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All Forum Posts by: Kenneth Garrett

Kenneth Garrett has started 81 posts and replied 3709 times.

Post: New Tenant petty requests

Kenneth Garrett
Posted
  • Investor
  • Florida Panhandle/Illinois
  • Posts 3,762
  • Votes 3,113

@Peter Morgan

Make sure your rental agreement covers these types of issues like bulb replacement. I use an attachment that covers all of those minor issues and who is responsible for what. It needs to be very clear. I think your always adjusting those rules as things come up.

Each tenant is different. Some are a little handy while others aren’t able to do anything. As an example, if the cabinet handle is loose; a simple screw driver will fix it. At times, I get called for these things. When I started, I would respond and I would show them how easy it is to fix it. It worked well, but I kept adding to my lease agreement. There is a line about what you want them to do. I’ve been pretty fortunate with tenants in this regard.

Post: Were You Working a Full-Time Job When You Got Started Investing?

Kenneth Garrett
Posted
  • Investor
  • Florida Panhandle/Illinois
  • Posts 3,762
  • Votes 3,113

@Katie Miller

When I started I was working 50 hours a week and had two kids at home. Time was limited, but I felt I become super efficient with my time. Couple hours at night on the computer, attend a REIA class once a week. I did a lot of networking in the time I had available.

Things started slow. The first year I was a big sponge taking it all in and educating myself. Once I started, I flourished with BRRRR deals and at one time had over 20 units. Mostly SFR and two and four unit buildings. Did a few flips as well.

It’s like anything, if you want to succeed you need to put the effort in. It’s all worth it.

Post: So, what is a COCROI?⁣

Kenneth Garrett
Posted
  • Investor
  • Florida Panhandle/Illinois
  • Posts 3,762
  • Votes 3,113

COC is the metric based on the first year. But you can extend it out until all of your cash is returned. I believe the goal is to get your cash back and reinvest in another project. This method allows you to reuse the same capital.

If you finance the property, your tenant is paying your expenses and your cash flow after your return of equity as a return is infinite. You have all of your capital back.

Post: Borrowing MONEY for RE Investment from Family

Kenneth Garrett
Posted
  • Investor
  • Florida Panhandle/Illinois
  • Posts 3,762
  • Votes 3,113

@Andrew Pettit

Whether you’re borrowing from parents, family, friends, etc.  You’re borrowing from a private lender.  You want to protect their interest even more with family.  Agree on the amount, interest rate, how long, etc. Are they going to be an equity lender where they stay in the deal.  As in a flip when it’s sold they share in the profits; typically 50%, but you can agree to any percentage.  A debt lender where you pay them a flat interest rate.  Say it’s 8% (family discount).  You can also do a combination of the two.  Have an attorney draw up a promissory note and a mortgage or deed of trust depends on your state.  Protect there money at all cost.

Post: Up and down duplex property landscape and snow removal

Kenneth Garrett
Posted
  • Investor
  • Florida Panhandle/Illinois
  • Posts 3,762
  • Votes 3,113

@Ian Dale Ibrado

Shared laundry is ok if you have a common area that each tenant has access to.  Ideally in a two unit building having each tenant with their own laundry is ideal and you might be able to charge a higher rent because of the convenience.  Of course, this is based on your market.

Post: Up and down duplex property landscape and snow removal

Kenneth Garrett
Posted
  • Investor
  • Florida Panhandle/Illinois
  • Posts 3,762
  • Votes 3,113

@Ian Dale Ibrado

When I have a multiple occupancy building, I hire a landscape contractor for those services.  If you are determined to have one of the tenants take care of that you should select one and put it in the lease and they would get a credit or reduced rent for taking care of this.  I don’t think it’s a good idea to try to have each take care of it as a shared responsibility, just to many issues and disputes.

Post: Total cash invested meaning

Kenneth Garrett
Posted
  • Investor
  • Florida Panhandle/Illinois
  • Posts 3,762
  • Votes 3,113

@Henry Adewale

It means money out of your pocket. Down payment, closing costs, rehab etc. If you recoup all of your money when you refinance then you have no out of pocket money in the deal. You essentially have a property that didn’t cost you any money, just your time.

Post: Buying an STR across the county, tips?

Kenneth Garrett
Posted
  • Investor
  • Florida Panhandle/Illinois
  • Posts 3,762
  • Votes 3,113

@Kera Takacs

Maybe it’s just me, but I prefer to set up my own units even when they’re long distance.  I think furnishing your unit if need be and any other improvements you should do yourself or at least oversee it.  Test the unit by staying there a few days so you know what your guests will experience and you’ll find out quickly what your missing.  Learn the area, so when guests have questions you can speak first hand about the area.  It’s only 2-3 weeks of your time, but I think the benefits out way any negatives.  Of course, this is all based on self managing your units.

Post: Brrrr initial financing help!

Kenneth Garrett
Posted
  • Investor
  • Florida Panhandle/Illinois
  • Posts 3,762
  • Votes 3,113

@Caleb Scott

So here is how this works.

1. The purchase is $40K plus $20K for rehab. Total $60K.

2. You need $40K to buy the property plus any closing costs.

3. The rehab is 20K.

4. If the private lender is funding 100% of purchase and rehab there is no down payment. If the private lender will only fund 80% then you have $48,000 from the private lender. You will need to fund the balance.

5. Each lender is different. Some find 100% while others might only fund 65%-80%. This needs to be agreed between the two of you. Remember there are closing costs on each closing (buy and refinance).

6. The repayment of the loan is based on borrowed amount, interest rate and length of loan.

7. At 10% for 6 months at $60,000 would be $3,000. This can be paid back monthly or at the refinance.

8. These concerns must be discussed with the lender and agreed upon.

9. At 100K appraisal if all goes well, yes you may be able to recoup all of the lenders funds or combination of you and the lender. Keep in mind, many times there is a little money stuck in the deal. That’s ok if the numbers make sense. I for the most part was always able to recoup all of my money in 6,12 or 18 months.

10. A first time investor seeking 100% funds for purchase and rehab is not likely. After the first couple of deals that go well that could be the result in the future.

Best of Luck.

Post: Questions to ask get a quick first idea of construction quality

Kenneth Garrett
Posted
  • Investor
  • Florida Panhandle/Illinois
  • Posts 3,762
  • Votes 3,113

@Mei Li

That is a very difficult question to answer.

You can look at the quality of the materials.  For example pine trim versus oak trim, solid core doors versus hollow core.  That only addresses the materials not the craftsmanship.  Remember saying that the construction meets all building codes is only saying it meets the minimum standard of the code.  The building is only a minimum standard.

1. Was the work performed by licensed contractors.

2.  Was a permit pulled and did all inspections pass.  If not, what deficiencies were identified.  You can FOIA that information at the city/county.

3.  References are probably your best bet on quality.  Call the references you be surprised what people will say even though they were happy with the work.  Example; project took an extra 30-60 days to complete.  The reference had to call the contractor numerous times, which means pretty poor communication.

Good Luck.