All Forum Posts by: Rick Albert

There are two reasons why a property doesn't rent: Marketing efforts and price.

If you feel like the marketing efforts is adequate, then it is the price. 

You can post on Facebook Marketplace as well. I got my last two tenants from there. Many property managers won't advertise there because you get a lot of bad leads, but it is part of the job.

According to Zillow, you have been on for 25 days but have 24 inquiries. That is almost 1 a day, which isn't horrible at this price range. I would reach out to see how many of them converted to showings and to ask for feedback. That might help in determining the price.

I have noticed that tenants in this price range don't care as much about new construction because of budgetary restrictions. If there is a nice 4 bedroom alternative at a lower price, they may consider it over yours. 

It has been a minute since I looked into tax lien auctions. Back in the day the auctions were in person, not necessarily online. I would contact the county to see where you can get the list. I know this post happened a while back but hopefully this helps.

Dave Ramsey is all about no debt. His demographics are generally conservative. I do listen to some of his stuff and he does have good advice given the circumstances. Keep in mind the definition of a millionaire is based on net worth, not money in the bank. He found 10,000, I bet I could find 100,000 millionaires who did use debt if I looked hard enough. 

Debt is only good if it gives you a return on your investment. For example, accumulating debt on a wedding is a bad idea. It is something that happened in the past. Having debt on your cash flowing property is considered good debt. 

Regarding 7%, I would gladly pay 10% if the deal made sense. The interest rate is just another line item in your analysis, you buy and invest accordingly. 

How do you know there isn't enough equity? Was an appraisal done? From what I see, there are a couple of options:

1. You don't have enough equity to sell, so stick it out and make a strong effort to buy down the loan enough to sell and move on. If there is enough equity to sell then move on.

2. It might be interesting if you actually invested MORE money into it and make significant improvements. I know it sounds counterintuitive but you may be able to increase the value and get a better pool of tenants if it shows better. The best option is to speak with an experienced Realtor and have them show you comps of a variety of conditions to see what makes sense.

3. I don't know the Cleveland market, but is there demand for mid term or short term rentals and do the numbers work? Could be interesting.

Good luck! Keep in mind real estate is a long term play. When I bought my second house hack here in Los Angeles, we ran into all sorts of problems. Fast forward to today and if we move out, our cash flow would be $1600+ per month. Even on my out of state properties when we had problems, in the long run it worked itself out. You have to take ownership and follow up with all vendors constantly until the job is done. Real Estate Buy and Hold is not as passive as it used to be.

Hey Austin,

These are great questions. Here are my thoughts:

1. It is all about the numbers. For some, it makes sense to rent by the room, others it could be units. Arguably you can structure a single family house like a multifamily, with each room being like a separate unit. Other than that, I have been leaning towards 2-4 units. People pay premiums to rent out full units and you have added privacy and easier to get lending on (lenders will count rental income on other units versus won't typically on bedrooms). It is really just preference.

2. That is really case by case and it would be important to discuss your goals with experienced Realtors and contractors. They can go over your goals and determine what hurdles you might have.

3. I used the FHA 203(k) loan. It is a pain to work with but it got the job done. You put 3.5% down on the purchase price and construction costs. There is also the Home Style renovation loan.

4. I converted our garage into an Accessory Dwelling Unit. I looked for detached and the ability to create privacy. Those were really important to me as well as future tenants.

Good luck!

There are a lot of variables.

What is the condition of each property?

Where are they located?

What are the long term goals? Can you hold out for potential appreciation?

The one where you break even you might actually spend more money if it is in rough shape, high vacancy, etc.

For example let's say property A is new construction in a stellar area. I would buy that all day long. Low repair/Cap Ex and great potential appreciation.

The one thing to keep in mind is which property is likely able to help you scale faster? That can also be a deciding factor.

There are a lot of resources out there you can use. Check out https://aagla.org/ to see what leases they have. Then from there add an addendum with ALL of the rules. This includes quiet hours, laundry uses, backyard uses, etc. You want to make it crystal clear how it is to live there. Even so much as to put all trash in trash bags rather than just throwing it away.

I would have them as a guarantor and you can have them sign it as such. If you put them on as a "tenant" then they would have rights to be there and if you have to do an eviction, it would be that much harder.

I could make the argument that almost any location can work. But if your plan is STR, then you need to understand the laws and that they are subject to change. This is especially true with MFU.

With that said, Ventura is an interesting market. Beach town alternative to Malibu. There are festivals out there as well as things to do. 

My understanding is very unlikely unless the deal is beyond stellar and you can provide strong financials and experience.