All Forum Posts by: Natalie Schanne

@Bog Morgan - It’s a lot of work to try to filter properties for clients. Remember your agent is part salesperson, part firefighter. Your agent will attend to the customers who are calling or texting them a lot. So, if you start texting or emailing every Thursday and ask Hey what fixer uppers or dated properties with high DOM should we go see this weekend? I like 123 Main St and 567 South St. Then your agent will probably be responsive and set up some showings for vacant or motivated seller homes.

Remember in Denver that appreciation can really drive your returns. Your ARV might appreciate 10% while you're in the process of flipping it. (It also might not).

Lastly, get on the list of every wholesaler (call the bandit signs or fill out on those we buy houses websites) and join your local reia and real estate meetups and Facebook groups to find tired landlords, people with tenants they just evicted and trashed the house, etc. These are all good ways to find Offmarket properties.

@Anjali L. - (Everyone else has addressed the risks of renting to someone who has nothing to lose by screwing you.) everyone needs a home.

It’s possible you’re not marketing your property well enough or it’s not in a good condition or location to attract B and A class tenants who would have provable good income and credit.

If you think it may be your marketing, consider hiring a real estate agent to take pro photos, suggest any repairs to spruce it up for cheap, and list it on mls. Make sure they ultimately use YOUR lease and provide you with the full tenant background and credit check info. You can also do this yourself, however I find a lot of property owners under marketing their properties (bad photos, in bad order, not posting in the right places, not using the right keywords, and not answering messages/calls.

Some places I post are Zillow ($10/week), zumper (free), Facebook marketplace, Airbnb (minimum stay 30 days, 50%+ more expensive, agree to furnish it with basics), and using turbotenant. We have been offered insurance contracts to rent the property because it was listed on mls. We have been offered $100+/day for a basic 2 bedroom apartment from a non profit group on Airbnb housing refugees. (They stayed 3 months at $3000/mo including utilities for our $1400+utilities apartment). This non profit was out of Jersey city so you’re not too far.

Good luck and let us know how it goes.

@Adam Widder - you can decrease your reserves when you have more assets because the likelihood of all of your assets failing to perform AND you not generating excess cash flow from your w2 job / other income is very low.

Evaluate your worst case scenario and your backup plans to determine the amount of low return cash reserves that are appropriate for you.

I have determined that 0% interest reserves in savings account beyond about $5000 are unnecessary for me, regardless of how many properties I have. You may decide this amount should be 2 months of PITI per property plus the cost of one roof or one Hvac system (depending on your financing options).

Like Allen said, I can borrow cash money from my stock account (td Ameritrade) without selling. The margin loan is at like 8-10% APY depending on the amount borrowed and I can borrow at least 50%. My VOO (s&p500 index) is up 25% year to date. I look like a genius for maxing my cash out refinances at 3.5% for 30yr fixed. Why wouldn’t I want every spare penny in something that will grow as inflation grows?

I also have 0% credit cards with large available balances or can easily get some with 12-18 month 0% runways if I anticipate a large purchase such as a HVAC system or property turnover-rehab (paint, flooring, etc.)

Over time, my money will grow a lot more than if I’m holding $30-50k in cash at 0% (which with today’s 6-7% annual inflation is actually losing a lot of purchasing power).

If you have other income such as a w2, this also serves as a buffer where you could tighten your discretionary expenses in a worst case scenario to continue to keep current on all your bills, thereby needing less in cash reserves to maintain your portfolio.

I’ll admit I’ve never experienced owning properties and having them vacant (or non paying) for more than two months. So I can’t relate to people losing 10+ houses in the Great Recession. I am super aggressive about putting someone in there. In New Jersey, if you make any kind of payment they will usually defer foreclosure for a long time (24+ months). Ultimately for owners, Vacancy is a killer. Rents are unlikely to fall especially now that inflation is ticking up.

@Bryce Renicker - A couple thoughts -

1. House hacking the right property was a tremendous net worth creator for me. The first one I picked was a single family split level with a common level kitchen and a 3/2 upstairs and a 2/1 downstairs. Sharing a kitchen is not the end of the world.

2. In my area rents went up about 20% year over year 2020-2021. Make sure your rental assumptions are up to date. I picked up a duplex that had been renting for 1800 and the landlord was paying water, sewer and heat. Now I’m renting it for 4200/mo and I pay no utilities.

3. If you buy in a solid B or better area, the property should be able to manage itself because your tenants can handle letting in the plumber or whatever and calling you for your credit card.

4. Why do you think you have to pay so much for water and common electric? I would plan to delegate all those expenses to the tenants. If it’s on one meter, split the cost by bedrooms or occupants. Like 40% / 60% or whatever.

Good luck and get started. Remember the list price is flexible especially after 21+ days on market. Just got a duplex under contract at 50k below list.

@Tony Angelo - Connect with SJREIA to meet some flippers, get some mentors, and some rehab connections! They have a website, in person meetings and Facebook group SJREIA group.

@Anne Williams - I have a PSEG worry free plan in the Princeton New Jersey area and they are excellent for HVAC, with asap service for “no heat” calls. So I would assume they are also excellent with boilers. I have their worry free plans for a variety of appliances but almost everything except the furnace or ac has had an immediate call out and then a wait for parts (Ie they couldn’t fix a wall oven or dishwasher at all).

Since they make the most money from you making sure your furnace and boiler are working, I would just buy the worry free plan and call if and when you have a problem.

One good idea is to buy the $10 leak alert detectors that will scream like a fire alarm when they are in contact with water. I have them under my sinks and by my hot water heater, washing machine, and ac condensate pump (that pump alone has led to 3 floods in my basement from it getting clogged or the pump tripped off so the air conditioning condensate floods my basement instead of being pumped outside).

@Payson Scott - if you’re one semester into college classes and you’re already dreaming of dropping out, I have a few questions for you.

1. How many of your CURRENT classes have anything to do with your major?

2. Would you also consider doing straight up computer science / programming? (There are always people hiring people with computer science programming on their resume).

3. Do you like or dislike your on-major classes? I got a degree in engineering and I use less than 10% of the in major classes and 25% of my off major classes in project management work. Most important was learning how to learn anything, and communication skills. I will say that almost all of my job opportunities have been BECAUSE I have my engineering degree. I wouldn’t have even had a shot at interviewing without it, even though I don’t need multivariable calculus and hydrostatics knowledge to do my job.

4. Have you considered taking extra classes and graduating early instead of working more? I graduated in 3 years and it would have been 2 if I hadn’t transferred schools (from Virginia Tech to Univ of Penn). 6-7 classes a semester is not that hard. For most jobs a degree and a 3.0+ GPA is sufficient to get the job interview.

— Lastly I completely agree with the house hacking idea. Maybe now that’s renting a large house and subletting to your roommates so you live for free, and when you can get a loan, buying one and having roommates too.

@Joe Young - you say WE but say you only get $250k capital gains tax free. If you’re married, you would get $500k capital gains tax free.

If I were you, I would cash out refinance my dream home and I would buy some investment properties or stocks or both, and also list my home on Airbnb/VRBO at an insane nightly rent like $1000-1500/night and go find somewhere fun to travel to, every time I get booked. Also remember that we are at a unique time. Limited supply and low interest rates are driving home prices up. My friend bought a foreclosed ocean front property for cash a couple years ago. She paid $400k and it's worth now $700-800k which was what the foreclosed loan was for, and she gets $350-700/night on Airbnb. All of my properties have never been worth more. And I'm going to use those high comps to get a huge cash out refi at 3.25-3.5% 75% LTV fixed 30 year loans as much as possible.

@Katie Willcox - agree with everyone else. Send them a pre screening Google form type questionnaire with 5-7 questions. At the top of the form, I’d write my basic criteria like income needs to be 3x rent, responsible financial history, no evictions, (no smoking indoors, no pets). Then it would go into like What is your name? What is your cell? What’s your email? When would you like to move in if you like this apartment? When are you available to tour? How much do you make monthly before taxes? What are the names,breed,ages of your pets? (Or N/A). How often do you smoke? (Or n/a). Is there anything on your credit or background check you would like to explain?

@Matt Ruttenberg - there are two common methods to furnishing STRs. The expensive but highly repeatable method is to get a 0% APR credit card for 12-18 months and buy relatively consistent furniture that's trendy-classic, affordable and hotel-like. People will give you high marks for stylish and you will likely get top dollar rental rates for minimal effort but medium-high money. Think IKEA, Wayfair, Amazon (Zinus mattresses), Home Goods decor.

The other method is to actively shop moving sales, especially targeting the most expensive neighborhoods in your area. I like Facebook marketplace and local FB yardsale groups. Your goal is to buy matching high quality bedroom and living room sets from wealthy people at 70-90% off what they paid, usually only 1-3 years ago. You have to skip the sellers who aren’t desperate yet (thinking they can get $1500 for their $3000 sofa) and focus on the ones who just want it gone and the ones who are moving very shortly and are desperate for it to be moved out so they don’t have to pay someone $100/hour to move it. This takes the maximum amount of time but for example I can furnish a bedroom for $200-300 with a full/queen mattress, and foundation/boxspring, attractive wooden or metal bed frame, tall dresser, long dresser with mirror, nightstand. Versus paying $300 just for a new mattress. I might spend $100-300 on a sofa and $50-200 on a dining room table with 4-6 chairs. Like I said, this method takes a lot of time and you can never duplicate it with low effort, which is why most people decide to go with the first method to furnish their Airbnb or VRBO with specific skus and new furniture.