All Forum Posts by: Brendan O'Brien

I am getting excited about the prospect of out of state deals. The first deal I ever considered was in Provincetown, MA - a vacation rental. It would have meant a 120 mile drive each way, each week, to clean. Better, I think to find some properties in very high-growth areas - which New England is surely not. Even living in one corner of the country, I can get anywhere here in a few hours.

The key benefit is that you can invest in a high-growth area. But find those areas for yourself! I'm sure this won't come as a shock to experienced RE investors but - not everyone trying to sell you a deal is completely honest.

I just put up an article on avoiding the appearance of discrimination and mentioned the tenant scoring system I use to vet prospective tenants. I feel this is the best method for accurately comparing prospects and would recommend it to other landlords.

The system uses two parts. The first is a composite score which assigns points to different factors. You then set a minimum score which any prospect must meet to be considered.

I won't give all the details here, but suppose you set a min score of 25. One component of that score is going to be tenant history. A 0 would be somebody who had been a tenant before and had gotten a bad reference from the last landlord. An 8 is someone who had been a tenant before and gotten excellent references.

I do the same with job history, arrest record, annual income minus required commitments, and credit history.

The other component is required scores. Don't rent to somebody with a score of 0 for job history (no job), unless there is a qualified copayer signing the lease or substantial cash in the bank.

The system has the benefits of being non-discriminatory, completely fair, and flexible. It will take an hour to set up your scoring system (mostly figuring out how to weigh different things), and then moments to plug any prospect into it.

What do you think?

Unfortunately one month is our limit here in the Granite State. Others are completely right about the "use the security deposit for my last month's rent" BS line. The real danger is that you'll take that deal, then they trash the place. Never let them use the security deposit as the last month's rent.

I happen to make property management software at www.pcpropertymaster.com. It works pretty well and we are improving it constantly.

Josh, I will totally understand if you delete this post, but I hope not!

I used to do a lot more of it before time became a major problem. Obviously you save money. The other major benefit is reliability - you know you will be there when you told the tenant you'd be there.

My sense is that article marketing was a loophole that has since been mostly closed by Google. I had a friend who published about 10 articles on hundreds of directories - his site visits shot up. Others who have tried it since have had much less success.

After Wheatie's excellent suggestions, understand your market. That is, is your area growing or contracting (I mean population + job market, as well as RE prices). If your area doesn't work for you, what areas would?

The difference is risk. Any real estate strategy carries some risk, but in these cases:

1) The 2 percenters run the risk that rents will not increase down the line, but other costs (notably real estate taxes) will. It may also be harder to find tenants down the line. If the prospective tenants go down and the costs go up, you value of the property will go down. Note the earlier poster's comment that the 2% rule works in distressed areas.

2) The "buy negative cash-flow and wait for Wal-Mart" people take the chance that Wal-Mart might decide to locate on the other side of town - which would leave your side of town empty and bare (and cash-flow-less).

I know your contractors should get one if they earned at least $600- anybody else?

For professional property managers: who gets a 1099 at the end of the year?

I know contractors need a 1099 if they got paid at least $600. Do you send your investors a 1099? How about tenants? Anybody else?