All Forum Posts by: Nuhan Demirkan

Hello Shawn,
I am assuming you are looking to wholesale this to a cash buyer. Have you done the pricing analysis to see if there is money to be made to a cash buyer or did you check the rental rates to see if it will cash flow to a landlord and at what rate? That would be the first item. Second, is the web site your only means of marketing? Are you reaching out to potential investors thru direct mail, phone calls, going to REIA meetings to market the house?
Third, are you positioning this opportunity correctly? How are you pitching the deal?
An investor can look thru the clutter and the mess if there is real money to be made. I suspect if you're not getting responses it is in one or all of the above three items. Re-examine the deal, the marketing and the pitch, you'll find the reason.

Hello Anthony,
I have been renting to college students for about 8 years now. Here are some of my thoughts. First check with the city/town to see if there are ordinances that might prevent you from renting to unrelated people. Some cities put a limit on how many unrelated tenants you can have. Second figure out how you are going to handle the utilities. College kids rent for short period of time, sometimes per semester and there is high turn over but limitless number of potential renters. If you include the utilities in their rent be careful so they don't run up electric, heat, A/C for excessive amounts. You may want to hire a cleaning service for the common areas and charge it back to the tenants in their rents. Their parents will like the idea. Also you may want to hire a lawn service/maintenance person to keep the outside neat and clean. That keeps the neighbors happy. Safety is very important. They tend to pull out the batteries from smoke detectors for their personal devices. Make sure you have fire extinguishers on each floor. Post emergency phone numbers ie: police, hospital, etc thru out the house. You may want to number the rooms just like a hotel so you can identify who has which room at what rate. It also comes in handy if you have to evict a tenant. Good luck, let me know if you have specific questions

Thank you Emily. Actually this is a family partnership. My three sons, my wife and I owned these properties personally. Each of my son manages a property and I manage the rest. I looked into Quickbooks or Quicken. But recently have been considering an online application so my sons, who live a few hours away, can also access the info and input. The reason I have multiple accounts is I give my tenants my account number and they deposit the money based on their rent schedule (some are on bi-weekly). What do you think about Buildium? Have you had any experience with it?

Hello,
I have 10 single family homes as rentals. I opened a checking account for each property to manage its rent collection and to pay its expenses, ie: mortgage, maintenance, etc. Each month I scrape these accounts and transfer the cash flow to a savings account for future investments. My question is with general expenses that I have that is not attached to a particular property ie: my R/E license fees, equipment maintenance, accounting, etc. Should I open a general checking account for these types of transactions and distribute the cost evenly across the properties for P&L purposes? That would make one more checking account to keep track of. Any suggestions?
Thanks,

Nuhan

In landlording business one thing you have to get right is tenant screening. You can buy the best house in the best location, do a beautiful job rehabbing but if you put the wrong people in it, it will be a big problem. Be very selective. Couple of items to look at also. Know the eviction process and duration in the county you are buying. In my county I can evict a person in 45 days max. If they are 15 days late I file the papers. Next county over you can't evict a person in 9 months. If the tenant is on the cusp increase the security deposit and be direct with them about your intentions on receiving the rent on time. Landlording is a business and you need to run it as one.

Bill is correct. Private loans are rarely reported to credit agencies. I have several mortgages and they haven't lowered my credit rating. They will affect your debt to income (DTI) ratio and that may make it difficult to obtain a loan. If you acquire properties under an LLC make sure to keep up your paperwork with the government. And it does create more paperwork during tax time.

Richard, I just got my first sub2 deal. Came in off a cash offer direct mail. I am thinking about changing my wording in my direct mail, taking out the cash part that way I can do more sub2 deals. I am a landlord and I am running into maximum number of mortgages.

Absolutely, the interest and the insurance you pay is a direct business expense.
If you analyze paying the full amount in cash or leveraging the purchase look at the following example. If you buy out your sibs in cash you would pay them $34K together ($50K value). The rent is $750/mo, let's say taxes and insurance are $150/mo, net cash flow is $600/mo or $7200/year. $34,000/7200 = 4.7 years before you recover your cash; cash on cash return of 21%. If you give them $5K each down payment and mortgage $24K at 5% for 10 years your payments will be $255/mo. Add the $150 for taxes and insurance $405/mo or $4860/year. Gross rent is $9000 ($750x12) minus $4860 PITI = $4140 annual cash flow. $10,000 down payment/$4,140 = 2.4 years to recover your cash back. Cash on cash return is 42%. And you still have $24K in your pocket to do the deal on the other house. Of course this assumes 100% occupancy and does not include maintenance. But you would have those costs in either case.

You got it... make sure your numbers make sense, there is a good tenant pool, and you can manage the property from WA. If this one works, you can buy your brother's property and have him hold that note or take over his payments. The idea is to create revenue with little money out of pocket as possible. Good luck...

I am a buy and hold investor so I don't pay too much attention to market appreciation. There is an argument to be made about "is the property really appreciating or is dollar losing its value". As long as it has an acceptable cash flow, equity (at least 1/3 of value from your situation) and a decent neighborhood to find tenants, it satisfies basics of my investment criteria. You can force appreciation by updating kitchens, baths, etc., if the numbers make sense and you can increase the rent but otherwise I would leave it alone. Later, when your situation changes, you tap the equity to fund your future deals as long as the the cash flow still holds. Sounds like you have cash but no revenue and this would be one way to create some of it.