All Forum Posts by: Ke Nan Wang

This is roughly the message I send to my tenant 60 days before lease renewal:

Dear tenant, 

Insert nice words....

Your lease is expiring on [date]

You have the following options:

Renew your lease for 12 month at [rate] (If market rate is $100 higher I tend to increase something, if market rate is $200 higher I use (current rate + market rate)/2 for the new rate, if market rate is same or lower I would keep it the same rate)

Move to a month-to-month lease at [rate x 1.25]

Vacate from the premise on or before [lease end date]

Please let me know by [deadline]. (Sometimes depend on the market, I even throw in some bonus such as if they sign a lease renewal before end of the week we can get them some rent credit for the upcoming month, if the market is hot then I won't say anything) 

Anyone in your situation is gonna feel bad. It just happened that you are in a bad situation right now. As long as you get through it, it's gonna be better. 

Slowly build up your cash reserve and equity. Be frugal. 

Right now I'm in a position where I barely hear from my tenants but collecting monthly rent. I self manage 30+ properties and I can double the volume before I hire a full time PM. If things break down from one property, I just call the right vendor/contractor to fix the problem and pay the cost. If roof needs to be replaced, I call the roofer I trust and replace the roof. 90% of my tenants renew their lease every year. I do maybe 3-4 tenant placement a year and that's actually real work. Other than that, my LTR properties are pretty hassle free. 

50% of my rental properties are new constructions I built so I control the qualities. I usually sell out the old ones and build new ones. That's why I'm not the investor who chase the "number of doors." I like to own high quality, high profit margin, low maintenance rental properties. 

The best strategy for you is to find someone who's doing it well and try everything you got to work for that person. If you are getting paid at all from that person, take it as a win. If not, thinking as a free course. 

If you call 1 person and that person didn't respond, you take that as a sign and quit then this is not for you. 

When you have nothing but time, you gotta hustle to get to where you want to be. Call 100 people you think they are good, set appointments with them and see how you can help them while you get to shadow with them and hopefully soon, you start to bring value to them and then they can start paying you. Then you learn, get paid, and get good. 

That's the strategy. 

I deal with a lot of these people because our houses are mostly new constructions and great for business like this. 

Almost all of them are newbie who took a course with no prior experience. All of them gave the same pitch: waive security and first month rent because they have to invest in furnitures. 

I always respond to them with the following: because they are making money off my properties, we are treating this like a commercial lease. So the lease will be higher than the advertised rent, they will be responsible for minor repairs, they are responsible for obtaining the proper licenses and pay all the taxes for their business operation (If you don't do this, you will regret it one day you see a tax bill that you as the property owner who are responsible for), and they required to have a STR insurance policy.

During COVID area, our town STR was booming, lots of arbitrage operators made good money doing even with those terms I presented. I had 3 LTR rented out to arbitragers. They made good money and maintained my properties and I collected above market rate rent, win-win. However, the STR market in our area has become saturated and most people aren't making money anymore doing arbitrage so they are exiting. My arbitrage tenants didn't renew their lease this year. Most STR owners are converting their properties to LTR or sell.

However, I still received inquiries like OP every time I list a LTR. I took them less and less seriously the more I deal with them. Every time I hit them with my terms and they just started ghosting me now. 

So pay very little attention to the names of their company. Chances are they are nobody. Just ask them how much experience they have with running the business and can they do the deal like a commercial lease with the terms I've mentioned (I think those are fair terms). 

This is an example of find your niche and do it well, you will make money. 

I know mobile home has a bad reputation therefore not that many people are doing it and the competition is not that big. 

I personally know two people who are flipping mobile homes and have good success. 

One is a wholesaler/flipper, last year he started flipping mobile homes and he's getting average $45k per flip, which is higher than his traditional average $35k per house flip. And now I'm seeing his social is all about mobile home flipping and he's really happy with the result.

I know another mobile home dealer, he buys crappy mobile from me when I purchase a rundown property to do a tear down and new build. He buys mobile home from me and flip them to make money. I can get rid of the mobile home without paying demo cost and make a couple thousands out of the deal, win-win. So far he has purchased 6 mobile home from me where I used to spend 4 or 5k to just demo them. 

Seems to me that these two people have figured out a way to make money with mobile homes. 

If this is something you are interested in, mainly because less competition, you should test out one or two and see how it goes. But make sure you have the resource to do what you need to do. I sure don't know what I'm doing if I see a mobile home that's falling apart. To me, I'm good at rebuild from ground up. 

Just a thought, are you in a position to develop other smaller project and learn from those experience first? 

If it's a golden piece of real estate like you said it is and you guys are all motivated, mentally and physically capable, I would keep this golden goose egg all to yourself. 

Seeking other smaller development opportunities first, maybe start with one residential property, work with the city's municipality, contractors and vendors. Gradually you will learn, gain experience, build the network to be in a better position to develop this high potential land. 

If you sell out now, you will mostly get penny on the dollar for what it could become because anyone who's taking on the risk to develop this piece of real estate will want to get it in a deal. 

If you start developing it or JV with other partners without any experience, I would doubt you even know what you can negotiate and what landmines and traps to watch out for.

So I say if you are capable of developing this and can afford to wait, wait until you become better and take on the lead position to develop this yourself.  

I'm doing both STR and LTR in St. Augustine, FL and doing both well so I think I'm qualified to provide some insight. My current scale is self manage and not a management company.

LTR is passive income, you put a good tenants in, as long as your property is in good shape, you won't hear from the tenants until they pay rent or lease renewal or the occasional maintenance request. 

STR is a hospitality business. Unless you hire a PM who's charging you 20 to 25% and most likely not doing their job to deserve that money. So in most areas, STR with PM only outperforms LTR if STR is super good and/or LTR is super bad. In general, STR with PM does not worth the hassle comparing to LTR with the following exceptions:

1. STR you personally can enjoy the property too

2. Most likely your STR will be well maintained at tip top condition. I can safely say I can fulfill my host obligation and put my STR on the market right away without any improvement and sell. I cannot say that with my LTRs. Usually 10% of my tenants leave the place better than they moved in, 10% of my tenants leave the place worse than they moved in and we had to exhaust their security and pay the cost in terms of 6 to 12 months rent to bring a property to listing condition (depend on how long the LTR tenants have lived there of course). And the rest 80% of tenant leave the property in so so condition and we would still need some work mostly in maintaining the wear and tear. So if I have a property that's in a very nice area and it's well renovated, I would do STR or MTR if STR is not allowed so I can maintain the property in a good condition.

If your plan is doing STR with PM then to you it's probably not that much difference other than the income will fluctuate from season to season.

If your plan is doing self manage STR and want to do it in a way that's self fulfilling (all guests are super happy with the place and your service and you are making good money that's worth your time) there is some learning you need to do and risks/investment you need to make before jumping in.

First, the house needs to be well built and in great condition, so either new construction or upgraded inside and out with a reputable contractor who does great work. You don't want to ruin your guests' experience with this not working, that not working. 

Secondly, the house needs to be furnished and decor up to the standard, at the minimum, like a 3 star hotel if not better. You also need to stock the house with consumables such as coffee, towels, dish soap and body wash and shampoo etc.  

Some optional items from a LTR lease now become requirement: you have to own the utility account, definitely have contractors to maintain yard, pest control, periodic soft wash the exterior, pool/hot tub (only speaking from FL, or any other property routine maintenance in other region). 

So those are property setups. Then the bulk of the work just began, now you have to market your property to attract guests and keep them happy to get those good reviews so you place is stayed booked. There is pricing strategy involved. How do you change your rate based on your market and the vacancy status of your listing. Study your competitions, see how you can offer more values to your guests. Most of the time, it's just space and price. You may in a position where you can offer some unique experience to the guests that other places don't, so that's your value preposition. 

Your attitude towards your guests will be always most hospitable. Thinking in terms of a good manager of any service industry. I give much more leeway to my STR guests than my LTR tenants because I know people pay good money to have a good time on their vacation. I'm the Johnny on the spot guy if there is any small inconvenience come up for my guests.

The number 1 thing you hire out is your cleaner. When we started out we were doing our own cleaning because we don't trust other cleaners. It's a lot of work. Especially if we have multiple turnover in one day. Gradually, we tried out a number of cleaners and found the great one we currently using. With a great cleaner, our workload reduced 90%. So right now our STR is mostly just communication with guests and occasional property visit if there is any issues. We are pretty hands off now.

I think our way of self managing is the optimized way where our place stayed booked, our reviews are extremely positive and we are fairly handsoff and we can leave town no problem. 

So as you see, it's a lot more work to get it established, but once you've gotten a system going, it's not that much more and the pay out is good. 

Hope this helps you to make your decision. 

A lot of good feedbacks here but I want to plug one point in:

It really depends on what do you want to achieve? Are you someone who's ambitious and energetic and wants maximum cashflow? You don't mind the hustling of tenant placement. If that's who you are, you should keep your lease as flexible as you can be. Tailor to whatever people need. 

During slow season, when people come ask me if they can rent the place for 6 month, I ask them can you pay 10% more than the advertised rent? And then go month to month after that at 25% more. Some times you have this one person needs it and they sign a lease and the property is filled. You get more money, that person gets a place to stay. But you just need to understand at 6 month time, getting ready to find another tenant or hope the tenant is not ready to move out and pay the 25% increase rent on month to month. I negotiate with tenants on the spot all the time, if they want something different than what I want, I don't reject them, I propose something to accommodate but of course, I get paid for the accommodation. If they don't agree with my increase then they can say no. 

Now, if you are someone who likes to have stability than maximum cashflow, longer lease term can provide you with less hassle. I know investors like that too. To them, the property is paid off, they aren't ambitious to grow, and they just want that mailbox money to enjoy retirement, so I say they are perfectly fine with a longer lease term. 

So no one can give you the best advise without knowing what do you want. I know what I want:

12 month lease at advertise rent and month to month at 25% increase rent afterwards. 

Have a competent realtor with market knowledge and transaction experience in the area you want to invest in will be good enough. This is more in commercial deals less in residential to have an attorney to review the contract that's other than the real estate agent who represent you since commercial deals are generally much higher stake in it. But ultimately, know this, no matter who you hire, you are the person who's ultimately responsible for your own signature. So don't think "I hire an attorney to review my contract and I'm good to go." Attorney makes mistakes too. And at the end of the day, it's your money. 

If you can afford to hire an attorney to review your contract because you don't trust yourself or your real estate agent, that's your freedom but it's 100% not necessary. Residential contract aren't that complicated and do a few deals you can already know all the clauses in it. 

Depositing mail into people's mailboxes without a stamp is a violation of federal law in the United States. According to the United States Postal Service (USPS), it is illegal for anyone other than the USPS to place mail or packages into a mailbox. This is outlined in Title 18, Section 1725 of the United States Code, which states that any person who knowingly and willfully deposits any mailable matter such as statements of accounts, circulars, sale bills, or other like matter, on which no postage has been paid, into any letter box established, approved, or accepted by the Postal Service for the receipt or delivery of mail matter on any mail route with intent to avoid payment of lawful postage thereon, shall for each such offense be fined under this title.

Violating this law can result in a fine for each piece of mail that is improperly deposited. The purpose of this regulation is to protect the integrity of the postal system and ensure that the USPS is compensated for its services.

Other than that, do deals first then worry about other stuff. The other stuff do not matter if you don't do deals. And if you aren't setup correctly initially becauseyou started doing deals, trust me, you can do it later and still be fine.