All Forum Posts by: Keenan Fitzpatrick

There is tremendous value in DIY upgrades. The majority of the expense on projects is labor, not materials. And good contractors are battling a shortage of labor and skilled labor. But you need to be honest with yourself about your abilities. The good thing about some rentals is that they are perfect to learn on and if it isn't perfect then it's still good enough but be honest if your property is a good candidate for that. Something in a high value area is not a property to learn on. Finally, ask yourself what your time is worth and if this is something you'll enjoy and benefit from acquiring tools and building out a new skill set and how this experience will benefit you in the future when you hire contractors. An unreliable contractor can cost you a huge amount of money in delays and expenses. I would never consider that an option.

0 Votes

Anchorage, Alaska

Quote from @Randall Alan:

Vacancy is really just a profitability calculation. I too think it is highly over-rated (ie. doesn't play a major factor like some buyers try to make it.) Here is my reality: We have 37 units, and if a rental is turning over there are basically three possibilities in my book:

Scenario 1: Presuming your renter took care of the unit, it can be cleaned and ready to re-rent within a few days. In today's market where I live, if I get notice of a tenant moving out, I will turn on the marketing for the unit a couple of weeks in advance of the move-out and I can usually dove-tail a new renter within 48 hours of the old renter moving out. Pretty much a zero vacancy situation.

Scenario 2: The renter damaged the apartment and it needs repair. Maybe it's just painting, maybe it is more? Now you have to figure out how fast you can get those repairs done. You more than likely can't dove-tail your marketing like you could with a seamless transition. If you can get immediate repairs made, you are probably talking about a week of repairs, and the marketing following shortly behind and a move-in within 2 weeks of that. So it might be 3-4 weeks in a good scenario.

Scenario 3: You have multiple vacancies at the same time and you are doing your own repair work. You can't get to the 2nd unit until you finish the previous unit needing repair. Now you can have a unit sitting idle for longer.

But to your question - do I put money away for vacancies? No. It's just lost income to your income stream. If you only have one rental, this may mean you are paying the mortgage for a unit if you are down for a month and it will 'get your attention'. When you have multiple units, you usually have enough cash flow that you will notice your bank account start going down as you don't get that rent payment for the month(s) that a unit is down. But the bank account just absorbs the loss and life goes on.

What we do is have a maintenance reserve account that we transfer $100/month / unit for simple repairs (ac / plumbing / etc). So for us, we are moving $3,700 / month into this account. While the account will float up and down, this figure seems to work out pretty well to absorb both the minor repairs, and the occasional bigger one. So it might get up to $7,000 - 10,000 dollars, but then we'll have an Air Handler or Air Compressor go out, and then it drops by $2,000 - $3,000 or $5-6,000. That little of a transfer won't usually handle Capital expenditures like a new roof, or a new septic field though.

Hope it helps!

Randy

@Tyreek King-El

This is the answer. Having reserves for these items is better than footing unexpected bills out of pocket.

0 Votes

Norfolk, Virginia

We all learned in Economics 101 that price is a function of supply and demand. Too many homes on the market, and prices start to come down. Not enough homes on the market, and prices start to creep up. Home prices, though, are a lagging indicator. They're the result of changes in supply and demand.

Tracking the supply and demand of housing in our local areas lets us have a peek into the future, then. We can see trends before prices start to be affected.

5-year Trend

5-year Trend

2 Votes

Anchorage, Alaska

Cheers from Anchorage, Bradley! Let's link up.

0 Votes

Los Angeles County, California

How many doors did you own before it made sense to hire an offshore/virtual assistant?

0 Votes

Anchorage, Alaska

There is tremendous value in DIY upgrades. The majority of the expense on projects is labor, not materials. And good contractors are battling a shortage of labor and skilled labor. But you need to be honest with yourself about your abilities. The good thing about some rentals is that they are perfect to learn on and if it isn't perfect then it's still good enough but be honest if your property is a good candidate for that. Something in a high-value area is not a property to learn on. Finally, ask yourself what your time is worth and if this is something you'll enjoy and benefit from acquiring tools and building out a new skill set, and how this experience will benefit you in the future when you hire contractors. An unreliable contractor can cost you a huge amount of money in delays and expenses. I would never consider that an option.

0 Votes

Anchorage, Alaska

AppFolio
Pros: Comprehensive feature set, including online rent payments, maintenance requests, and financial reporting; user-friendly interface; mobile app available; good customer support.
Cons: Expensive compared to some other options; may require a learning curve for new users.

Buildium
Pros: Affordable pricing; easy to use; offers online rent collection, maintenance tracking, and accounting; mobile app available; excellent customer support.
Cons: Limited customization options; lacks some advanced features compared to other software.

Yardi Breeze
Pros: Affordable pricing; easy-to-use interface; robust accounting and reporting features; mobile app available; excellent customer support.
Cons: Limited customization options; not as comprehensive a feature set as some other software.

Rent Manager
Pros: Comprehensive feature set, including online rent payments, maintenance requests, accounting, and reporting; customizable to fit specific needs; mobile app available.
Cons: Expensive compared to some other options; can be overwhelming for new users.

Propertyware
Pros: Affordable pricing; easy to use; offers online rent collection, maintenance tracking, and accounting; customizable to fit specific needs.
Cons: Limited customization options compared to some other software; mobile app not as robust as other options.

0 Votes

Riverside, California

How did this end up @Jared Hennings?

0 Votes

Virginia Beach, Virginia

Quote from @Andy Sabisch:

Inspections, especially for investors that are new to the game can save one from an expensive mistake and I am sure many of us have been down that path . . . I know I have.

But in many cases, hiring a home inspector is a waste of money as they miss the big things and focus on the BS. Years ago we bought a property and went the home inspector route . . . told us about torn screens, missing outlet covers, burned out bulbs . . . you know the important things. Well a month after closing we had days of heavy rain. I opened the door to the basement (luckily unfinished - and saw water up to the 2nd step. Well bottom line is I called a foundation guy and he walked down the steps and immediately saw the issue - a slightly bowed wall indicating hydro static pressure and that was where the leakage came from. Cost $12K to repair.

Since then we have done a lot of homes - some pretty bad but we learned what to look for from professionals. Most inspectors tel you to hire a professional to assess so we have always felt why not just go to the professional to start with. So when we do the walk through, we can gauge what is needed and what we want inspected. It may the plumbing if there is galvanized piping and old black iron drain lines. It may be a roofer based on what we see in the attic or from the street. If may be an HVAC guy to inspect a furnace or an electrician to tell us how bad the condition might be. The thing is if you use them in projects, they will often do a free estimate / assessment and then you know what the cost will be as well. It may turn out the cost is not worth the price . . . juice is not worth the squeeze as they say . . . but you will get a pretty accurate number.

The bottom line is that once you develop a network of professionals you can call to look at a possible project, you will have real numbers from people you can trust. Choose your inspection people wisely but doing it without any inspection is often the best way to lose and lose big.

This is the way!

0 Votes

Anchorage, Alaska

6 days left - hang in there. I hope she doesn't try to pull any more shenanigans but always be on the lookout!

0 Votes

All Forum Posts by: Keenan Fitzpatrick

Keenan Fitzpatrick has started 16 posts and replied 213 times.

Post: DIY home repairs vs. hiring unreliable contractors: which is the lesser of two evils?

Post: Stashing away for Vacancy. Does it actually matter?

Post: 2019-Present: Anchorage Residential Residential Inventory and Sold Units Trend

Post: New to BP Chatroom!

Post: Airbnb - how much do you pay yourself?

Post: DIY home repairs vs. hiring unreliable contractors: which is the lesser of two evils?

Post: Rental Management Software

Post: Stopping Foreclosure on a Decedent's Property

Post: The hidden costs of home inspections: Why you might be paying too much for too little

Post: Does anyone know if a House-Hacking landlord can enter a tenant's room?