All Forum Posts by: Tim Deimer

We have two condos in Phoenix that we rent out and I mostly agree with Scott. We got the first one in 2009 for almost nothing in an auction. Even getting it so cheap, it took three years to make any money. It wasn't a great neighborhood and I couldn't begin to describe how terrible the rental market was. After the first two tenants we got, I left it empty for a year because it was cheaper to pay the utilities and hoa and not have tenants trashing the place than collecting $1500 and paying $4000 to repair the place! We bought the second one in 2016 with no intention of renting it out, but the Phoenix market took off and when we were going to sell it this last winter, the capital gains tax would have been more than we ever want to give to the government, so we're renting it out long enough that we'll be able to do a 1031 exchange. We're doing real well with both of them right now - the first one because we bought it when the market was in the toilet and we just got lucky on the second one. Not that we were trying to time the market, but it can be done accidentally! I haven't run the numbers at today's prices, but I'm sure these wouldn't do much better than break-even. As far as appreciation goes, I think the condos have done alright in the Phoenix market. Houses are getting so expensive that condos are an entry-level option that allows a buyer to get a little nicer place than a similar priced single family home and have more predictable expenses since the condo fee covers some of the maintenance and repairs that would be on the homeowner of a house.

Now for the stuff we've learned the hard way!

First, many condos don't allow rentals. The ones that do, generally aren't as nice as the ones that don't. If all the owners are on site, everybody cares more about property values and just keeping things nice.

It's nice to know that if you need a new roof, the association has to pay for it. That's what the dues are for, right? Well, sort of....I have a long story about a 9 year fight to get a roof fixed that I'll spare you, but it did cost me a $1000 deductible and my insurance company $9000 before they decided we were right, the roof needed to be replaced. The point is the HOA pays a management company, who's job is to not spend a dime of the money you pay them. Too many cooks....

That leads me to number 2 - You have to check the HOAs financials. The one where we had the roof problem is actually in good shape. Those units are almost all rentals and many people own multiple units, including the people on the board. They keep the condo fee low and keep a close eye on the checkbook. It's a double edged sword, sometimes they don't spend money when they really need to. But they are solvent. The other place is about half rentals and half owner-occupied. The downside to that is most of the owner-occupied are first time homeowners who squeal like stuck pigs if they even whisper about raising dues, and that HOA is having money trouble.

That's probably the worst of it. The positive side of being around many identical units (both complexes that we're in have 3 or 4 floorplans) is comparable sales and comparable rents are easy to find. As far as appreciation goes, identical units to the one we bought in 2009 are selling for around 12-13 times what we paid, (and that was not an exceptional deal at the time) and units like the one we bought in 2016 are going for 3ish times what we paid when one comes up for sale. Our daughter's boyfriend just sold a condo in Scottsdale and had a gain of around 85-90% in about 2 years. That's Phoenix right now though, everything has been going crazy.

I doubt that it's likely, but if you find one where the numbers work, just remember the extra headaches of dealing with HOAs. And don't assume that a nice complex is in good financial shape. The complex where our daughter's boyfriend was was also having some drama related to money.

Good luck! And if there's anything else I could clarify for you, don't be afraid to reach out. 

Quote from @Theresa Harris:

Look to move to a different company.  Your regular income from your 9-5 job is going to be needed for a bank (or anyone) to lend you money.  You don't have to work overtime or the extra hours, you can say no.  The extra money is nice and can be used to fund your rentals.

Most people who have rental properties still work.  The income from them unless you are flipping or possibly doing short term rentals, isn't going to be enough in the short term to live off of.

There's no such thing as a 40 hour work week in trucking. This worker shortage that everybody is dealing with the last couple of years has been going on in trucking for at least 2 decades. 

I'm not sure where Jose is, but in WI, if you're refusing to work over 8 hours in the concrete business during summer, you're less useful to the company than an empty truck. We have a slow season here, I know of one large company that doesn't offer vacation to their drivers because they can take vacation in the winter and collect unemployment. They're not hurting for drivers any more than any other company.

It would be possible to do a career change, but it's not likely that an experienced driver, especially one willing to drive mixer, is going to make anywhere near the same money. The only way a career change would be practical, assuming a guy had his heart set on real estate, would be finding something in real estate to learn more about the business. With no experience, it would probably mean less pay, but getting paid education and making contacts. Also, bankers are like scared bunnies. Change careers now and you're likely delaying getting a mortgage for over a year.

Jose, if you're on here looking for permission to quit your job and become a real estate mogul, you're going to be disappointed. It's probably possible, but I couldn't tell you how to do it and I would be suspicious of anyone telling me I could do it. I'm trying to be polite here, but there's no shortage of people willing to take your money to allegedly teach you how to get rich overnight, but more likely to fund their own business. Do yourself a favor, man, and at least look around. You might be surprised at what companies are overlooking these days to get an experienced mixer driver, you might even be able to get more money.

Quote from @Ned Carey:

You are just not talking to the right lenders or possibly the wrong person at a bank.

Just had to throw this out there.....I recently talked to a manager at our local Chase branch who told me Chase doesn't do mortgages on 2-4 unit buildings. I'm sure I was talking to the wrong person but I know why they call the place "Chase". They've been doing it to me since they bought that branch!

@Jerryll Noorden

At the risk of finding out what an idiot I am, here I go...........

I think the word "wholesale" is the issue here. I know Jerryll isn't talking about wholesaling when he actually is buying the property, so I'm not sure why the word is so offensive. If I'm reading it right, Chris Ransom is actually talking about the other side of it, as in people wasting his time bringing deals that couldn't be profitable. I'm sure 75% of the people who are cold calling me couldn't tell me WHAT they are. I will tell you I think they are mostly broke fools who've been separated from their money by snake oil salesmen who've told them easy money stories and sold them lists of "motivated sellers". I'm a big fan of Jerryll on this forum just because I hope some of these wannabes are reading his posts and deciding not to max out their credit card buying a list with my name on it!

For anyone who might be reading this and thinking about buying a list with one of my property addresses on it:

My daughter is not a motivated seller. She doesn't own any real estate, she just happens to be on the same phone plan as me, which I can only assume is how she got tied to that property.

My wife is not a motivated seller. Her name is not even on the deed, partially because our schedules were very different at the time when I bought the property at auction and had to return paperwork in a hurry, but mostly she didn't want her fingerprints on my trainwreck. (Not motivated to buy OR sell!)

I'M NOT a motivated seller either! I bought the property from a motivated seller called IndyMac Bank. Google might remember who they were, if you're interested. I can't imagine that anybody who was buying property in one of the hardest hit cities, in one of the worst markets in my memory, would be considered a motivated seller. I could have sold it at anytime in the last 10 years for a profit, no assistance required!

That one bothers me the most. I paid cash, not knowing when I'd make money on it. Nobody bothered me for about the first four years, then, just when values started increasing, it seemed like the whole state of Arizona wanted it for half of what it was worth. I asked a few of them where they were in 2009, when they could have bought all they wanted for half of what they were offering me. Never got a straight answer. In fact, I only got what seemed like straight answers from one caller in all that time. Every other cold caller seemed clueless, like the dog who caught the bus, no idea what to say if you get them off script. I no longer have voicemail on my phone and don't answer calls from AZ that aren't in my contacts already. The texts don't bother me as much. I used to have a list and I'd add each text to the end of the list and send it back. My list got to 80ish texts and it wouldn't send anymore, so then I made another list that got almost as long before I lost interest and stopped sending them back.

Another one that I get a kick out of is a friend of mine who gets calls and texts wanting to buy his house. The "house" they refer to is 20 acres of swamp land in the middle of nowhere Wisconsin with no building on it. The guy wouldn't sell his hunting land for anything unless you had more acreage with more deer and closer to his home. Not ANY kind of seller, let alone motivated!

Once in awhile I answer my phone and if there's anyone on the other end, (that's less than half the time) they're clueless, many seem to be employees in a call center, some so new to the english language that I'd have a hard time understanding them if I wasn't more familiar with their script than they are. Sometimes I answer "can I buy your house?" Then they go into their pitch and I say "I asked you first!" I get the feeling most of them don't have a house to sell me. One time my phone rang during a commercial in the middle of Jeopardy and I answered. When the guy told me which property he was interested in, I said "you call me in the middle of Jeopardy and expect me to give you a deal on a house? Who do you think you are?!" His script didn't have an answer for that one! I do make a point of telling people I wouldn't sell to a cold caller no matter how desperate I got.

Jerryll, I don't care what anyone else says about you, you're doing the Lord's work if you can reach more than one person at a time and convince them to stop wasting money on bogus lists!

Quote from @Bob E.:

Had a call from our PM at 6AM.  Call back right away, not detail.  Never a good sign.

Call back and find out that our upstairs tenant in one of the duplexes, who we were in the process of evicting, set the place on fire and went missing.

Fire was in April, deal with the insurance claim and start renovation in July only to get a call from our contractor.  They found the former tenant in the burned rubble.  Great job by the PD and FD.  Shut down the renovation for a few days while they collect evidence.

On the way out the police ask the contractors bo BOLO for a hand gun.

 This has GOT to be in Phoenix. Never had to deal with FD but for the life of us, we can't figure out what the PD actually does down there. Pleas don't tell me there's other departments like that down there!

@Jose Varnadoe

The first thing you need to do is find a different job. I've been a truck driver for 36 years and I've worked for 13 different companies in that time. There are companies that follow the law, even concrete companies. I've been driving bulker for a concrete company for the last 5 years for a company and people that I really like, and I'd get in trouble with them if I tried to work the hours that you're working. Your description of the company you work for makes them sound worse than average, but almost all of them will push you to run over hours if you don't push back. I've found that most drivers are afraid to tell the boss that they're not going to drive illegally, but most bosses will not insist that you do, IF YOU TELL THEM YOU WON'T. The ones who do insist need to be punished with a high turnover rate. I'm not sure where you are, but I am sure there's different colored trucks around, and everybody is looking for drivers, especially mixer drivers. My company has been offering referral bonuses and signing bonuses for mixer drivers for the last 4 years even though they have the highest pay rates in the area. If you can drive mixer, you can probably drive just about anything, go find a different truck!

The 2nd part of your problem is that real estate isn't a quick way out. You may get lucky once in awhile, but in this market you don't have enough free time to get lucky. (Getting lucky is a lot of work) I'm in Wisconsin and I just don't spend much time looking for real estate deals in the summer when I'm working 60 - 70 hours a week. Work slows down, and sometimes stops here for 3 or 4 months in the winter though, so I put money away until then. I know what I read on this forum, but I'd guess there are more people who are doing like we are than just quitting their job and becoming a full-time real estate investor. We started in earnest in 2003 and we just got to the point this year where the rents would pay most of our bills. And we had 2009 - 2014 to get some deals of a lifetime.

To sum up,

1) Please do yourself a favor and stop doing illegal things (that you hate doing anyway) for money. There are enough trucks that need drivers that we don't have to work for people who expect us to be criminals. Also, a boss who asks you to do something illegal won't think twice about throwing you under the bus when there's an accident.

2) The next guy I meet who goes from hanging onto a steering wheel one day to full-time real estate investor the next day will be the first one. I'd never say never, but it would be tough even in a buyer's market and this isn't a buyer's market.

To do the job you're doing, you have the most important ingredient to be successful - you know how to work. Just take care of the most important stuff first. Don't be so desperate to make a deal that you end up making a mistake. A bad real estate deal could make you just as miserable as a bad job.

Quote from @Alicia Tingey Geddes:

@Tim Deimer

I appreciate your offer on giving us insight into the Minnesota market. If we were looking in the area, that would be amazing.  But my husband and I aren't going to be in Minnesota very much longer.  Thank you for offering! 

Not me. I don't know how I got mixed up with MN. Fortunately, I'm not one of the perpetually offended! I'm a 4 hour drive from MN and don't have any interest or know anything about any market there.

Quote from @Sarah Brown:

You mentioned you had enough in savings to buy a duplex and rent.  Why not buy the duplex, rent out half, live in half, and then buy a single family home in 1-2 years when you need more space.  This allows you to get the investing party started, have someone help your mortgage, stack cash, and invest again. 

 That's what we would naturally do too. I don't know Baltimore but I hear things. When I look at big cities I notice almost nowhere I'd want to live but there's no shortage of people who do want to live there. We own a couple of units in Phoenix where I wouldn't raise my kids but we have surprisingly little turnover.

Unfortunately, multi-family homes aren't really available in the community where we want to settle down, so that's not an option.

@Scott E.

We bought a small building leased to the Post Office when we were about 35 yo. Not a true NNN, but similar. The only reason we bought it was because it was underpriced. I don't think the broker, who was selling it for an estate, was familiar with how these things were priced. I think he priced it based on the then-current rent, not accounting for the 5 year option that had already been exercised, which almost doubled the rent. The rent should have been averaged over the 76 months left on the lease and the price based on that. (There was also another 5 year option which was eventually exercised also) He was at least 20% low on the price. We borrowed the full asking price and doubled somebody else's money in 6 years, which allowed us to buy properties for cash after the mortgage meltdown from 2009 to 2014.

I've never run across another commercial deal like that, but I guess I wasn't really looking for that one either. My Dad had recently retired and I thought of him when I stumbled upon it, but he wanted nothing to do with it. I couldn't pass it up when I did the numbers. I always thought we'd buy some more of those when we retire. It seemed like most of the time, they're a better deal for someone who has made their money and is looking for something hands-off with reliable income.