All Forum Posts by: Michael Ehmann

Hi recent posters (@James Davidson @Christi Leonard @Kerry Noble Jr @Genene G. @Mendel Robbins): Mohamed's post has the link to our meetup group (Atlanta REI Meetup). We meet at 7pm the last Wednesday of each month @ The Ivy in Buckhead. Here is is again: https://www.facebook.com/groups/270978073318709/

Please note that occasionally the date will get moved around (+/- 1 week) depending on holidays or if The Ivy has a conflict. So make sure you join the Facebook group for updates, or check back here each month to confirm date. 

While condos have their downsides, one of the nice things IMO is that you can budget a little less for CAPEX (assuming your HOA covers pretty much everything outside of your interior walls).

If you're interested in deploying the cash tied up, have you thought about a HELOC vs. selling?

I feel like a big factor is what the future would look like if your tenant moves out. Is $2300 a pretty fair market value? If it's undervalued then you could raise it to increase cash flow or keep it a little lower to let supply/demand work its magic and keep your expected vacancy lower. But if $2300 if maybe on the higher end, I'd be more likely to sell. 

And at the end of the day, it all comes down to what your tenant is willing to pay for it. If she comes in guns blazing at $375-400K, then I say take the money and run. 

Seconding @Matthew Devine's comment. Matt Wood is business partners with Mike O'Conner, and Matt lives in the Decatur area. Matt represented us as our agent on our 2 recent acquisitions and is very knowledgeable of the Atlanta area.  

@Ryan E.: no idea who that is

Thanks, all for the input. Really appreciate getting some perspectives on both sides. 

For the cynics: I do agree (partially). This is an investment property first and foremost, not a charity. That being said, the tenants are already in place, so our thought is to at least try and keep them in there since the information we have so far suggests they are decent, stable tenants who are interested in staying long term. 

We aren't going to be paying to enroll them in finance classes or let them get away with stuff we wouldn't expect of any other tenant. We aren't looking to create a ton more work for ourselves, just wondering if there are some low effort things we can do to make them more financially stable (which reduces our risk as landlords). 

To be honest, we would be 100% stoked if they became financially stable to the point of owning homes themselves. Our property is in a good part of town near a university, so we will have no shortage of tenants. 

Tl/dr: we are looking for advice/resources to help "train" our newly inherited tenants to be more financially literate/stable (more context below). 

Here is what we're looking for:

• Any programs/courses (either in Georgia or nationally) that help people become more financially literate.
• Recommendations for banks or other companies with low fees that might be beneficial.
• Any general advice/ideas on how to help/encourage our tenants to be more financially literate.

Some more context about the situation:

• My partners and I just acquired a rental property with tenants already in place. The tenants have been there for several years and want to continue to stay. As far as we know, there has not been an issue with collecting rent. 
• Our tenants are all minorities somewhere between ages 30 - 50. To every extend possible (without putting ourselves at risk), we would like to try and keep the tenants in place as part of the community. Many parts of Atlanta are experiencing gentrification and displacement of lower income individuals in the city. If possible, we do not want to exacerbate this (of course if issues arise, we aren't afraid to evict/do cash for keys, but we want to at least try to make it work first). 
• We do have some concerns about the financial literacy and stability of the tenants though. 
  • The previous owner collected rent each week, not monthly. 
  • We think the tenants have close to minimum wage jobs (or at least likely below median income). 
  • We are also unsure whether the tenants have bank accounts. Rents have previously been done via money order. 
• We aren't planning on changing too much on Day 1. However, we would like to move from collecting rent biweekly instead of weekly ASAP. And then long-term collecting monthly like normal. Even if it takes time to get to monthly rent payments, we also at least want to have a contract so that they're on a longer term lease (i.e. 6 months or 1 year), even if we still have to collect weekly for a little while.

Any thoughts are appreciated. Thanks!

As with any real estate transaction, it all depends on your situation. They can be advantageous because of lower down payment requirements. There are also some first time home buyer programs. Do some Googling and see what Illinois can offer. 

If you're in a lower income situation right now, I'd advise you really think about whether purchasing a home makes sense right now. You not only have to afford the down payment (along with other closing costs typically), but you also should have some reserves to cover several months of mortgage + potential expenses (like the dishwasher breaking) in case you lose your job. 

If you can house hack and buy a duplex/triplex or buy something with multiple rooms so that you have roommates, it could make sense financially if it can reduce your living expenses compared to your current rent rates. But again it all depends. 

Even if you determine that it does not make financial sense right now (or if it's going to take 6-12 months to save to the point where it makes sense financially), you can still learn about real estate and start getting involved. Maybe there's another investor you could help in Chicago? 

Lastly, if you haven't already, check out the BiggerPockets Money podcast and other resources in the Financial Independence community. You may be able to find some ways to cut your current monthly expenses and increase your savings rate (so you'll save for a down payment faster and reduce your financial risk if your expenses are lower). 

Discipline > motivation. Always. Motivation is a great tool and should be leveraged when you have it. Some days you'll be motivated. Others you won't. That's where discipline comes into play: discipline is moving forward and making progress, even when you don't always feel like it.

I'd focus on continuing to save now and trying to find a more stable, higher-earning source of income

"Vacuum the truck" - from one of the BP Podcast episodes a few months ago. Basically, you don't have to know how to do everything. All you need to do is figure out the next step to get you closer to your goal. It's all about taking action.