All Forum Posts by: Brant Richardson

Be persistent. If you have run the numbers on your properties and you know they are good deals then keep charging forward. You will have good feelings just as intense as the frustration you have now when you finally have your first month of all the properties rented and paid on time.

Talk to your property manager about what they are doing to get it rented. I had one that took a couple months to rent and I was wondering why my PM wasn't getting off his rear and doing something about it. I started talking to him once a week and it turned out he was busting his rear to get it rented, advertising and hours of showings. Tenants kept saying they were interested and then not filling our the application or they were not well qualified.

4-5 at once is a big bite to take, a lot of stress at once, maybe get all of them rented and a PM you are satisfied with before buying another.

There is a lot of articles, blogs and forum posts on screening your property manager. Do some searches and a few hours of reading, it will be well worth your time.

You asked "Equity build up rather than cash flow, why not?" and you got a lot of reasons why not. There are plenty of reasons why paying down quickly is good too. For me quick pay down comes when I can't get fixed rate loans anymore or I have reached my goal number of properties. The decision is personal as you said.

"First, they tend to be in low-appreciation, low property-value markets." I live in a very high appreciation/value market and have gone through great efforts to invest out of state for better cash flow.

"Second, they tend to be relying on cash flow from their real estate investments to fund their current lifestyle." To help fund my next real estate purchase would be my position. But yes, the guys trying to quit their day job to be full time real estate investors should see cash flow as an objective.

"Third, real estate tends to be their only investment, the one thing they are counting on making them rich." I pretty much agree with this statement for my personal finances. Unless you are in at least the top 5% of earners your career is unlikely to ever make you rich even if you live well below your means. I have a 401k invested in stocks but I am not excited about them like I am about real estate. I would agree that real estate is what will make me wealthy.... and my career plus my cash flow will allow me to acquire the real estate.

Now that I know how easy it is I think I'll do it too! Nice job, that is incredible for your fisrt mailing. You must be doing something right.

Thanks for taking the time to write it down and props to you for taking the initiative to start marketing. From the podcasts it sounds like its all about persistence and repetition.

And stop sending me yellow letters, just because I'm an out of state absentee owner doesn't mean I want to sell you my property, ha ha.

That would depend on your definition of wealth. To me, wealth is being able to live with out having to work. Cash flow is going to give me the passive income which will allow me to not work, not a lump of equity.

@Brie Schmidt

Great point, I never thought about the decreased payment with a 30 year mortgage being important to DTI. That lower payment will also decrease the necessary cash reserves with loan 5-10 when you need 6 months reserve for each property. Of course properties owned outright would be even better for DTI and necessary cash reserves. Something to think about on 15 vs 30 yr though.

Property tax/utilities/insurance = $600. Sounds too low.
10% of rent for maintenance.
10% of rent for vancy.

I'm paying 9% monthly, 75% of one months rent for new tenant, 25% of one months rent for lease renewal. If the new tenant bails before the end of the lease there is no charge to get another tenant in.

I started a similar post to yours when I first hired a PM and was surprised to find that paying 75-100% of a months rent for a new tenant was typical. I have read on BP over and over that quality PM is the key to success and you don't want to just go with the cheapest.

I think an important part is how high demand is for rentals where your investment is. My PM put a lot of work into renting one of my units, easily worth the 75%.

If you have a goal to own many properties then you need the cash to put into each new acquisition. If you are paying 5% to borrow money and you can make 10% on that money then you want to pay it off as slowly as possible. Right now rates are low so it makes sense to lock down those 30 year fixed rates. Later when rates have gone up you will want to concentrate your paydown efforts on your newer, more expensive loans. If you are at or near your goal number of properties then equity pay down certainly makes sense.

If you were a buy and hold guy during the crash you just kept cashing rent checks and making money right through it. Equity dropped and then slowly came back. They survived just fine and hopefully scored some great opportunities to add to their portfolio.