All Forum Posts by: Mark H. Porter

Many folks may feel differently, but I use umbrella insurance rather than an LLC. I did use an LLC to combine my properties with My wife's for some big 1031's but had to come up with 30% with a 20 year amortized and 5 year balloon . I know there is better but it was a new area with a new bank.

For a new bank that I had never dealt with before - they required Two years of taxes including schedule E’s, rent rolls for all properties , 3 months of bank statements as they want to make sure you have the cash to cover N number of months payments,  and personal financial statement.

It may not be relèvent, but I’ve taken section 8 for over 20 years.  I currently have 14% section 8 occupied and to tell you the truth there is no more propensity to being a problem tenant over a non-section 8.

Guaranteed rent is not a guaranteed good tenant.  All applicants go through the same process of background checks including my google prowess, past landlord references, job references (yep, most section 8 applicants work), and the ability to pay (rarely does section 8 cover 100%).

Sorry, I hit send to soon. My LTR items are above, my STR items are as you say. The cleaning fee/taxes are part of the rental rate and the paying of necessary fees and minor maintenance are included as you say. I'm sure it's just a factor of PM competition and other local factors.

Hi Dan, I started in 1997 and owned over 60 doors at any one time.  They go up and down depending on how I’m utilizing 1031’s (we just 1031’d three of our smaller properties totaling 11 LTRs for 3 STRs and doubled our net cash).

I pay 6% across the board.  For the LTR’s, they handle the advertising, showings, collections, all calls and complaints,,etc.  I pay the bills (it’s an extra 1% for them to do it if I chose but most are automatically so I just arrange it myself), pay hourly charges at $40 per hour for maintenance, and pay $325 per turnover for showings ( as I am in a college town I have about 10 per year).  They do the books for everything they touch but I have a contract accountant  that does the downloads from the bank and reconciles everything for the schedule E  for my tax accountant.  I budget between $750 and $1000 per door (Depends on property age or how much I’ve already spent on capex) for M&R alone and that’s included  in my expense ratios.

No, both have property managers. You're right though, my annual gross on a SFH STR is almost equal to the annual gross on my 18-unit LTR 1br's. You're on the money (pun intended)

What stands out for me is the lower expense ratio I've experienced with STR's n a vacation area. My LTRs average 32% but my STRs average 22% even with the theft factor of replacing toasters, silverware, coffee makers, blankets, pillows, chaise lounges, lightbulbs,hair dryers, etc...

It depends on your locaL laws.  Where I am I could take them to small claims for under $5000 and then upon winning pursue a judgment against wages.  All your expenses (court charges, legal, sheriffs) go into the amount you are seeking.  I’ve collected checks from four judgments for years at 12% interest by law.

Cap rate is the quick and dirty that simply peaks my interest.  In my area most sell near downtown or the college at 6%, 5-10 blocks away and it rises to 7.5%.   in those area if you see an 8 or 9 I’ll investigate further to see if it’s deferred maintenance.  It’s a starting Point.

For the most part I am separated from my tenants by the property managers.  Most of them time I show up as there is an issue the PM can’t resolve.  They are my customers and I have no relation with any of them.