All Forum Posts by: Lance Robinson

So we have a vacation / second home in another state that we generally use about 1 week a month.   I suggested to my wife that maybe it would be a good idea to rent a room out to accomplish two things, bring in a little cash and have someone at the house so it was not vacant when we were not there.   The house is in a historical district, walking distance to a University, a historic Main Street area and not far from a Community College, so it's in a somewhat touristy location with a lot of potential students as well.

We talked about it a little and she was on board with the idea so I posted an ad on craigslist and got an inquiry a few hours later.  The potential tenant is a college student, just starting their second year that works at an upscale restaurant walking distance from the house.   Student currently rooms with 2 other students in an apt whose lease is up in Sept.  The other 2 roommates are moving elsewhere, so student needs to find a new place.   Our place looks to be ideal.  Sounds good so far, right?

I advise wife that we have a potential tenant and suggest the steps to begin vetting the tenant.  A few hours later she tells me, No, she's not comfortable with a stranger being in the house when she's there - in other words, no deal, no renting a room.   

Wife said she'd be OK with renting out the place as a VRBO when we're not using it, but no renting rooms.  I'm good with going down the VRBO path, but really liked the idea of renting out just one room so the place would not be vacant when we were not using it and the rent would have been almost 2/3 of our carrying costs for that house.

Has anyone run into this and if so how did you deal with it?

@Lance Robinson I like your strategy of not over-leveraging the properties you own.  Yes, this will insulate you somewhat from rental income loss, or lower rental rates.  In my mind this is the way to go.  I realize that the more cash we put in our properties or hold for our properties in rainy-day funds, the less we have to throw at new properties, but sometimes it seems like prudence is better than risk taking in times such as these.  

Hi everyone, newbie here. I'm planning to buy my first investment this year. I'm trying to do as much due diligence as possible to protect my investment and assets if the real estate market crashes in the future.

For buy and hold strategy, is it enough to make sure cash flow positive (actually not easy in my area) and account for enough unforeseen expenses? I wonder how you all prepare your investments for this.

It would be nice to hear from folks who had been through the previous market crashes as well. What you learned and what you wish you had done differently.

Agreed on the 80%. That was exactly my point that to get that would take a ton of legwork to find.

I'm looking to grow passive income over time - so finding a solid turnkey provider does seem to be the way to go.

@Account Closed

In theory that plan to go in with a 70% LTV in a Midwestern apartment building via 1031 seems like it would solve her cash flow concerns. However, there are a lot of problems. One, is that LTV would be far too risky for someone with limited income and in their 70's. If she were to go underwater or had problems with vacancy, it seems like it would be debilitating and catastrophic.

The other is logistics.  Out of state low income apartments are not like a bond and are not mailbox money.  How is she going to asset manage these apartments?  How does she feel about flying out to wherever every year or two to check on things or if there are major problems or a management company change.  Usually as people age they are getting out of these type of investments not into them.

Triple net may be a better option, but I would advise against that if this is the only real or main source of income.  Retail tenants can go BK sometimes fairly suddenly even if the risk is mitigated and proper due diligence is taken.  There is always some risk here.

She may not be able to refinance given lack of W-2 income and it sounds like she is not accredited. I'd probably advise trying to do a limited cash out - maybe 40% LTV and using the proceeds for other investments. In any situation, you need to help her evaluate the risk of different type of investments.

@Account Closed - If she's getting $1800 a month now and wants a $600 upgrade, than she could consider lending the funds. There's a number of ways she could go about doing this...many of them are discussed here on BP, but $369k (ballpark after capital gains) at 6% for 30 years is $2212 a month. That's gets her to $400 a month more ...with much less of the hassle of actually owning a property. 

Just something to consider. 

Hello BP!    I have a client that owns a rental home here in San Diego since the 70's she is ready to do a 1031 exchange and will have 400k after sell.  She is retirement age and doesn't want to deal with property managing herself any more.  She will need them managed.  My question to the community is what would you do if this was you and you had 400k to exchange into more cash flowing property or properties.  Should she jump into apartments at her age?  Should she buy cash? Use leverage? buy single family or mulit family?  What area should she buy? Thanks for the input.

Hello BP World,

I am buying my second property which actually is a duplex.  (Congrats).  Thank you.  I have a separate bank account for my first rental because I am taking the advice from Brandon's book on growing your landlord business.  It seemed like a great idea but now that I will have another two doors, with two tenants, I will have to get two new bank accounts?  I guess I could just do one bank account for the entire duplex.  Regardless, as I grow my rental portfolio, it seems very daunting to keep opening up bank accounts for each property address.  Well, not for me so much, but my wife.  She handles all financials.

What are you thoughts?  Should I continue to make bank accounts for each rental or just keep it all in one bank account?  Am I over thinking it?  Should I get a debit card for each bank account?   I get the idea and I like it to keep everything separate i.e. deposits, rent checks, paying for maintenance etc.  I am torn and need yalls help.  Thanks in advance