All Forum Posts by: Susan Maneck

Renting property long distance in Madison County might work because it is such a high demand area. Someone you might consider working with if you want a property manager or you decide to sell is Sherry Azordergan.  Her father was a brain surgeon (seriously) who bought a lot of property in Madison County near the lakes when there was basically nothing there. His son took over his brain surgeon practice and his daughter took over his real estate business. She is really, really good. The only reason I don't use her myself is that I focus on cheap SoJo properties.  Although she advertises foreclosures, etc. on her website (I go there first to find them) she really doesn't like dealing with them anymore. Here is her website: http://www.sherryazordegan.com/

I'd talk to her before you decide on anything. 

You don't find Section 8 tenants in a Class A neighborhood (at least where I live) because the rent in those neighborhoods is above what HUD will pay. Personally, I'll take a Section 8 for any of my South Jackson properties and even prefer it because the turn-over is less. I have not found them more destructive to my property than other tenants. The tenants who trash your property are the ones you are evicting, not Section 8. Section 8 tenants want to keep their vouchers. And no, I don't take their dishwashers out.

Hi Mike, 

I'm from Jackson or at least I've lived there for the past fifteen years, but I had to look Luka up on Wikipedia because I never heard of it before! 

I have indeed built a relationship with my tenants. I pick up my tenant's kids who are Middle-school age each weak to Junior Youth Empowerment  meetings. The tenants who are handy I hire to do various jobs, especially if they become temporarily out of work. I spend a lot of time talking to them about money management because one day I want them to buy my houses. I sure won't make any money selling them to investors! 

Jason, the fact that others are getting their cut along the way is not the only reason it doesn't make sense to do this at a distance. I'm making good money at this but it can hardly be considered passive income. Every single one of my tenants pays cash and if you don't go around collecting the rent personally you are not likely to get it. The only tenant I have with a credit score over 600 has a HUD voucher! There is a reason most of my properties are within walking distance from where I live. Sometimes you get paid in bits and pieces. What property managers will do that? The Hinrichs may have done well with his investments in Madison County from a distance, but ask about their experience in South Jackson. Property managers let these houses sit for months. I usually have my houses rented within days of seeing the last tenants move out and I rarely advertise.

Ironically, the one property which I own long-distance is my California condo. It is so hassle-free that my 84 year-old mother manages it! 

My advice to those who see these long-distance properties as their only option, rent them out Section 8. Any house I'm not able to sale before I leave the state to retire and live in my Tahoe condo, will be rented to those with HUD vouchers. That way I don't have to come back too often.

As someone who owns nearly that many houses altogether in C-D neighborhoods here is how you do it without 450K investment using my own version of BRRR.

1st house purchased with my mother in 2011. Paid 15K, took 25K to rehab. Appraised a year later for 50K. Wells Fargo gave a HELOC for 30K. House currently rented for $900 a month. HELOC payment less than $150 a month. 15K from HELOC loaned to my son to buy 3bdrm 1ba. Most of the rest went to purchase another home for 35K. Less than 5K needed for rehab (needed paint, flooring and a water heater.) It only appraised for what I paid for it a year later but I got a HELOC on it for 21K. Currently it is rented for $825 and I pay less than $90 on the HELOC. I now have three houses but out of money to buy more. That is when I opened a solo401K for which i was eligible by a little consulting work I do on the side. I rolled over my IRAs worth roughly 100K into my solo401K. With half of that money I purchased two houses, one for 30K in a C neighborhood and another for less than 16K for a neighborhood which has now declined a D to an F neighborhood. Not a war zone, but too many empty houses. I put nearly 14K into rehabbing both houses which are now rented Section 8. I get $868 a month on one house and $770 on the other. (HUD gave me 10% over the market value for building a ramp for my disabled tenants.) The remaining 50K in my account? Well, 30K I loaned myself to buy a house which is now my principle residence. (Had trouble convincing Fannie Mae I really intended to live in this house since I owned a bigger one three blocks away.) For that 30K I bought that house free and clear and rented out my old house for $950 a month. (I bought that house for 73K from HUD in 2001 but sadly it is now underwater.) Now I owe my 401K 30K amortized over 15 years at 4.5% interest. That leaves 20K in my 401K which I again loaned myself (amortized over five years.) Meanwhile my son had bought his second house and refinanced his first house and turned it into a rental, so I got my 15K back. Now I had money for another house. This time I found a property with two houses on a piece of land with a combined square footage of over 3200. This was my first and only purchase from a wholesaler. I bought it for 32K. Front house wasn't bad, back house was a mess but I figured I got it for free. I spent probably 18K fixing both up and now get $1500 a month renting both houses to an extended family. My latest property is my condo in California which I purchased for 110K with a conventional mortgage and 20%. Currently it is rented at $950 but my plan is to eventually make it my retirement home.

Bottom line: Total rents on all my properties come to  $6783  per month. Mortgage payments come to around $1750 a month. Amount of my own money invested? I figure that comes to maybe 150K altogether. If we subtract the mortgage payments from my rent that still leaves me with about $5000 a month and if we assume that I will only see half of that after taxes, insurance, maintenance all that other stuff, I'm still left with $2500 a month minimum income from 150K investment. Where are you going to get those kinds of returns? 

 Generally they are right about not being able to afford properties in California, but this summer I bought a condo up in Lake Tahoe for a 110K. Yeah, that is the price of three houses where I live, but the condo is leveraged and I would have had to pay cash for those houses in Mississippi. The rent is covering all or nearly all of my expenses and that includes the $375 that is going towards my principle on the property (I got a 15 year mortgage.) Eventually this will be my retirement home. I think you just have to look harder in California and stay away from the coast (except Eureka and Crescent City which are both affordable.) 

I listened to one of those podcasts from companies that buy houses that need rehabbing in different areas of the country, then get you to pay for the rehab and maybe even the property management. After the podcast I went to his website and found one house for 49K. I ran the address through google and found that Fannie Mae had been trying to sell the property for 29K. Mind you, the property hadn't been rehabbed yet. I realized I would be paying someone nearly twice as much for property I could find on my own, and that the rent would be lower, not higher than what I currently get. It just didn't make sense to me. 

 I've been investing in C and D areas for the last five years. It has worked out fine for me, but it is labor intensive and I can't see it working long distance. 

I don't know if you could do that in Starkville but not in Jackson. I usually tell my tenants to check on a few things before I come over. During the recent ice storm a tenant called complaining that I had to do something to keep the cold from coming through the windows. I asked her if she had remembered to put the covers back on her window air conditioners. She said she couldn't do that (she is disabled) but I noted her teenage son could and to call me back if it was still too cold once those covers were put back on. Of course by that time our freezing spell was over with.