All Forum Posts by: Michael Hastings

Hi @Andrew Michaud,

Congrats on your first property, at first read, the numbers you threw out seem sound and you should do well in the long term.  Your goals to focus on buy and hold properties seems sound, and getting started at a young age will allow time to be on your side, to take advantage of some gains due to inflation, changing market conditions, historical trends and your experience in the RE market.  Wanting to own 100+ units is a lofty goal, and could be a management nightmare if you are not well equipped for it.  Taking time to season your experience is the best advise I can offer here, and I say just take one investment at a time, gain success, revise your strategy and continue to build your team (realtor, lender, contractor, appraiser, etc.) to support your long term investing goals.

One of the things I have learned here on BP, is that many investors (including myself) think in terms of goals as a financial windfall, versus a count as to how many pieces of RE they own.  For example, one of my new mentors here had a goal of a specific dollar amount to achieve monthly, to create their financial independence.  So, if you think that you can achieve financial independence on $5000 dollars per month per se, then that should be your goal.  Then work backwards to find smart investments to get you to that goal.  You may not need 100 units to do that, perhaps 50 or 25 or even 10, depending upon the cash flow.  This assertion is spoken on in many books and blogs of gurus who help people achieve financial independence and early retirement. 

I say, start somewhere, be smart, squeeze those numbers through thoughtful analysis of all deals and be patient.

Be sure to take a look at the book "Set for life" by @Scott Trench, and one of my favorites, "The Millionaire Next Door".

Good luck, I hope this was helpful.

Hi @Holly Wooten,

I have read this over, and have some prior experience with these types of issues in a prior career as a paralegal, so I will give this a stab.  I will tell you before anyone can give you an answer that is not based on conjecture or speculation, there are some facts that need to be added to the scenario, as these situations can all be different.  Also, you need more clarity in your points.  Here they are as you stated them:

1.  "My son and his cousin have had a lease for a year" <-- What was the actual lease term in dates? (like may2016-april2017 as an example)

2.  "They have been good tenants and paid on time or early the whole time." <-- fact supported by payment schedule, and receipts, I assume.

3.  "The cousin has decided that he does not want to renew the lease but my son does want to" <-- I know of no legal obligation for a landlord to renew a lease, if he/she feels that they want to not renew the lease of an existing tenant.  Laws may vary from state to state, my experience was in California.

4.  "The landlord wont let him because he said he just passed the financial limit that he requires and doesn't want him to not have money for unexpected things that arise."  <-- this is the landlord's rationale for not renewing the lease, it seems sound, if he is saying he has an expectation as to how much money a tenant should earn to make him a good candidate to rent his apartment.  This action would be appropriate if the tenant was applying to renew the lease and the landlord was conducting due diligence to ensure the tenant will financially qualify.

5.  "Therefore he has to move out at the end of the month." <-- is the end of the month the end of the lease period?  This is not clear.  Why would the landlord ask your sone to move out early, before the lease has expired?

6.  "He is also telling him that he has to pay $2000 for breaking the contract for not giving 2 month notice of not renewing lease" <-- your narrative switches from the lease not being renewed by the landlord, to one that suggest the landlord is forcing your son to break his lease early, and then wants to charge him to do so?   This is not clear.

I am not an attorney, so I cannot give legal advise, but this seems like the scenario should have some additional clarity before any actions that your son can take would be suggested.  If nothing else, you can seek a local attorney in your area to answer these questions via a free consultation.  You need to seek the advise of a landlord/tenant/eviction specialist.

Hope this helps.

Hi @Greg Davis,

I think you have laid out your initial RE investing business plan!  I can tell you that the resources here are tremendous on BP, you will find a lot of information to go along with your goals.  No matter what, definitely do not let the naysayers sway you from your goal of financial independence in 10 years via RE investing.  I can tell you that I have met several people through BP in just a matter of a few weeks who have done just that, and many of them achieved that sooner than 10 years!

Let the numbers be your guide, that is what I have learned, and do not be afraid to walk away from a deal, if it does not meet your financial and personal management criteria.  Unlike Denver, where I live, in KC there are still a lot of on-market deals.  Certainly more than enough for you as a newbie to analyze the numbers and make a choice as to if the investment fits your long term growth strategy.

If you are serious, I would suggest becoming a pro member of BP and taking in as much training as possible before buying anything that will be non-owner occupied.  The podcast are also full of information and very inspirational.

Good luck!

Hi @Account Closed,

I will PM you after the inspection with the details.

Hi @Heidi Hughes,

You have heard the adage "hindsight is 20/20"?  If I was in your position where I was out from under a car loan and received a lump sum of cash, I would buy a moderately priced automobile and pour the rest of the cash into investing, building my financial future.  Many of the "retire early" gurus swear off Car Loan payments, and I have to tell you, I think they are right (no, I know they are right).  The car is a depreciating asset, and no matter how low the interest is on the loan you use to by the car, the asset will never increase in value.

Take advantage of the cash windfall, get a car that is moderately priced to get you around (6K to 8K) and take the remaining money to continue building your real estate empire.

Like Dave Ramsey says, no one cares what car you drive, except you!

Good luck, I hope my words are helpful.

Hi @Justin Holland,

Is it too late to require that the current owner deliver the residence vacant?  I don't have a lot of experience with this, however, I owned a duplex previously, and it was delivered to me with tenants, and for one of the sides, the tenant stopped paying rent a month after I owned it.  This was in California, which is very friendly to renters, and it took me months to get them evicted (lots of lost revenue and burned some of my reserve).  For the next deal (a 2/1 condo), I made sure that the current owner ensured me that the unit was vacant when delivered, so that I could select the tenant after minor fix up.

I think you can find the answer to this in the BP forms (by searching) and hear from some seasoned investors, as to how they would/have handle(d) this.  I would also suggest speaking to your realtor about this as well, if you have not done so already.

Hi @Account Closed,

This is a good question - Most of the properties that I have analyzed thus far I have relied on the rehab quotes from the BP member (as I have been getting deals to analyze from the BP marketplace), who usually provides that estimate in the advertisement (some of them have been detailed w/pics and ARV comps, others not so much). Since this analysis is just to learn how to work the numbers, I do not necessarily worry about the estimates being exact, the drill is to just start analyzing and asking questions.

However, I finally found a potential SFH BRRRR property available in a market about a two hour drive south of me, I am going there this weekend and will try my hand at estimating rehab cost on a live house. I went to my local library and there were a lot of books on how to estimate construction cost (the librarian helped me find a few that were good for beginners), I will use those for the analysis.

I assume my estimate can't be perfect, and if I was to make an offer on such a property, I would locate a contractor local to that market to help me with real rehab cost.  I think the BP bookstore has some books on estimating rehab cost as well.  Thanks for asking!

Thanks @Trey R.

I would compute the number more to your benefit, by offering a much lower amount, if you think the area will support your goals.  Like you say, the worst they can say is no.  Most likely, there would be a counter, especially if it has been on the market that long.

Boy, I wish I was in your area.  $50K is barely a decent down payment in my neck of the woods!

Hi @Halin Arilus,

If you were speculating with rentals and had a lot of them coming available in a short period of time, then your plan of getting a list of potential renters before you have your property available may work.  Additionally, I think this may work in areas where there are very few rentals that come onto the market, and advertising a potential opening ahead of time would then be very desirable as you would have people waiting for the opportunity (I think this would fit in high population density areas).

However, it was my experience as a landlord and a small investor that the property that I wanted to rent needed to be available when offering it for rent, so people could see it right away and make comparisons to other properties also available in my market.

I used craigslist, advertising at the property and flyers to neighbors to draw potential tenants in and never had a problem with potentials.  Screening them correctly was always my issue, as the wrong tenant can derail your profits.

Good luck!

Hi @Bryant Amundson,

Thanks for the post!  I think to answer this question, there is additional information needed from you before anyone can assess if this is a good deal or not.

For example, whether you are planning on "house hacking" this deal versus buying to try and correct any deferred maintenance and flip it to another investor is a totally different analysis as to if this is a good deal or not.

I would ask you to fill in the "Rental Property Calculator", found under "TOOLS" above on the navigation bar, IF you are thinking of this as a buy-and-hold rental property.

Once you enter all the specifics and estimate the expenses, only then can you answer if this is a good deal.  Once you do this, any red flags will jump off the page.

You can come back here (forums) and ask for some additional help once you have more info. on the deal, there are a lot of people who can help.