All Forum Posts by: Mark N.A

Jon:

I have always used generic 'For Rent' signs from Lowes and they seem to work fine generating responses from passing traffic. One problem is they don't last long from wind and sun.

However, I am closing on a house that is in the college rental area, but is located on a dead-end dirt road with no traffic whatsoever.

So I will be ordering customized 'For Rent' signs with my web site prominently featured. Not only will this sign be in front of this particular house, but I will also put signs in the yards of my other already-rented college houses in hopes of driving potential renters to either call me or see what is available from my web site.

Don't know how well this will work yet, but I do know how expensive it is advertizing in the classifieds!

Christian:

I like your 'early out' for a fee lease clause, but would never use it for college rentals - they must stay for the full year since it's next to impossible to fill a vacancy in the middle of the school term.

You are blessed with good tenants, it sounds like. I would guess solid middle class types.

Couple months ago I got word that one of my low-income tenants was dealing drugs. Since her written lease was MTM I simply gave her a lease termination notice and she left.

For me it's all a matter of who my tenant is. But I'm going to add your 'fee' clause next time I find a middle-class tenant. Thanks for the tip!

I'm certainly seeing that kind of fanatical building targeted toward students here in my college town. Toured one place with heated pool, billiard room, tanning salon, full-sized indoor basketball gym, exercise room, movie room, and so on and so forth. Fully furnished and utilities included. But it is far from town and campus. Cops ride the bus every weekend evening handing out $50 tickets for barfing and arresting underage drinkers - still drinking! Some major drug busts occur out there, too. I swear I didn't see one ugly co-ed in a bikini by that pool, all of 'em with a well-stocked cooler close by.

Imagine turning 'Animal House' into 'Animal Complex'. Were I single and twenty years younger I'd find a way to live out there myself!

However, my bet is that ten to fifteen years from now these may very well turn into high-density section-8 tenements. That pattern has already occurred in Durham.

Students gravitate to the 'latest and greatest'. An investor's only real defense is location. But even so, common sense and cash flow rule. I'm already seeing several foreclosures and 'don't wanters' in the good college rental areas. Unless Daddy Bigbucks comes along to buy them for his college-aged daughter, they may sit there for a while. At least until the price comes down enough to make the numbers work.

I am going to let my partner/fiance read your post, Tim. As much as I warn her, she still likes wandering around and inside vacant properties.

The last time I wandered with her I was on the second story of a vacant house. I decided to look inside a closet. When I pulled on the door it pulled back. I still have a pucker mark on my undewear.

IMO, there are two distinct advantages to REI: 1) it's a local market, meaning situations vary from town to town depending on many variables that are not simple to quantify using 'national averages'; and 2) it's an inefficient market, unlike, say, the stock market.

The economics of the pond I swim in are driven by a growing university system and a growing regional medical center. At present my target renters are those connected with the university (students), and the low-income people connected with related service and support industries. Anecdotally, while one group has much more money than the other, both exhibit remarkable similarities in irresponsible destructiveness and a necessity for 'parent-like' guidance from me.

Because of the future potential of my pond many large investors are pouring a great deal of money into real estate development. Personally, I cannot compete with anyone who can write a million dollar check. But I can certainly find and exploit market inefficiences.

When Ross Perot was building his mega-succesful company many years ago he stressed the importance of recruiting the right personnel. His quote about that was, "Eagles fly high and by themselves and must be gathered one by one."

Thus it is in my own endeavors buying property.

So bad times may certainly come, but they will be distributed unequally throughout the land, IMO. My feeling is that if you're in this business one worthwhile strategy is to find and define your market and then become a local expert. Opportunities will present themselves.

Let me also add, FWIW, that I also have a good half acre reserved should I ever need to grow vegetables. It helps me sleep at night.

Thanks for making me dust off my dictionary to read the definition of fiat money, Mike!

Here's a couple more worries: who will the government raise taxes on? Unemployed people? The elderly? No - it will be the greedy rotten landlords who are sqeezing the life out of honest Americans.

And we'll make easy targets, too. Can't hide your rental unit under your mattress, or deposit it in an offshore account.

But wait, now let's add in rent control! Seems pretty popular in New York and California, so why not make it available to deserving people everywhere?

But I'm not worried, oh no sir - I'm gonna start making all my tenants pay their rent with rice!

Christian:

MikeOH explained the MTM lease reasoning better than I did. Thanks for clarifying, Mike.

However, with my college student rentals it's different and I DO require a year-long lease. Reason for that is twofold: 1) most students are bright enough not to want any sort of credit ding on their record; and 2) I also get their parents to guarantee the lease providing another party to involve.

But I doubt I would ever offer 'Cash for Keys' to any recalcitrant college student. I'd get a judgement, wait a few years 'till the kid got some assets, and then 'surprise' him with his debt plus interest......

Well, here is my $0.02:

Owning your own personal residence can be a wonderful thing for many reasons.

But is it an 'investment'? Consider that certain intangible returns, such as your personal enjoyment of your house, are completely tax-free. You may qualify for a home-office deduction, as well as interest deductions, and other benefits an accountant can advise you on, too.

But will your house appreciate at the same rate as the S&P 500 has historically done over long time periods?

It may, or it may not. That depends upon many variables such as location, initial purchase price, neighborhood and city future potential, and so on.

Succesfully investing in real estate is hard work, just as succesfully investing in individual stocks involves hard work. Can it be done? Most certainly. Can just anyone do it? Probably not.

I believe that what makes real estate investors succesful is that they literally 'love' this business. They eat, sleep and dream real estate, and it's their passion, so to speak.

Go read the thread "You know you're a real estate investor when...". Although the posts are pretty humorous to me, they are also pretty true about some of us.

In any event, one key to succesful investing is diversification. If you don't already own your own home, you can do worse things with your money.

Good luck.

Heathen -

In my lease the wording is such that rent not paid by the first constitutes a 'breach' of the lease, and so technically I could file for eviction on the second based on that breach. I have not tested this in court, choosing to go the 'safe' route with the 10-day-pay-or-quit.

But you are correct about consulting an attorney, and if I can find a shorter method any savings in time will be worth it.

Unlike the past, my current leases with low-income tenants, though written, are now all month-to-month because that requires NO reason on my part to stop doing business with troublesome tenants.

But still, if they know the system they know how to play it to the hilt.

Thanks for your input.

One thing these shows have done is separate a lot of 'wannabe flipper geniuses' from their cash. The shows make it sound soooo easy that any fool with some dough and credit thinks s/he can jump right into a flip, splash on some fresh paint and add shiney drawer pulls and make a fortune.

I get bid out by these fools regularly and then watch those properties languish on the market for months at a time. Last house I went into was getting foreclosed for at least the second time in a year. And still had all the 'Open House" signs in the basement.

The good news is that with each failed flip some speculator is out of the game. The bad news is that there appears to be an endless supply of speculators with money. But I suppose they'll work their way out of the system eventually.