All Forum Posts by: Michael Hayworth

@Debra Schwartz, it sounds like you're being very reasonable, but you're in a state that is not always reasonable to landlords. This is a great opportunity to research NJ's landlord-tenant laws so you know exactly what your legal ground is. Once you're sure of that ground, you can stand firmly on it.

As I've mentioned in other threads, tenants are often like children - they will test the boundaries until they see that you're going to firmly enforce them. And if you give off a hint of uncertainty, they'll pounce on it and test you even more. You have to come across as reasonable, but self-assured and firm. No begging, no concern that they "won't like you", or anything like that. 

Many tenants want to tell you how to run your business. You save yourself lots of trouble down the road if you establish clearly up front that you don't work for them, and - within the boundaries of the lease contract and your state laws - you're the one who makes decisions about what you'll do, not them.

This is a question on many people's minds. Those of us old enough to have lived thru a few boom and bust cycles know that things don't go up forever - there's always a correction eventually. (I had $100K in stock options that were 2 weeks from vesting when tech stocks crashed in the early 2000s...all that paper wealth vanished overnight.)

Real estate is very market specific, so it seems to me that the answer to your question depends on your market. It also depends on your comfort level. Here in DFW, we have more people moving in than we have available housing. So it seems that we should be somewhat insulated from any widespread correction. But still, if there's a panic, it's going to have some effect. 

Me personally, I'm keeping my rentals that: 1) Cash flow the best, and 2) Have significantly more upside for appreciation (gentrifying areas). I have others that don't cash-flow that well and have some equity in them. I'm starting to sell those off to make sure I have plenty of cash ready if a correction does come. I'd be really frustrated if prices dropped 15-20% and a lot of overextended investors needed to sell fast at a discount, yet I had no cash available to take advantage of it.

Kyle, I own several businesses, with a Money Mailer franchise among them. Yes, I've used Money Mailer for my own "We Buy Houses" campaign and was successful with it. 

It's blanket advertising, so not as targeted as mailing absentee owners, but it's far less expensive. You have to treat it like a real advertising campaign - you're going to run it for 6 months or so, and as people see your ad several times, and it forms an impression with them.

I bought a few houses off my campaign, but the best one was a house in a gentrifying historic district in Fort Worth where the couple who lived there wanted to get out from under the increasing property taxes and move closer to their kids. It needed lots of work, and they wanted to sell it as is, rather than fixing it up to list it. Right now, I could sell that house for a $60K profit, but I'm holding onto it as a rental because that area is only getting more valuable. I would never have reached that couple with an absentee owner mailing.

Money Mailer franchisees can sell into any area of the country, so I'd be happy to talk to you about this if you'd like to pursue it. No hard sell at all, just message me if you'd like to talk.

Some of this is market dependent. Not knowing your market, I don't know if this is a rare deal or a pretty common one. I will say that if I found that deal in my market, I'd jump all over it. Multifamily is overbid here and any kind of decent deal is hard to find. That deal here would be $165K or more, even with repairs needed.

The numbers seem to work, based on what you've said. (No info on taxes, insurance, etc....but assuming nothing odd there, the numbers seem OK.) In my mind, you'll never regret buying multifamily. The country is moving more and more toward a renter society, and multi has better cash flow over time than SFR.

If I saw that deal and didn't jump on it, it would be one of those I regret missing.

As always, this is dependent on the terms in your lease and your local laws. But that would be pretty unusual for the kinds of things you're having done.

One very important skill in this business is making sure the tenant knows that you don't work for them, and (outside of lease terms and the law) they don't get to tell you how to run your business. Some of them are like kids - they'll test the boundaries until you firmly establish them. 

You will find many agents in DFW who will list it for 1 to 1.5%. There are even some who will do flat fee listings for $300-500, some for $1000. Levels of service vary. I use a flat fee service, because I typically do my own staging, do my own photos, write my own descriptions, and do my own negotiations. I really just want an agent to put the house in MLS. But I've been doing it for years and have done dozens of transactions. When I was new, I didn't have that experience and knowledge.

Two things to note:

1) The 5.5% you're talking about is a combination of commission for buyers' agent and sellers' agent. Total commission in DFW is typically 6%, split evenly. The buyer's agents work their asses off, running buyers around to look at dozens of homes, put in offers that may or may not get accepted, and so on. I would NEVER recommend cutting buyer's agent commission.

2) When you're new, you need advice and market knowledge. I would not recommend a flat fee agent for the first few transactions. Find one that'll give you decent service for 1-1.5%. Good advice on prepping the house for market is valuable, and then the first time you have a contract dispute or have to negotiate a repair amendment, that help will be valuable. As you get more transactions under your belt, switching to a flat fee agent may make sense.

Good luck!

You're simply repeating yourself and becoming tiresome, without offering any actual evidence to support your position.

This is actually a fascinating idea. It may or may not work in real life - it seems likely to be dependent on state laws, and upon how you craft a lease.  And it would certainly be wise to have an attorney research the issues for your state.

But a parking lot owner certainly has the right to have a car towed or booted for unpaid parking fees. It happens every day. It seems very likely that a properly crafted lease, particularly if it separates parking fees as a specified part of the overall rent, would be perfectly legal. In that case, the apartment owner is, in effect, also operating a parking lot. So how about offering some actual logical argument instead of just repeating the same content-free talking point?

I think generally, if you operate your business in an ethical manner, you'll invest ethically after Harvey (and Irma if that hits).

I think the free enterprise system is the best, most ethical option worldwide among all competing systems. Each individual makes decisions as to what's in their best interest, and "decision pairs" come together to determine whether it makes sense for homeowner A to sell a house to Investor B.

I don't have the power or money to undo all the damage that has been done. No one does. At this point, we're in "making the best of a bad situation" territory. I donate pretty heavily to charity, but my business is not a charity. As I run it properly, though, I create opportunities for other people to have jobs, for joint investors to gain wealth, and so on. And if homeowner A is strapped for cash, and I buy his house with a quick close and put cash in his hand, I hope I've helped him make the best of a bad situation.

What I wont do, after a disaster or not, is be one of these damn "wholesalers" - and I know there are plenty of them on this site - who go around making big promises with no cash to back it up, then terminate a contract when they can't find a buyer. Good wholesalers are honest, understand real ARV and real renovation costs, and have the cash to add the house to their own portfolio if they can't find a buyer at the price they want. Those guys are a very valuable part of the market. But they're a distinct minority. Bad wholesalers don't have that experience or understanding, don't have any cash, and are often just raising homeowners' and newbie investors' hopes with inflated ARVs and understated reno costs. I see them every day on Facebook in my local investor groups, pitching ridiculous deals on a house they've locked up, giving the homeowner hope for 2-3 weeks, then canceling when no one bites. And to do that to a disaster victim is about as low as it gets in this industry.

1 piece units are really for new construction. You can't fit them thru a typical 24" bathroom door on a remodel.

You can still do the acrylic surround, you just use the one where the tub and surround come separately. We use the Delta 400 tub and their tub surround. It's about $500 for the combo. You can definitely get cheaper ones, but we've had durability issues with really cheap ones, and even a lot of them arriving with cracks in the surround.

I had a similar scenario recently. I purchased a 6-unit property and offered an opportunity to a friend. We were putting up a minimum of $100K cash and financing the rest using my existing financing line with a local bank. I had all the risk.

In my mind, the total deal cost $400K, so each $40K cash was worth 10%. My potential partner balked at that, feeling like the percentage should be based on total cash put into the deal. To me, that would be appropriate if he was on the loan and had personally guaranteed it as I have, but my view was basically that I was using the credit I've spent years building up in order to finance 75% of the purchase, and putting up cash for the remaining percentage.

In the end, I ended up putting in the entire $100K and own the whole thing. It did make me curious how apartment syndicates treat investors who are just passive investors contributing cash, but I haven't checked that out yet. I'm sure someone on here knows, though.