All Forum Posts by: Mike Marko

The three times rent is probably the limit for me. Otherwise if they ever run into a small emergency they will suddenly have no money to cover all of the rent. Once a renter falls behind they will rarely catch up. Do yourself a favor and stick with the guideline of 3 times rent.

Will makes some very good points here. Having the reserves will also give you a better chance of getting financing for the home. The 4-6 months of rent is a great rule of thumb for starting... as long as you still have at least $5k in reserves. Even a good inspection will not necessarily tell you that the sewer line going to the street will suddenly get clogged... at cost anywhere between $4k-$6k in my area (though running a camera through the line could mitigate that risk).

As you get more rentals, the law of averages start working in your favor as long as you always have enough to cover one big expense if it ever happens.

Welcome aboard!

I agree with Alok that it is easiest to find a mentor, but it isn't necessary.

Over the years, the biggest obstacle to any new investor is themself. They are afraid to take that first step because it is a step into the unknown. There are lots of sources to find out information about getting started, but it comes down to knowing knowing that you are buying at a good deal, and knowing what the home will rent for once you have it. A lot of this information can be found relatively easy, and your real estate agent (if you selected on correctly.. you want one who owns their own rental properties) can be a great help.

I do cover a lot of topics on my blog, www.intendhomes.com, but there is a lot of good resources here as well.

Rent rates are dictated by the market. Period. If suddenly there are a bunch of vacant rentals (say a local factory shut down) then you have to drop your rent to remain competitive. Over the past couple years, I have been able to raise my rents by 5-15% because there are a ton more renters (vs. rentals) in my area due to the economy.

When I first started I thought you could project a 3% increase as well but I have quickly learned that you cannot rely on that. You can't control external factors other than by diversifying... spreading your rentals throughout different neighborhoods while still keeping them with 20-30 minutes of your home.

I completely agree with Marco for all the reasons listed. You should avoid investing in a property out of state... in fact I personally recommend keeping the property within a 20 or 30 minute drive of your home so you can check up on it.

You need to be careful about moving a property into the LLC after your purchase with a personal mortgage. I am by no means an expert in this but a lot of mortgage companies won't allow it and IF they find out then the mortgage could be suddenly cancelled. There is a process to do this you need to follow to help cover yourself... which includes making sure they are in the picture.

If you definitely want to have the home under and LLC (which I recommend) then you should look at a commercial mortgage/loan for the property.

Wayne has hit this on the head. Are you sure it is a "smokin' deal"? I have been burnt in the past. Make sure you inspect the property thoroughly, and if you don't have the experience to do so then consider the ~$350 for a home inspection insurance that you don't walk into a money pit.

I target my reserves at a minimum 3 months rent. Since I have multiple properties I have the law of averages working in my favor. Since my average rent is $650, that means I have an average of $1950 for repairs or vacancies per property.

As you can imagine, that isn't very much for major repairs but I also have a strong network to help keep my costs low. This number also includes the fact that there are constant repairs I have to deal with.

I couldn't agree more. With the exception of your accountant, you need to build your team locally to where you want to invest.

You want to give high level information, without giving away stuff that will make your customers want you. It is a balancing act, but you need to show that you are an authority in what you are talking about, and have been in it for a while.

In addition to that, another important thing to converting leads is to have them buy into you, Sekelle. People don't buy products, they buy into who is selling them. Your customers need to buy into you. There are lots of people selling similar products to what you are, but what you need to do it connect with your potential customers. Even if they don't buy from you in a while, if they know someone who is looking they may refer you in the future. Basically if you are in this for the long haul you need to brand yourself. People need to buy into who you are

Hope that helps some.