All Forum Posts by: Mark N.A

You might also want to figure this deal from another angle -- the cap rate for the property.

Take the gross yearly rents and subtract from that the percentage you think it will cost you to operate the property: maintenance, taxes, insurance, etc. This percentage usually/maybe/sometimes averages around 50% depending on many variables. The one variable you have most control over is YOU. Will YOU be managing for free? Will YOU be doing repairs and maintenance for free? This is how many investors start out. Finding a wonderful tenant who will stay for years and years will also lower your overall operating expenses by minimizing vacancies. So you might actually be able to significantly lower that 50% average.

There's a nifty little property analysis tool on this very here website you can noodle around with, too.

So now you must decide what return you want on your invested dollars. And that's a decision with many variables that only you can decide on.

Personally, I like the advice of some of the wiser people here who only invest if they can get instant equity of 30% or more. That gives you a really good safety cushion, and, of course, will color your decision of what is a good return on your money.

But keep this is mind: deals are like taxis; if you miss one another will come along by and by.

Good luck and let us know if you get this deal.

My biggest frustration since starting out in the rental business are tenants.

I swear to you, get rid of all the tenants and this would be a wonderful business.

Excellent post, MikeOH, and I agree with you 110% - it galls me to no end to pay someone who's stealing from me. Yet from a purely business aspect getting them out quickly and effortlessly saves money and time. Here in NC we have a ten day pay or quit time frame, followed by ten or more days till court, followed by another ten days until I can file a writ of possession, followed BY ANOTHER SEVEN DAYS till the sheriff physically kicks them out.

The 'discrimination' part of your post is just way too amusing and way too terrifying -- mainly because I'M SURE IT COULD HAPPEN.

Thanks for your input.

Around here the banks offer $500 “Cash for Keys” to foreclosees if they will vacate quickly and leave the premises “broom clean”.

How about you landlords out there? Do you give any monetary incentives to avoid formal evictions and rid yourself of non-paying tenants faster? If so, how do you handle it and how much do you pay?

Several months ago I offered a tenant $250 if she would leave by the end of the weekend which she did, and she left the place pretty clean, too. My main savings was on time, since in NC it can take almost a month for the eviction process to unwind. Then again, I also saved $130 in fees.

I’m not doing that with my latest eviction because this tenant knows the game and intends on staying until the sheriff escorts her out. I would not have rented to her in the first place if she had had a previous eviction, so my gift to future landlords is placing one on her record.

Anyway, I’m interested in reading how other landlords handle these situations.

Thanks to all who respond.

John T. Reed 'rates' various gurus. You can visit his website and see his opinions. Of course, some people here on BP don't like Reed very much.

If you decide to go with Sheets (or another guru) please let us know your thoughts and results.

Good luck!

Back many years ago, Mr. Reed was endorsed by Jane Bryant Quinn. When I recently discovered that, I bought a couple of his books and liked them. So I bought a few more. And for the most part liked them.

Now, I'm a voracious reader with a constantly growing REI library and count a book worth the price if I learn just one useful thing.

He is definitely not your 'rah rah let's all get rich' commentator, and I like his 'curmudgeonly' attitude in that it serves to give me added perspective.

If you want one yardstick to judge him by, consider that his newsletter costs $125 a year and I believe he has well over a thousand subscribers. He calls that 'scalability', and if I could sit at my typing desk and generate that kind of dough I would gladly dump all of my rental properties.

To add insult to injury, he characterizes real estate management as very low-paying considering the time and risks involved. I agree, but until I experience an earnings epiphany and find my own 'scalable' career, I will continue to do real estate and be happy being my own boss.

Richard:

Thanks for posting that article. Interesting to compare college rental property to waterfront property. As always, location is crucial.

For those contemplating college rental investment here's another twist: eminent domain.

In my town the university has long-term plans to expand the campus by taking over several square blocks of residential neighborhood homes. They'll make you an offer, and if you don't like it you can litigate with the state's attorneys until either you or the state runs out of money.

One campus neighborhood thought they'd be clever and get their area declared a 'Historic Disctrict'. Now there's a whole new can of worms. It will most likely keep the university out, but let me warn everyone first hand - you do not want rental property in a Historic District. I cannot put storm windows on without the approval of the Commission. And I am forbidden to put up siding, even if it's historically accurate and matches every detail of the house.

So I see from your profile you have no completed deals. Which makes you at the very least an unknown quantity to a broker, and at most a time-waster.

Put yourself in their shoes: they're in the biz to make a buck. How will you help?

Used to be, you could find good deals on the MLS and a good agent could help you find them. Now everybody and their monkey are scouring the MLS for deals. And the good agents are either buying them up themselves or portioning them out to favored investors.

The fact is, once you have a couple of verifiable deals under your belt agents will start treating you different because you will be 'real'.

The choice is yours how you get 'real' and make your first deal. There's been some great advice to you already. Mine might be: if you're worried about a FSBO, negotiate a deal that covers the agent's fee.

You Know You're a Real Estate Investor When...

... the eviction court judges know you by first name...

... the cops in your low-rent areas know you're just checking your properties and not out cruising for crack or some 'ho...

... you really think you've seen it all, and then you see (fill in the blank)...

... you really think you've learned a thing or two, and then some tenant teaches you something totally unexpected (and always costly)...

... you own fifty or more keys which don't fit anything... not even the couple dozen entry locks you've accumulated over the years...

... you can instantly tell the difference between the sounds of a .22, a .32, a nine, and a .45; and you know if it's ten rounds or more in a row it's a Glock!...

Man, this is a hilarious thread (and all so true...)

I guess some people need hand-holding, or huge injections of encouragement, or the perfect 'plan', or whatever. But I'm with Tim about reading books. I have many many many on REI. Also, network with other LLs. Also, read and learn from these posts. And I'll bet Tim has also spent years watching and learning from his Dad.

The whole point is to get 'educated'. Do you think you can earn the amounts that, say, a highly-trained physician makes from just a few months of 'coursework'? A few years? You are in a field with plenty of competition and I'll tell you this - it's a lot of HARD WORK to be succesful. And your 'education' will be continuing! Personally, I'm one of the laziest people around, I hate hard work, and I would pay a king's ransom for a foolproof system! But try as I can I just don't ever get ahead by cutting corners or taking shortcuts.

All real estate is 'local', and by default what works in my neck of the woods may not work at all where you are. Want a system? Build your own. But first build a solid foundation by educating yourself in every way that works for you.

Personally, I learn best by 'doing'. And, ha ha, I have paid plenty of 'tuition' from my own pocket - but I won't soon forget those lessons!

"Those that can, do. Those that can't, teach. Those that can't teach become coaches. And those that can't tie their shoes become critics."