All Forum Posts by: Ke Nan Wang

@Glen Wiley If the tenant is asking for it, if it makes sense to you financially, you could provide the appliances and raise the rent. Just think in terms of tenant's alternative. How much would cost them to either go to laundry mat or buy a used pair? Is the way you are charging them make sense to them compared to their alternatives. 

Technically you are "renting" the appliance to the tenant but the wording makes a difference. 

It's a capitalistic society so you can do whatever you want to make more money. 

Personally I hate extra fees so I don't do charge for washer and dryer. I use them as a selling point that's about it. 

They do come with a cost so if a unit doesn't have one and you would like to provide for the tenants, you do need to consider the ROI on your investment. For us, if the unit didn't come with W/D, we rent the unit without W/D and the tenant has to bring their own. If the unit came with W/D already, then we look at the comp in the surrounding and price the rent price accordingly. If the unit is not renting, we priced too high and would need to adjust accordingly. W/D is not gonna make any difference. Something will though, if I'm a renter and I see a W/D in the unit and the landlord said it's gonna cost me extra to use the W/D, my impression on that landlord is gonna drop significantly. It puts a bad taste in my mouth. Especially the W/D is in the unit. If it's in a detached building in a common area, I think it's more understandable.

Just wanna mention another thing that I haven't seen being mentioned here while the OP is mentioning quit claim deeding a property to a LLC.

Often quit claim deed will forfeit title insurance. Even I'm not a title agent, a good one would always want your business and of course they would always advise you to get a title insurance and do a warranty deed. Not saying you have to do it, but just keep it in mind that it's a calculated risk you are taking. Or you may want to spend the money so you can sleep well at night. Or if you want to refinance the property, the lender will force you to do it. 

You need to have a rolodex of money people that you have a good connection with before you do the "find the deal and the money will come" with confidence. 

I would build relationship with mortgage brokers, bankers, credit union loan officers for the traditional stuff. 

Usually at my local RE meetups there are no shortage of mortgage brokers, hard money lenders and private money lenders there.

Before you go out and look for deals, schedule meetings with these people and talk to them. Also talk to other investors and see which lenders have they used before. The ones that always come through with good a reputation, reasonable cost and terms are the ones you would like to build a relationship with and work with them on future deals.   
 

The more money people you know, the better deals you can get from lenders. We have a local guy who has lots of money but he charges 3 points and 12% 6 month term, he would be the back up plan for most people since that's on the expensive side. Most people charge 2 points 12% and more flexible on time line but maybe they don't have that deep of a pocket. Sometimes we run into people who's willing to do 0 points and 10%, usually these people just have enough money to do 1 or 2 deals and the money will be tied up. 

So short answer to your question, get your finance in order first. 

Depend on your personal taste, I know most DIY solo investors start off with long term rental SFR because it's the easiest one to enter. Only require 1 on 1 communication skills. Also low requirement on marketing, sales, analytical and management skills, and the capital to invest is on the lowest side. The downside is that it's pretty slow growth.

I also know people who started their REI journey dive right in into large multifamily syndications with very little industry experience before, given these people were relatively successful in their own professional field with high education so there are some transferable skills, mainly in their ability to analyze, problem solving, management, network and communication. Typically these people can invest some money joining the right master mind and then more experienced people in that group would be able to partner up with them and guide them through the journey.

Like most people have said, you don't find the niche the niche find you. Pick one thing that you know you can do and start doing it today. If you don't have a mentor guiding you to success, essentially you will have to find the rope with lots of trial and error. So it's up to your personal preference on how you want to go about this journey. If you have the money, the drive, the intellect but just don't know where to go and you want to grow fast, I would probably recommend you to invest some money and join a program/mastermind. Although I haven't done any of them myself, the people who I know that I more successful than me, almost all of them are part of a mastermind and they all said it's worth the money, simply because the contact you have access to, not counting other benefits such as educations and investment opportunities. 

Nobody can evaluate the pros and cons of different niches for YOU. First develop a habit of doing it, taking actions, either fail or succeed, then learn and grow and continue doing. The actions will lead you to your niche. 

Some insight from a contractor, price per sq ft never works well either the investors get screwed or the contractors get screwed because everyjob is different and the scope is different. You would be lucky if somehow worked out for both. 

If you say, I just want a price per sq ft for budgeting purpose. I don't believe anybody who says to me "I won't hold it against you, tell me what's the ball park?" especially if that person is new. I did that a few times when I was new, and later on the quote came back higher, the customer always said "I thought you said it's gonna take XXX." Doing this long enough has taught me, the number that came out of your mouth will get stuck in the customer's brain, even you say lots contingencies afterwards, the customer will remember none of those words. And the number you put out, will always come back and haunt you no matter what they said. Either I had to meet their expectation and not make money or they have to be upset with me and pay me the "extra." If the customer is a pro investor and their words have meaning, then I may shoot a ball park number from the hip. They understand my job and they do not hold it against me if I'm wrong with explanations. I do the same with my subcontractors. 

So with that being said, as a new investor, just ballpark the cost this way for a house that's less than 1500 sq ft:

1. light rehab: flooring and paint (10-20k)

2. medium rehab: light rehab + appliances, kitchen and bathroom, windows and doors, builder grade light and plumbing fixtures (50-60k) 

3. Heavy rehab gut job: Complete redo down from the studs forward: medium rehab + replumb, rewire, new AC, drywall and insulation. (150-180k) 

Add a $15 per sq ft for the roof if new roof is required. Assuming shingle roof. typically around 10 to 15k for small to medium houses. 

This is just for your own budgeting purpose when you look at deals unless you can find a trusty contractor who doesn't mind give you free estimate for all the deals you are analyzing (unless he just got too much time on his hand, another sign of starting/bad contractor) 

Once you locked in a deal, walk with the contractor and come up with a specific scope of the work. You want to make sure that you discuss everything you can think of and have that specified in the quote (if you are working with someone you haven't worked with before). 

Once you have done it a few times, you will get a better sense one what items cost how much for your future deals. 

Hi John, 

I do this everyday. I'm busy but I have spare time, like commenting on this post right now. You can talk to me and see what is like. Or you can find me on social and my website, K.Nan Homes or K.Nan Construction in St. Augustine. we post pretty frequently. Trust me, I have nothing to sell you. I'm a professional, I only charge people if they use my professional service. Chatting is free. 

I'm my local land wholesaler's biggest customer. I buy land for myself and for my retail RE investors. So learn what I'm looking for you will have your disposition buy box for builders/developers. 

Cheers,

Kenan

I highly suggest you use an attorney/title company and wire the funds for all of your deals. 

Document all the cost and how much they owe you after security deposit and send it over to collection. If you have a judgement is better but they will work with anything (lease, ledger). There is no cost upfront with them but they take 33% of what's collected. It's best you have their full name, DOB and SSN, it's pretty effective. Usually this is where leverage comes against a good credit score tenants. When collection company contacts them with emails, phone calls, and text and present them the stick (ruin their credit score) and the carrot (work out some affordable payment plan), most good credit score people will come to their senses. 

Doing all that cost you nothing other than paying the collection company 33% of what you would have lost anyway. At the minimum, you get a chance to harass them for being a terrible human being even if you don't get anything back. 

It's doable but certainly more challenging. In general ground up new construction loans are more expensive (higher origination fees and higher interest rate). Usually the LTV in the land doesn't justify the risk for a hard money lender unless you have other assets to put down as a collateral. If you have private money lender connection, then that could be a more affordable option than ground up new construction loan. In summary, the first build without cash will always be the most challenging part for newer investors. After the first build is complete, then investors can refi the house and repeat.