All Forum Posts by: Michael Smythe

@Ell Jay Lindsey going to guess that you are referring to Class A properties?

Prices & rates have gone up so much in the last 3-5 years, that these won't cashflow ANYWHERE!

So, you can either accept negative cashflow for 3-5 years or switch to investing in Class B & C properties.

Which loan do you think a borrower will pay first, the one on their primary or on their rental?

Obviously, most would pay on their primary and let the rental go to foreclosure if needed.

So, rentals are riskier loans for lenders!

In the world of investing, Risk and Return are linked - the higher the risk, the higher the required return.

So, there is NO WAY around paying a higher rate (assuming the same loan type) on a rental property - unless you want to commit fraud.

@Matthew Banks we agree 100% with @Nathan Gesner!

GO PAPERLESS!

Then you can work from anywhere:)

We use Dropbox as it's the most flexible, although we use Google Docs/Sheets for some collaborative projects.

Here's our folder structure:

Portfolio Name
   01) Management Info (we use the 01 so sorts to top of folder list)
   Main_W_123 (property folder. We put street name first as easier to find!)
      01) Property Info
         01) Insurance (at top as most important)
         02) Property taxes
         03) Deed & Title
04) LLC Docs (if any)
         05) Purchase-Sale Docs
      02) Utilities
      03) Maintenance
      04) Leases
         Lease Name Folder
            Application Docs
      05) Advertising
      06) Rental Licensing (required in most of metro Detroit)
      07) Inspections
      08) Appliances & Mechanicals

You can setup the PMC LLC with a bank account and run everything through that bank account.

If these are all single-member LLCs and you remain the only owner, you can just distribute funds to each property LLC annually.

You will need to have a management contract between the property LLCs and the PMC LLC.

This is not legal advice, so be sure to confirm with attorney and CPA.

@Danny M. we don't know what we don't know, so keep asking questions!

Just be prepared for some "tough love" responses to naive, simple & vague questions.

Hopefully, you appreciate these as at least someone took the time to help you with a "lesson".

Typically, when asking for owner-financing, you have to also give them something of value.

Often, it's a higher purchase price.

So, you may not be able to negotiate both, but you can always try.

@Danny M. Most teams are set up to:

1) Supply the same level of service, regardless of the agent

2) Agents cover for each other because NO ONE is available 24/7/365

"Should I seek an agent who is available early in the morning, late at night, weekends included?"

Come on man, I'm going to call you out on this UNREALISTIC expectation!

Why would you be so naive as to expect this? Do you do it at your job?

@Angie Y. this is a Class C tenant. 

How familiar are you with the pros & cons of a Class C tenant?

You didn't mention anything about the Verification of Rent for their last 2 landlords?

We require a 2-year work history, supported by YTD paystub and last year's W-2(s).

You won't get stable rent payments, unless tenant has stable income, which they won't have unless they have stable employment.

@Thang Nguyen we manage almost 700 doors in the Metro Detroit area. 

There is a BIG difference in tenant quality between the suburbs and the City of Detroit.

What are the average unit rents of this 100-unit building?

Check with your local municipality for their Boarding House requirements, as that is what you are creating.