All Forum Posts by: Michael Ealy

No offense, but it's a waste of time to comment on each item. This woman is clearly not a good tenant. You should give her a written notice that gives her two options: accept it or move out.

I include a clause in my lease that essentially says, "You were given the opportunity to inspect the property and agree to rent it in its current condition. Landlord makes no promises for additional cleaning, repair, or improvements unless agreed to in writing prior to occupancy."

The home clearly is not suited for her champagne tastes and she clearly doesn't respect your lease agreement. Tell her she can suck it up and accept it or move out.

And I agree with @Natalie Kolodij that you need to get rid of this PM. They should have handled this for you and they should be handling it right now with very little - if any - involvement from you.

Hi All BP fam,

I’m wondering if anyone out there has experience with renting out hotel rooms as long term rentals I.e rents over a month. I understand you cannot have leases with tenants but would it be treated just as a long term hotel stay? What would pros or cons be to doing it this way? The reason I ask is I am under contract on a hotel property in NJ and we were going to turn into long term rentals but there are a lot of costs involved with switching it over vs we operate as a extended stay hotel unfurnished/furnished where we would essentially just be long term rentals. Thanks in advance 

@Lukas Zupan I was living in Los Angeles working as a commercial real estate broker. It was a real gut punch seeing all my deals cratering. I had a 60,000 SF office building in escrow, non contingent, and I was representing both sides in the deal. On Friday we had 17MM in financing. On Monday it dropped to 15MM. No yield meant no deal. I went from making a really good living to a low 5 figure income overnight. I ended up losing my condo, my marriage, and my career. It was a humbling experience. Not something I wish ever to repeat.

I was newly wed and 7 months pregnant living in Santa Barbara, CA. We cashed out a chunk of my 401k at the high and borrowed from my future inheritance to get a down payment to purchase our first foreclosure house for $530k. It was in rough shape but had previously sold for over $800k so we assumed it was a good investment. We made quite a few improvements and sold it for $749k in 2016. Looking back it was the perfect scenario. I borrowed 401k money at a high and paid it back at a low. My 401k had crashed in half so I didn’t feel bad about taking half of it out prior to the crash. It goes against everything Susie Orman and Dave Ramsey will tell you about borrowing against your retirement but in those crazy housing markets sometimes it’s the only way to get your foot in the door.

My story may be a unique one...  In '06 I left my nice cozy job as a business banker in MS to take an executive position with a regional home builder and investment company.  I was 29 years old, cocky and thought I was untouchable.  As a banker, I had seen first hand the profits RE investors were making.  As an executive with a homebuilder I learned how to operate a profitable RE company.  I slowly started flipping houses that year using the resources I had at the time.  As the national real estate scene began to slow in '07 and collapse in the next couple of years I arrogantly thought 'real estate is local economy' and 'those national things won't touch us'.  Until one day, as I tell people now, it was like someone turned the water faucet off...no phone calls to the office, no interest, cancelled contracts, etc.  Then the layoffs began.  I was the last employee for the company.  Obviously, I saw the writing on the wall and decided to get out while I could.  I took a job with a 70 mile one way commute.  The RE project I held at the time wasn't able to be sold.  So, I rented it out to pay the mortgage.  That was fine as long as the tenant paid on time.  Over the next year my marriage fell apart and actually moved into the rental I couldn't sell.  That house became my personal residence for four years.  When I refinanced that property I had lost 25% of the value due to the downturn.  I didn't stop investing in RE.  I bought two duplexes during my single days.  That taught me lots of lessons in managing property.  It took me about 10 years to financially recover from my divorce and the recession.  But, I'm stronger because of it.  The biggest things I've learned during that time: 1.) everything is temporary, whether good or bad.  You should enjoy the good and do what you can to prevent the bad.  2.) Be prepared for the next opportunity.  Because of my marital situation I was not prepared to take advantage of the bounce in real estate.  Although at the time, I was doing everything I could to keep my head above water being a single parent I could not afford, nor was I willing, to buy when the market hit bottom.  3.) Slow and steady growth.  There is plenty of opportunity for everyone.  Due your due diligence.  

I still own the house and two duplexes I purchased in the last decade.  The values have come back and rents have increased to marginal profits which I'm reinvesting.  I've purchased one more SF home this year and have another under contract to close in early January.  I'm in this for the long haul.  Although I'm a long way from it, my goal is to own 20 units that cash flow in under 60 months.  I'm doing this all as a part time investor with a W2 job which allows me to meet the needs and some wants of my family while maintaining health insurance.

Guy

@Jason Turgeon, you ask about basic strategies -- I have one. With 22 units, it's a manageable enough number that you could ask people what matters to them! Of course, you're not going to put in any amenity that doesn't fit with your business plan or the property, but you'll be able to gauge what add-ons will garner the most appreciation. For instance, when I recently closed on a small building here in Massachusetts, I took the first few weeks to spend some time there -- popping in on weekends, maybe a few times in the evenings during the week. Even though I have management in place, I wanted to see who was living here and I wanted them to know they mattered to me. What I found out was one tenant really liked lilies. So this spring we're plant a ton of them. An elderly tenant had trouble coming down 2 flights of stairs to let in her visiting nurse -- an electronic keypad entry lock fixed that. Another guy had been asking the previous landlord for a screen door for his back entry for the 17 years he lived there! These are simple fixes that work for smaller buildings, and they show people you appreciate them, and are listening. Lastly, I sent each tenant a small gift card to the local supermarket right before Thanksgiving. So if you're going to start increasing rents, give people reasons to stay (like respect, appreciation, dignity). 

Let me know how the building turns out once you close on it! And best of luck!

@PJ Kolnik

Man that sucks, I'm sorry to hear that. Murphy's Law at it's finest! Just my observation, but your cash flow is not $350/mo. I know hindsight is 20/20 but you really should have accounted for a certain amount of $ each mo. to go towards repairs, capex, vacancies, etc. BEFORE figuring your cashflow. Only calculating it as Rent - PITI could get you in trouble long-term if you're not careful.

Anyway, just something to think about on your next deal. Hopefully you are atleast getting some great appreciation. Best of luck!

I'm in Cincy and investing in the market. Happy to connect. 

Also, @Michael Ealy, 

For those of you who don't want to know about me and instead want to get to the point of this post move on to "2". 

1.)

My name is Lukas Zupan - I'm a real estate investor in OKC, and I also own a RE photography business that specializes in 3D Tours. I have been in this game for 3 years now and I love studying real estate and learning, and since I started, I've overcome false beliefs and acquired new mindsets. (including realizing I should have and more importantly *could* have bought most if not all the houses I wholesaled while I learned) Still, I regret none of it and I carry on learning!
I was 8 years old when my family moved from Vegas to Oklahoma City when our land-lord collected rent for a few months on our apartment complex at the time (2008) and skipped to Brazil. Or that apparently was the story, and I have since realized that also happened to many people. Much of my memory of that time makes more sense now, however...I was certainly not an 8-year-old real estate investor just chomping at the bit to get houses for pennies again. Now, over 10 years later I realize that all the markers are in place to betray another correction is imminent, and..."overdue". 

2.)

Boom. Personal blurb complete. The reason I am deeply interested in your personal story surrounding the market crash/correction of 2008 is that my perspective of market cycles is largely from second-hand experience. While I'm interested in your experience of market cyles in general, (you Veterans out there!) and I don't mind mentions of historic trends and crashes prior to '08, I would like to keep the specifics more related to our most recent cycle.

There is no right or wrong answer, just feel free to share whatever comes to mind about your story around that time. I look forward to chatting!

-Lukas Zupan