All Forum Posts by: Michael Smythe

@Asma Shah PM us for more info:)

@Victor Nguyen let's not assume and be clear, for most seasoned investors SFR = 1-4 family since you can get a traditional mortgage on them. FNMA, FHLMC, FHA and VA also use this definition.

MF typically means 5+ units that are only eligible for a commercial loan.

Given this, an investor typically gets a better return on 2-4 unit properties than 1-unit.

@Mike Liu there's no industry standard, which can be a challenge!

That's why we state using our data as an outline to build your own for whatever market you are interested in:)

Of course, if you ever decide to invest in Detroit...we should chat.

Politicians keep giving more "rights" to tenants, some of them deserved, but what about better rights for landlords to protect them against bad tenants?

@Bob S.

While investing via Turnkey Rentals sounds easy, you should understand that you will be paying full retail, often even more, for the properties.

Why? The Turnkey provider is looking to maximize their profits!

Also, there are numerous challenges dealing with Turnkey providers:

1) Terrible renovation work - we've taken over many properties that investor bought turnkey and they were shocked to learn the true condition of their property from our TakeOver video.
---So, get a GREAT property inspector NOT recommended by the turnkey company to avoid bias.

2) Misrepresenting Property Class - have seen many turnkey providers in Metro Detroit area sell OOS investors Class C properties as Class B.
---So, learn the neighborhoods where you plan to invest and use Google Streetview to virtually explore them.

3) Poor Tenant Screening - they typically can't sell a property until they place a tenant. So, they have a conflict of interest in waiting for the right tenant.
---So, insist on them providing the rental application and supporting docs for your review. This means YOU need to learn how to evaluate a rental application!

4) Poor Property Management - Where do you think a turnkey provider will put their best staff, on selling properties and making $5k+/transaction or on property management and making $80/month transactions?
---So, ask about their standard operating procedures and make sure your management contract has an easy termination clause.

What are your options if you experience one of the above? Everyone thinks they can sue to solve the problem.

Do you realize how much it will cost to hire an OOS attorney to sue the turnkey company?

Unfortunately, the majority of investors that experience terrible service from turnkey companies, figure out that it's not worth spending tens of thousands of dollars suing their turnkey provider and just move on - which allows the turnkey provider to not change their ways and stay in business:(

You should also check out this BP thread about the topic:

https://www.biggerpockets.com/forums/88/topics/976647-turnkey-company-suggestion?highlight_post=5648876&page=1#p5648876

@Ally Alvarez how much stress are you comfortable with?

Why so much debt?

How much disposable income do you have right now?

How are you looking at a rental, part of a larger plan or just as a way to address your debt?

@Art Maydan cancelling is not as easy as you think, which others have mentioned.

Being forewarned, you may want to do your own radon test. Or better yet, have a licensed contractor do one.

That way, you will have proof if the tenant tries to play games with their results. 

You should also look into your options if a tenant claims radon issue.

@Timothy Nako how much do you understand HOW & WHERE your property is being marketed?

The best ad doesn't matter if not enough consumers see it!

You should know the following:

What websites your property is being advertised on

How it looks on each website (some make alterations)

How many views your property is getting on these sites (Zillow makes this easy, others share no data)

How many showings you've had scheduled and how many completed (there's always some cancellations)

Feedback from showings

Your PMC or agent should be giving you updated CMAs every 30 days to see if the market is dropping and your price is in synch.

@Jared Billman hire an attorney to handle this notice.

It's bound to get ugly and you'll need someone with much more experience than you!

Side note: you should have been raising his rent bi-annually at least, as your costs have increased! 

@Asma Shah please don't tell us you dropped a few thousand on a S8 guru program!

Section 8 is a tool for landlords, NOT a cure-all.

Yes, a landlord can sometimes get higher rent via S8 than they can from cash paying tenant, but only in Class C- and D areas. Then, a landlord's challenge is getting a S8 tenant to live in a lower Class area. 

Waive app fee and Security Deposits and you're sure to get a tenant, just don't freak out when they trash your property.

Another S8 challenge for landlords is fewer & fewer voucher holders have 100% of their rent paid by S8. A decent portion of S8 tenants don't pay their portion of rent or utilities - sticking it to their landlord.

Forget about using the threat of having their voucher taken away, as that doesn't really happen any more:(

We manage almost 700 doors in Metro Detroit with almost 100 S8 tenants. So, we're very familiar with the S8 program and tenants, and how to properly screen them to avoid the worst ones.

PM us if you have additional questions:)