All Forum Posts by: Kurt Gardner

Such a great discussion and really amazing points from so many different perspectives.

@Thomas S. @Jay Hinrichs - you guys are clearly very solid in your business plan and I appreciate your "grounding" advice. 

I am very much still new and getting into my growth phase (flipped once, just got my first duplex and own 5 SFH). I definitely rent in the C/B- category, so i'll be considering a little more on my rental repair war chest (I was hit this year with a couple plumbing and HVAC situations that hurt my account).

My goal/focus up to this point is getting properties where I have 50-60% equity after all in.  I'd say I'm closer to 40-45% (rehab always costs me more than I optimistically want - and I'm learning that putting in new HVAC/supply lines/water heaters, etc. are really cost/time savers down the road).  Up to this point, our investments have provided stepping stones to purchase the next property (equity leverage).  I target a minimal cash flow (we price rent slightly above median market for the area - average rent is $750 and if I get $100 CF, I'm ok, $150+ and I'm happy).  My exit strategy in each property is threefold: 1) for the next investor (with a good tenant that is M2M and paying on time), 2) to the renter (to buy as first option), or 3) simply to vacate and flip. 

The only reason I would divest myself of any property I own at this time would be to invest that money into the next tier class of property (B/A).  I think I would be happy at 12-15 properties that are all B+/A, and I project that would give me enough cash flow to quit my fulltime job and pursue this on a fulltime basis. 

I buy precious metals and real estate as my primary retirement strategy.  I see both as about as solid of an opportunity as there is, particularly for the longer haul.  Consequently, it's from the equity discussion vantage point where I jumped on board with you @Lane Kawaoka.  It is worth considering, however, the wisdom of the cash flow discussion and particularly the contingencies of short term, unforeseen costs, because without a property or with a property in terrible disrepair, there really is no equity.

To all the other commenters, it is a reassuring moment to realize this community isn't just a bunch of flame-throwing trolls who want to one-up each other with comments and braggadocio.  Kudos and thank you.

It is a pleasure "working" with all of you, and I always (even when my feelings/ideas may get a bit clipped) appreciate your experience and willingness to share.

@Lane Kawaoka

"Sophisticated investors do not look at interest rate and the amount of debt instead they focus on cashflow and effect on net worth."

Brilliant post.  Thank you and expect some new followers (at least one).

@Nick Stoddard

Icemaker in a fridge?  No way.  It is as stated above, just another item that can break/cause long term problems.  When (not if) it breaks you have to face the decision of fixing it or explaining to the tenant that it was a luxury item and you are not going to pay for the repair at this time.

Garbage disposal?  Even when I flipped, I didn't put in the garbage disposal for three reasons: 1) I'm cheap, 2) it's not a deal breaker item, and 3) most people like to customize certain things (ala Tim Taylor, "more power") to suit their personal tastes.

Regarding a tenant, garbage disposals are really just an excuse/temptation to be lazy and not take care of the plumbing like one should.  Anytime you have to add more instructions/sections to a lease agreement to explain to an ADULT how to use something, you are asking for trouble and proving the point that sometimes we credit our tenants with more responsibility than they may deserve. 

Keep it as simple as possible.

@Account Closed you always crack me up.

@Ronald Perich - yeah, it's a bit of a tight one, and I estimated a little high on the repairs.  So far, I've "gutted" a house and flipped it and spent no more than $38k.  My typical rehabs are in the $20-30 range to get them what I'd consider nice.

I know there are corners that could be cut to save money and I'm not really comfortable putting a home out for a rental if I weren't willing to live in it myself, and that means that even though "it's a rental" (the common phrase on the job site when I'm rehabbing), it still has to be done right.

Hope you're doing well.  FYI, it's the troy, access road property...did you ever look at it?

@Steve Vaughan, @Dishant Pandya, @Ronald Perich

Thank you all for the feedback...I am certainly looking at it with the long term eyes and not the wholesaler perspective. It's difficult to let go of one process and switch into another one sometimes. 

BTW, the duplex closed, and we're modifying our "to do" list and it looks like we may be able to get both sides up and going in just a few weeks!

@Account Closed At some point, we all "take a stab" at something new and by that term I do not mean in a frivolous or reckless way. More like, jump in. My first deal was not a 100% success, nor was my last deal. Each carries it's own mistakes and learning opportunities. I still own all the properties I've invested in (except for my one flip, 18% ROI) and I am profiting from them. Thank you for sharing your thoughts, as well.

I pay sewer and trash.  All other utilities are the responsibility of the tenant and clearly stated in the agreement.  I would not want to pay and recoup a fluctuating amount each month.  

Do you have to pay their bills, or is this just your business model?

I want to buy this home. I can't because I'm closing a duplex today and that will tie me up for a month or so. I am considering putting a contract on it to wholesale, but I have never wholesaled nor do I have a big "buyers list" of people I know who would invest. I am not desperate for either, honestly. I find good deals fairly regularly. I do think an additional revenue stream would be nice and you gotta try sometime, so... What would you do? Would you "wait" for it and hope it is still avail in a couple of months and take the deal yourself, or take a stab at wholesaling "in the blind" and get a little from the deal now? Basic numbers: 3BR 2BA, B-/B area, contract price would be $58k, rehab about the same (~$60k), ARV $135-140. Thanks for any advice.

Hi @John Suralik - used Zillow on my last rental, it did the cross posting, and got me responses immediately.  I like the app interface it provides for managing the listing - slightly less clunky than CL.

Additionally, I used (I hope I can say this, but mods remove if not appropriate) rentometer.com to spitball my price range, and I got the top end right away...it was spot on. 

@Steve Rozenberg - see the link above by @Rick S.

I suspect this is partly a rhetorical exercise, so my answer will be brief if not obvious. 

Would you marry based solely on height?

We use a third party evaluator who performs full background checks (they charge $50 paid for by our potential tenant in their application).  They base their answer (recommend or do not recommend) based on their parameters and we are kept out of the discrimination issue as a result.  It is fair and thorough. 

I recommend :)

@Alexander Lang - I used to charge by the day $5.  That got tedious and really convoluted particularly if you have a grace period and you have to ration do you retro calculate back over the grace period as days late or not...it led to unnecessary tenant arguments.

I now charge a flat $50, no grace period, and I have a similar fee ($35) for any NSF payments (I specifically note in the agreement that a NSF payment will undoubtedly create a late fee so it is clear it's VERY COSTLY to write me a bad check).

I make one caveat with my tenants; if they mail the rent to me, as long as it is postmarked before the 1st day of the month, even if it arrives late, I will not charge them a late fee.

I have collected one late fee on five properties since I have implemented that policy, and I'm much happier to have my calculated rent on time for my bills than to make an "extra" $15-50 every so often because my tenants can't get it together.

@David Moore - I agree with the situational consideration.  It's why I keep the postal caveat in and I've also given one tenant a break by waiving her rent one month (she was in the hospital and out of work for nearly three weeks), and allowing her to add $100 to the rent for the next seven months to catch it up with no additional penalties.  It's called being a decent person who is about their business!  Nice job, sir!