All Forum Posts by: Jeff Takle

Well, here is GrandCentral / Google's reply to my concerns:

[i]Dear Customer,
Thank you for contacting us.
Since we are giving out free use of minutes for click to calls during beta we removed the credit and balance from the account tab. If you are prompt to recharge your account you can do so by logging into your account online and placing a call from the website. You will be able to recharge your account with more minutes.Our current plan is to offer a free service with as many features as we can and later add paid features at a very affordable prices. Unfortunately at this time we do not know what the pricing will be post beta. I believe we will offer a small business plan in the future but we don't have details on how this will be structured.
Sincerely,
Lydia[/i]

I currently use Packet8 for my business phone system. They're great and my only problem is that you cannot record conference calls, which is silly considering it's all digital VOIP happening anyhow. It is possible to cobble together your own "record" feature but not simple, integrated, or reliable.

I was thinking of the GrandCentral just for operating the phone number, not the business phone system per se. Essentially one number that simul-rings customer service reps or sales reps, can record all the calls, unifies voicemail, fully integrates click-to-call from the website, integrates mobile-access, etc.

I can send out 10 invitations from my GC account so if you're interested in checking it out, PM me with an email and I'll send it out. One real concern I have is that it's beta and they appear to intend to charge a fee for it once released; I'm hesitant to integrate a service when I don't know what it will cost me down the road.

Is anyone using this new service to unify telephone numbers, etc.? If so, would love to hear your reviews. I signed up and have a new phone number but before I go "live" and let everyone know via email and business, wanted to see how well it's working for people in practice...

You may want to consider who will manage the property and make decisions about when to sell, trade up, etc. If the money person is only bringing money, then I'd lay out all of the requirements for the property expected in a list and designate which of you will do what. For example:

Closing on Purchase: ME
Cash down payment: YOU
Find tenants: ME
Screen tenants: ME
Prepare and sign leases and other dox: ME
Manage property (maintenance, escrows, rent collection): ME
Decide to sell: BOTH OF US
List property and conduct closing at sale: ME
...

From this you can better understand and justify an equity split. Another thing to do is closely review the financial forecasts for the property. Anyone putting money into a deal is going to want to get...let's say 15%+ annual returns...so after you forecast, figure out total returns and then find out what's left after you provide 15% cash-on-cash return to the investor: that's essentially what you can keep. It may or may not make sense for either or both of you after doing that analysis. But, if total returns are 17% and the investor needs 15%, then your cut by default is 2% and you have your equity split (15:2)

Keep in mind that if you're providing property management and listing services, that you should list those services on your financial forecasts at market value -- if that's money coming to you, then it's part of your personal return on the investment.

You may wish to establish an LLC where you are a GENERAL partner and the investor is a LIMITED partner - you would retain all voting rights except for special circumstances like when to sell, or to dissolve the company. If the investor puts the down payment into the LLC at formation, you can buy the property directly with the LLC (bank will require personal guarantees) and that gives you *some* liability protection, voting control over daily operations, and saves a step over the above process. Down side is that banks will charge you higher interest for mortgage. If all cash purchase, you could just use LLC directly too.

Don't forget to get an excellent, high coverage insurance policy on the property. It's relatively cheap.

Another website option is RentSlicer. They seem to have more data, more ways to dice it up and view it.

-Jeff

I have a duplex in Boston that's on oil heat. I filled the tank prior to the very first tenant moving in. Then, they are responsible for leaving with it full. We put a clause in the lease that they are responsible and that unfilled oil was "damage" to the property (just like uncollected / owed rents) and will be deducted from the security deposit.

1) Expect that they won't top off the oil when they leave. Not because they're mean, but most renters move in the summer or early fall when they're not really buying or using oil. You may want to set up an Outlook reminder for you to talk with them 30 days prior to move out.

2) You may consider sending your tenants a copy of the signed lease 30 days prior to move out anyhow. They're much more likely to read it now than when they were moving in. If you have a clause in the lease for who pays oil (you'll need one), they may see it again.

3) If they don't pay, fill it, deduct that from the security deposit, send them the receipt and a copy of the page on the lease with that clause.

So far I haven't had any problems.
Jeff

John,

Yes I've talked with them on several occasions. They're also behind the pending legislation in California to clarify and legitimize it as a sec deposit alternative. Part of this is education for public, judges, all. SureDeposit won't underwrite/work with anyone who's managing fewer than about 10,000 units because of the lack of the landlord's substantiated details, e.g. vacancy rates, average security deposits, average damages at move out, timeliness, many years of data, etc. It's too much work on their part to come up with the "risk" numbers (the percentage due for the bond) for too little reward otherwise.

By inference then, working with smaller landlords is much more uncertain, therefore higher risk, therefore higher price on the bond per thousand dollars of coverage. I suppose you could just take a SureDeposit example, add 50% more, and try it out. Less scientific but you would know in 2-3 years if it was worth it or not. It's also less certain how the courts will react if individual landlords attempt this, instead of a licensed insurance organization or bank.

Jeff

a1propertyclean

I am tied in with a number of angels and angel groups in Boston, as well as with Babson College and Harvard University and think the idea of surety deposits for smaller landlords may have legs. If you're interested in talking a little further at some point PM me and let me know. We may have the resources to flush the idea out a little better but would want/need someone in the insurance industry with some solid experience to chime in.

Cheers,
Jeff

Last I talked with CoinMax, they didn't do service plans if your complex has fewer than 100 (or maybe it was 25) units in one place. Otherwise it wasn't worth their time and effort to service it, etc. They may have a program to help smaller companies but I doubt it gets a lot of attention.

[size=18]If you want to make money on W/D, let's run some numbers on buying the appliances and installing them yourself:[/size]

Install used W/D set ($200-$300 total) and charge $10/month for unlimited use as an option per rentable unit. Most tenants will pay that amount to avoid having to go to the laundromat. Make sure they also pay the utilities (depends on how utilities are metered in the building) or you'll lose money.

By doing this in a 4-unit complex for one year with 100% participation, you would receive revenues of 4units*$10/mo*12mo = $480/yr. Discount that cash flow at 8% (just for kicks) = $460.02 present value. If you pay out $300 for used appliances, your net present value = 460-300 = $160 NPV in the first year.

Now, because I'm a nerd, look at the useful life of these appliances. Let's say these pieces of junk will last for 3 years before they require maintenance. Then PV of cash flows from tenants = $480*3yrs = $1,640, discounted = $1,278 - initial investment $300 = $978 NPV. If you therefore expect (in PV terms) to spend less than this amount in unforseen expenses (like repairs!), you will make your minimum return of 8%.
[u]

NOTE: That doesn't mean you will make $978[/u]...it means that you will make an 8% return on your initial investment PLUS $978. My read on this is that it's worth it; the business model is great. You do have to balance how much you want to be in the business of fixing crappy old washers and dryers...OR you just buy nice new ones and extend the expected life out to 10-15 years. Both projects make money but cheap appliances have lower vandalism/theft risk.

It all boils down to numbers and we're in this business to make money. If it makes enough money to pay you for your opportunity cost, pain, and profit, then do it. Your Internal Rate of Return (IRR) on this project is 31.9%; not bad!

-Jeff

I'd like to take a stab at the macroeconomic impacts on the US economy--this is really complex with many primary and secondary affects, but I'll trace the effects through the FOREX, the Real Goods Market, and the Real Loanable Funds Markets...get ready for "boring"...

1. When Iran asks Japan to stop paying in dollars, Japan demands fewer dollars on the foreign exchange market, shifting the overall demand curve for dollars on the FOREX market to the left (lower).

2. All else constant, that drives down the value of the dollar in the FOREX relative to yen and decreases the quantity of dollars traded on the FOREX market.

3. For Japanese investors, this makes US goods cheaper (they have to sell fewer yen to buy dollars to invest in US goods), and therefore more attractive as investments. This drives up demand for US securities/investments (because they are relatively cheaper now), which drives up the real risk free interest rate in the real loanable funds market. More on this later...

4. For US consumers, this means that Japanese goods become more expensive -- i.e. it takes more dollars to buy the same product in Japan. As a result, the US will import less from Japan, improving our trade balance, and subsequently increasing real GDP = (Consumption + Investment + (Exports - Imports). This increase in Real GDP results in greater discretionary income, which drives additional consumption, pushing overall demand curve to the right in the Real Goods Market. Since the US economy is in the normal range (not the Keynsian or Classical) of the supply curve, this shift will increase overall prices in the US real goods market.

5. Higher consumption will drive up demand for loanable funds, impacting the real loanable funds market, shifting the demand curve to the right. This too (along with #3) would result in a higher real risk free interest rate, making it more expensive to get a loan.

[b][size=18]What's the net result?[/size]
[/b]

My guess is that the ultimate impact on the real estate market will be a slight increase in housing prices and mortgage interest rates. However, the size of that impact may be negligible and depends partly on just how much USD are spent by Japan each year, and what % those numbers represent of total US dollars traded in the foreign exchange market. In other words, if Japan only buys 0.0000001% of all US dollars on the foreign exchange market, the net impact will be tiny. But, if Japan's oil buys represent 79% of all US dollars traded in the market, the impact could be substantial.

I don't really think this will have a noticeable effect on the real estate market, at least not enough to drive whether to buy/sell right now. If this becomes a global trend (away from trading USD) then it would have a major effect.
[b]
How's that?[/b]

-Jeff