All Forum Posts by: Mike Levene

I switched to Baselane to manage my 3 properties. I have both LTR and MTR and I list the MTR on Airbnb as well. The reason I switched is because I needed a software that had all of my necessary features (automated rent collection, bookkeeping, transaction management, lease creation and signing, tenant screening, reporting, tax prep, etc.) and would not increase in cost as I scale up.

The banking features were a great bonus because now I can manage all of my property finances from the same software I manage the property themselves. It lets me set up unlimited virtual accounts so I can separate bank accounts for each entity and also set up sub accounts for things like security deposits. Pretty neat features that I have not seen anywhere else in this space.

I use Baselane as well for my MTR and LTR units. Its great for tenant screening, but then comes with all the features others have noted like rent collection, bookkeeping, tax prep, reporting, etc.

Plus, remember what its like to be a tenant. Imagine your landlord makes you sign up for an account to do tenant screening. Then they ask you to sign up for another account to pay rent. Then they ask you to venmo a security deposit... By keeping everything in one system, it not only simplifies your business as an investor, but makes the tenant experience so much better.

I encourage you to think about something called risk adjusted returns. Right now, you can put your money in a HYSA and get ~4% interest. You can also put your money in a 10 year treasury and get ~4.5% risk free. 

You could also put your money into the S&P 500 and get ~7-8% (over the long run) but this has more risk than a treasury bill or a HYSA. 

You could also invest that money in something real estate related. This could be tax liens, or could be a traditional buy and hold property, a short term rental, a flip, etc.

These all have their own associated risk, and in general, the more risk you take on, the better return you would expect. 

I might look at a buy and hold rental that has an IRR of 14% and think that is a good deal based on the risk adjusted return whereas a flip that returns 18% might be too risky for the level of return.

Apply this concept to your approach to investing and remember that if you want something easy, it likely has a small ROI. If it has a small ROI, it better have low risk, otherwise you're better off with some of the options listed above.

Those are some good rules of thumb, but it is unlikely you will find an entire market that meets the 1% rule. That rule of thumb was popularized at a time when the macro-economics of the housing market yielded the 1% rule more often.

Even still, most markets are probably in the 0.5% to 0.8% range for rent to price ratio. However, within a market that has an average 0.7% rent to price ratio, there are likely deals below that number, and some deals above that number. For example, take Cleveland, a very popular market for long distance and cash flow investors right now

Average rent: ~$1300/mo
Median home price: ~$145k
Rent to price ratio for the market: ~89%
Median household income: ~$39k
Household income to rent ratio: 2.5x median rent

In this market, you will likely find deals that hit the 1% rule of thumb, but these likely won't hit your criteria for household income compared to rent, and also whatever your criteria is for crime rates.

At the end of the day, the 1% rule is just a rule of thumb. Some markets will be better for cash flow, and will have more deals closer to the 1% rule, and some markets will be better for appreciation and will likely be further away from the 1% rule.

TLDR: This is a tougher market for find cash flow than 5-10 years ago and home affordability is near a 40-year low. HOWEVER, cash flow still exists and it requires analyzing a lot of deals to find.

In case you missed any of the latest Baselane updates, they actually do have tenant screening built right into the tool. I've tried it out recently and it creates a very throughout report and provides a lot more data than I'm used to seeing on a tenant screening report. 

The cost is also quite competitive. Since I pass the cost on to my applicants, I'm sure I get more applications due to the lower cost barrier. Unfortunately I don't have any data on this but I bet someone out there at a larger PM company might.

Relay is a solid option for personal or general bookkeeping, but doesn't help much when it comes to rental properties. For your rentals, I'd encourage you to strive to separate your personal finances from your business (rental) finances. Not only will this help build financial accountability and make tax season much simpler, but you should treat your rentals like what they are...a business.

When it comes to Baselane vs. Stessa, Baselane seems to offer a lot more functionality without the monthly subscription. It has everything you'd expect from a modern day tool including automated rent collection and late fees, tenants screening, bookkeeping, reporting, and tax prep. On top of that, they have top tier banking features specifically for landlords. I love being able to create new virtual accounts with a single click to separate security deposits for each of my tenants. 

I've been using Baselane for about a year now and I love it!

I use it to manage 2 LTR and 1 MTR from rent collection to bookkeeping, tenant screening to tax prep. I really appreciate that they've carefully thought through the experience for both the landlord and the tenant. 

For example, as a landlord, if I collect rent right into my Baselane bank account (which is a no brainer), I don't have to pay any fees to collect rent. Similarly, as a tenant, if they pay with ACH, they don't have to pay any fees either. 

For bookkeeping, you can assign credit cards and bank accounts to automatically tag transactions. This, plus the little notification of transactions that have not been tagged yet are an absolute game changer for me staying up to date on bookkeeping and being able to confidently do it myself.

Regarding the tenant screening, its a fantastic way to manage tenants from start to end all within Baselane. This let me consolidate from 3 separate tools for managing my properties down to just one. I can now manage the process from tenant screening, lease signing, and security deposit collection all the way to lease termination and returning security deposits.

Overall, I think they're setting the new normal for what a landlord should expect from a property management tool.

Hi @Chris Rojas

I started exactly the same way (with a triplex not a duplex but not important). 

First, congratulations it sounds like your first deal is going well and is hitting your targets for cash flow, renovation timing, and hopefully budget. 

When looking to buy your second property, there are of course synergies to use the same local bank, however, there is nothing that requires you to use the same bank. You will likely find that some banks are much more favorable to lending to primary homeowners, while some may lean towards investors. 

It sounds like your current bank might be hesitant to provide a loan for the next property until you can prove that the current property provides enough income to support your overall DTI (Debt to Income Ratio). The easiest way to prove this is to have a lease in place with a tenant. You mentioned you seem to think this is a new regulation across big lenders, but aren't you working with a local bank?

Have you spoken to multiple banks and loan officers about your situation. I think it is a very broad statement to say it is riskier and harder to get approved for a triplex vs. a duplex. Ultimately, it comes down to underwriting and the ability for the property, and you, to afford to pay the monthly expense of the loan. 

If I were in your shoes (which I was recently, and will be again when I move to the next property), I would call up 10 different lenders including small banks, credit unions, etc. and tell them your situation, what you are trying to do, and how they might be able to provide a product to support you. 

Lastly, you mentioned this is a BRRRR but you plan to cash flow "like crazy" after renting it. If it truly is a BRRRR you would plan to refinance the property to pull out some capital, and then likely use that for your next deal. Totally ok if you don't plan to take any capital out as interest rates are likely higher than your original loan, and it sounds like the deal will cash flow, but just wanted to point that out so you are speaking the same language.

As the landlord, you can dictate how you collect rent. Typically this is outlined in your lease. I would strongly advise against using an app that the tenant picked, especially considering they are only willing to make partial payments.

I use a trusted property management tool to collect rent and I never allow partial payments. Either the tenant pays in full on time, or it is late and late fees apply. This also helps down the road in case you ever need to do an eviction.

Using a trusted tool to collect rent can help automate the rent collection and ease the burden on both the landlord and the tenant. From the landlord perspective, you set up the rent amount, the due date, and then the tool will send automatic reminders to the tenant ahead of each due date. If payment is late, it will automatically apply the late fee structure you have set up.

From the tenant side, they will get reminders that their rent is coming due with a link to pay rent. They can pay with debit/credit card, or link their bank account and do ACH. If the tenant has already made payments in the past, this can be as simple as just 2-3 clicks.

With a tool like this, you don't need to manually follow up with tenants, collect checks and hope they don't bounce, show up to your property to collect cash, etc. It also helps you keep a very clear trail of when rent was paid, if it was paid on time, and track the history of payments. 

Lastly these tools can integrate directly into your bookkeeping so you can automate the income portion of your bookkeeping which will help with your analytics/reporting and save you tons of time during tax season. 

Has anyone used a general contractor in the west Michigan area that is willing to give a quote for price per sq ft or a range of price per sq ft for a full gut remodel? For context, this would be for a property I already own.

I understand this may be a bit unconventional and people will likely recommend I get a proper quote and have the contractor do a full walkthrough. For a variety of reasons, including keeping this potential project "need-to-know" only right now, I want to get a ballpark estimate with full understanding that the goal posts could move in either direction as the project gets more discrete. 

Any referrals for contractors in the Grand Rapids area would be fantastic!