords and tenants are good people. There is a small minority of landlords and tenants that are not good. These people really do have a destructive effect on neighborhoods. I have personally lived in a neighborhood where a rental property was owned by a lazy landlord who put bad tenants in the home. The result was negative and included a lot of police activity suddenly, break-ins, and a lot of shady looking people hanging around who did not live there. Not only that but a single home that was in such bad shape and so trashy it made the rest of the neighborhood look like a dump. This caused a sort of chain reaction where those residents who could afford it (myself included) moved out. Many of those homes then became rentals as well and some of those landlords were lazy and let even more bad tenants in. This perpetuates the problem. Keeping that in mind, I made it my goal to have the highest standards for my tenants and I do not want to create these issues. I just think you need to look at it through the perspective of the residents. If anything she seems to have been talking to you in order to address concerns or issues she has seen from other landlords in the past.

Small investors such as me can still win even in the current market cycle. I am in a lower cost Midwest market. There is still a lot of low cost housing that meets the cash flow rules that i set.

I am focusing on single family because a lot of investors are so focused on multifamily and are ignoring good deals.

@Steve C.

Are you independently wealthy? You must be if you can pay out over $1100 a month so that someone else has the privilege of living in your house.

You are the kind of landlord that renters love. You go to work every day and earn money at your job so that your poor renters can live in a nice house in the Bay area for far less than the cost.

Originally posted by @Fred Venturini:

I'm finding a lot of mobile home parks that are not allowed to replace a mobile home once it is removed from the park. I've done my homework on these, and this is a new bit of information to me. Does anyone have any advice or other information on how to handle this situation, or how to property value it into an offer? What are people doing with empty mobile home parks? It creates a finite lifespan.

When the homes are tenant-owned, you can't really control rehab or maintenance costs, and they could presumably move on a whim and leave you holding the bag on an empty lot for the life of the property.

Take for example this MH park deal I looked at. Lots to like here - 19 pads, 18 are tenant-owned (1 is about to be rehabbed or removed after the owner passed away). City water, city sewer. Not individually metered, but lot rents look to absorb the costs rather well. I'm being conservative with my estimates, but it looks like it can generate 29k NOI with some upside.

The asking price is pretty high, I think: 395k, which is a 7 percent cap rate. Cash flow is around 4-5k with a 20 year loan factored in, but that isn't producing a cash on cash return that makes it worth burning up 80k in cash.

The owners say they had the property to use up the tax breaks and have exhausted them all, which makes it an attractive target to negotiate for seller financing (the installment sale presumably spreads out the tax hit over several years). I just think the ask is too high and I certainly don't like the feeling of permanently losing a unit due to the whims of an occupant, the lifespan of the home, or a natural disaster.

 I can't remember what podcast it was, but on one of the BP podcasts they recommended against investing in parks such as this one. I believe they said that this occurs when the zoning of an area changes and the park no longer conforms to the new zoning.

Being the last person stuck with such a park could be a nightmare as you would slowly lose all of your income as the homes get older and deteriorate.

@Matthew Paul

Does your neighbor want to buy the house or was he just venting his frustrations?

You have to understand that a lot of people od not see renters as being desirable in many neighborhoods. The reasons are pretty obvious. Renters do not care about a property the way owner occupants do in most cases. Also lazy landlords have put awful tenants in rental properties and sometimes do not do proper maintenance on their houses.

While this isn't always the case, the bad cases will stick out in a person's mind more than the good cases. Instead of being rude and standoff-ish with him, you should have reassured him that you will do a thorough screening process to be sure that only the best possible tenants will be renting your house. You should also have told him that you plan on making improvements and maintaining the house to keep it up to standards.

The truth is that you may need a friendly neighbor to help keep an eye out for issues. Besides, the last thing you want is the neighbor constantly calling the police or code enforcement on you and your tenants.

Originally posted by @Joe Splitrock:

@John Park cities are starting to recognize that Airbnb hosts in some cases are running a full time businesses, which means they are essentially operating a hotel business. Residential neighborhoods were not planned or zoned for this type of use, so residents of a neighborhood naturally don't appreciate it. There is also the tax issue. Some cities are collecting taxes, but even in those cities, some hosts don't pay the taxes. Hotels have licenses and oversight, something Airbnb hosts have largely escaped.  

This isn't a matter of "people in power" not liking a service, but rather new services trying to find ways around existing regulations. It is not fair to existing businesses who have to register, pay taxes and follow specific regulations. Of course there is going to be push back.

I don't see Airbnb going away, but regulations will continue to catch up with them. It will take time to evolve, so I see no harm getting in the business. Just stay current on regulations and you will be fine.

The easiest way around these regulations is to simply not do business in those cities, and that is exactly what a lot of people do. One city may ban AirBnB, but every suburb around it still allows it, and they get all of the benefits while that one city is still spinning it's wheels lost in old regulations.

When it comes down to it short term rentals have existed for a very long time. I remember being a kid back in the 1980's and my family rented a fully furnished house at the Lake of the Ozarks. That was a long time before any of these services. All cities that are vacation spots have had them for a long time before online services. They aren't going anywhere.

I liked this episode. The truth of the matter is that I went through a very similar process when I was getting started and paying off debt. Budgeting is a dirty word to so many people, but I absolutely love it. Basically you are weeding out the wasteful spending in your life.

Just as an example, I recently went through my personal finances and saw several efficiencies and improvements that will save me $150 a month ($1800 per year) with absolutely no lifestyle changes. It more had to do with lingering costs from services that I no longer use, or that I could greatly reduce.

I also agree greatly with food costs being one of the places where you have the most ability to see great savings. Though I personally do not like Aldi and could never do all of my shopping there, I do buy things in bulk and do a lot of cooking and preparation at home.

On top of that I am a health and fitness buff, so cooking at home allows me to eat a very healthy diet.

A point that she made was that they would buy lots of groceries then still end up eating out in the beginning. Well I had that bad habit as well. What changed that was when I decided to really try some unique and interesting recipes.

One point that was somewhat discussed was time efficiencies. By planning out meals, chores, shopping, etc, your time becomes optimized and you have more time for doing the activities you enjoy. I saw the exact same thing.

Originally posted by @Ete-kamba Jeremiah Amaku:

While the term ghetto certainly has its own meaning to different people, the definition you provided fails to yield a viable definition which can subsequently, stand and function as an efficient and effective tool to be utilized by agents, brokers, investors, etc. as a guide for decision making. Yes, it informs about a few categories of the neighborhood, but like @DavidFawcett said, they are just numbers and numbers can be manipulated, and ultimately just ends up being your own opinion anyway.

Your responses certainly prove that some shift is happening there in Stockton, but I would ask whether the article was written with the investor in mind, or the growing family? Or Both? Either way, I have to agree with David because although those figures are helpful, what is it that your eyes tell you? Which brings me back to the "ghetto" comment. Let's be frank, we know that is code for "people who don't look like me," but I'd caution inexperienced readers and potential buyers who fit in that criteria of $400K budget >>no SF >> no peninsula >> no Richmond, and options are [ghetto] Oakland or...Stockton? This would be a no brainer. The property you posted looked bad -- but fortunate for me, I have the ability to see that property in person, so I did!

Yeah -- I agree it doesn't look very inviting from your pictures or mine, and I can see how your clients may feel unsafe and refuse to exit the car. But like David said, what the pictures and numbers don't show are; the business complexes being built around the corner on Seminary Ave., across from the commercial retail shop construction site, with the new traffic lights being installed presumably for the anticipated increase in traffic?

"So if you can no longer afford the Bay, or your life situation is changing and you need to buy a home but only qualify for $250k, you can basically either move to Stockton or leave the state."

I agree with you here. You do what you gotta do! However if I was advised to move to Stockton, I would run the other way. The 3rd option would be to miss out on an opportunity in a so-called unsafe neighborhood, and continue to bid on the same overpriced walls with the rest of the people who are handcuffed by fear. 

But...I could be wrong =)

I invest in lower income areas and I personally believe there is money to be made there, but I sure as hell don't want to live there. That looks like a D class area. This is not the kind of place where young families choose to buy. This is the kind of place where the majority of single family homes are tenant occupied and the renters live there because they can't afford anything better.

I'm sure that you must take offense at the notion that your neighborhood or city is seen as the "ghetto". It certainly is not a nice neighborhood. It certainly is not desirable to the grand majority of home buyers.

Don't let your emotions cloud your vision. I used to do the same thing with concern to my home town. Real estate is a business and trying to convince investors that investing in a D class area is a good idea won't work unless they specialize in those kinds of areas and properties.

Originally posted by @Nathan Gesner:

Don't buy it. Financial obligations do not stop simply because the employer isn't paying. Would you waive rent if he lost his job? Of course not. Mortgage, insurance, car loan, cell phone, and utilities will all expect to be paid regardless of what is happening with your job.

Treat it like a business.

 I agree with you, and get this, I work for the federal government.

We are no different than anyone else and we must be good on or financial obligations in spite of what our employer is doing.

I personally was around during the last government shutdown and it was part of the reason why I started investing in real estate. My rental properties will continue to pay me even though the government is not paying me.

On top of that I have substantial emergency reserves. I purposefully saved a lot of extra money so that I could survive several months without income.

Originally posted by @Russell Brazil:

Originally posted by @Anthony Gayden:

Originally posted by @Russell Brazil:

Welcome to the FSBO market. Now ifnyou want to get the real value for your property hire a good agent to sell it.

I respect your skills and experience, however I just have to say that I have never met a real estate agent who thinks that it is ever a good idea to FSBO. They have too much at stake to lose and a lot to gain by trying to convince people to use their services.

What I have found though is that in the transactions that I have done without a real estate agent the process went far faster, there was much clearer communication, the deals we worked out were much better, and both buyers and sellers left satisfied.

I can not say the same about all of the transactions I have done with a real estate agent. I do believe that agents are absolutely great sometimes and of course necessary in many cases. However if I could get away with never using one again, you know I would do it.

 I said to use a good agent, amd not some random joe off the street. Over 1 million agents in the country, and maybe 25,000 of them are good and do about 90% of all the business. The agent you had a problem with, how much business were they doing?

 It's agent(s) that I did business with. The first real estate deal I did ended up costing me $1000 extra after a property fell out of contract due to an error by a very experienced RE agent who had been in the business for 20+ years. It put a very sour taste in my mouth. I still closed on the property, but I ended up paying $1000 higher than my initial offer after the property fell out of contract due to her mistake on the paperwork (she checked the wrong box on a purchase contract).

Another agent constantly told me how I was offering too little for properties (I generally make first offers 90-95% of asking price on MLS deals). I highly suspect that he was not even submitting the offers to the seller. I would put in an offer and he would tell me that it was rejected. Later I would see the property had sold for less than my offer.

I had a great agent too. He really knew the market well and could tell I was serious and brought me a great pocket listing that I still own to this day. I still recommend him to people doing business in Tucson.

That changes nothing though. I hate middlemen. I like doing business face to face with people. If I never had to use an agent I would not do it.