A weird thing happens when I write down my goal. Even if I don't look at them again until the end of the year, they all seem to happen. I thought I would use this forum to write down my 2016 goals. Hopefully, they all happen again and maybe you will glean something to add to your goals.
1) Add 5 rental units increasing my portfolio to 18 rental units. All must meet the following criteria: a) built after 1970 b) have an 9% or greater cap rate c) are at least 10% under market value d) do not require variable rate/ballon financing (4-family or less).
Update, I have already bought my first one. It is a 1976 SF ranch, 11.4% cap rate, 25% under market value after repairs.
2) Refi to increase cash flow and eliminate variable rate/balloon loan.
Rates have no where to go but up. Time to lock in long term loans with a cheap fixed rate.
3) Get my real estate brokers license.
This will save me $1,800 on a typical $100k deal and saves me a lot of headaches getting into see properties. Plus, I may make a few bucks off my investor friends. This may also be a good part-time gig when I semi-retire in a few year.
4) Standardize, simplify and document all my business processes. This includes bookeeping, documentation, advertising, move-in/out, etc.
I hope to be able to hand this off to someone in the near future. Plus, if something would happen to me, my wife will need to know how to keep things going.
5) Setup quarterly inspections for all properties.
I have been lucky so far and it has not been an isssue but it is time to get proactive.
6) Get serious about late fees to increase income and decrease hassle.
I am not going to be an @ss but when I have to deal with crap, I need to get paid for it. A late fee will be applied the day the rent is late.
7) Convert all my properties except the 8-family, to pet-friendly for a $200 upfront fee and $25/month.
The 8-family is already a pain with the people getting along. No need to add pet hassle there.
8) Get out of the utility business or get paid for it at the 8-family.
The utilities are all seperate but, for some reason, the former owner kept them in their name. For 8 years now, I have been collecting utility payments and every year it seems like I get stuck with a bill when a tenant leave. I am giving tenants the option to move into their name or pay me a $10/month handling fee.
9) Get all rents to market rates.
We all have those tenants that have lived there for years, are great people and never cause any trouble so we never raise the rent. Not raising the rent is the easy and safe thing for today but could be a disaster when you go to sell. Here is why 1) you have lower rents which will hurt your cap rate i.e. lower the amount someone is willing to pay. No investor is going to up the amount they pay because you have a "great tenant". 2) If they have been there for year, the place has likely not been updated and in the shape you ould have it after a turn over. This will also drive down value when you sell because an investor knows they will need to fix up the place.
I think that is enough for one year. Good luck in 2016!
