All Forum Posts by: Rick Albert

 Hey Michael,

I completely agree! I was working with one of the largest PMs in another city I invest in and they were awful! I switched and so far so good.

Thanks for the advice!

Rick

With the exception of Geoff's comment, I've never heard of someone doing this successfully. You start going down this path and you risk creating disgruntled tenants. They stop paying and now you have a bigger issue on your hands.

Are you saying these tenants have been in these units since the 70s or are you assuming? Most mom and pop landlords don't keep great records. 

I don't like the cash for keys option either, but unfortunately it is effective. It is a lot of money, but cheaper in the long run, as it can take months or even years to evict a tenant.

Unless my client had experience in this, I would never advise a client to think they can pull this off. 

Regarding cash for keys, there are creative solutions. For example, as the Seller to do it. If they don't have the cash, maybe after you release all contingencies, your Earnest Money Deposit is released early and the Seller can use those funds.

I'm in Los Angeles and I did the FHA 203(k) loan. The structure has to either already exist (we converted the garage) or you can do an addition to the property and build it out that way.

One of my clients took an illegal garage conversion that was expanded into two bedrooms and used the FHA 203(k) loan to get it permitted. It still cost around $100K, but that is way cheaper than building a 2 bedroom ADU from scratch.

There are couple of things you can do:

1. Figure out why the block is there. What are the concerns and how can you address it? For example a lot of my clients are concerned if it is a "good deal." I then proceed to show them comparable sales in the area and a report we pay for that shows projected appreciation rates based on a variety of data. 

2. I have what I call "Rick Proverbs." One of which is the "F*** It Price." If you are on the fence, at what price would you say, "screw it, at this price it makes sense." I had a house hacking client do it and it ended up being a phenomenal deal. 

3. You have to remember that real estate is a long term game, not short term. In the big scheme of things, on a typical property (nothing crazy like major hillside work, septic, etc.) you can screw up pretty bad and if you hold on to the property long enough, it will likely work itself out. When we bought our second house hack, we made a lot of mistakes. My wife and I ended up moving into our 360 square foot ADU instead of the beautiful home we remodeled and expanded. I even thought about selling mid construction. But I had to take a second and remember that things take time. Fast forward to today and we are in the main house, and I was able to take a HELOC out and buy an investment property, and with my tenants in place we are paying below $2K/month to live in a 3 bed house with a nice backyard.

Your team (Realtor and Lender) should be able to walk you through the process. They can double as mentors and partners because if you buy a property at a good value, everyone wins. I have a house hacking client where we are on the search for his third property in three years. 

Thanks!

And here comes the agents telling you their market is best.

Turnkey properties are hard to find because you are competing against owner users. Generally now the best deals are ones that need work. 

As far as appreciation goes, I'm seeing the highest appreciations happening in more expensive markets like New York, Los Angeles, and others. The reason being is there is no more land to build, which limits supply. Versus I noticed in Texas a slow down because an older home is competing against new construction.

From a tax perspective, buying new construction is becoming interesting. Talk to a CPA, but there are things like capturing bonus appreciation. This can offset your W2 income and make money that way.

Just like anything, it is about supply and demand.

What I have been doing is joining Facebook Groups for people looking for rentals. Every market has single people looking to rent a place. But if you see that some markets don't have as much engagement as others, then that is your answer. Zillow also has a rent by the room feature. It is limited, but provides some information. 

This seems to be such a fine line. The best route is to contact the Department of Real Estate and see what they say. 

If business is doing well, it could make sense to get your license. It is inexpensive and you would easily make the money back by picking up more clients. 

My business partner and I are considering buying a 2-4 unit property in the Atlanta area. We are starting our due diligence and wanted to speak with a few property managers.

Who do you recommend?