All Forum Posts by: Anthony Thompson

@David Boroughes Since you're going to be managing yourself, I'd start by looking at how far you're willing to drive and then drawing a mental radius around Newport or wherever you spend most of your time.

Then with that list, see which areas can support the rents you're looking for, and then set up some MLS searches (if you're an agent) or ask an agent to do so for you, for houses meeting your criteria (3+ BR, asking less than 200K, anything else you want).

You can also drive through those areas as @Nate Burgher suggested, and try pursuing off-market deals such as calling for-rent signs to see if the owner would sell, calling FSBOs to see if you can strike a win-win deal where the #s work for you, etc.

Finding a property these days where the #s work is difficult, it's definitely a grind, but you just have to set your criteria and grind through it. Think of it like prospecting for gold and sifting through all the rocks to try to find a nugget or two :)

@Matt Romano I'm sure if you email Steve asking him for a recommendation he'll shoot you back a terse but helpful reply suggesting someone. I'll also PM you a few other attorneys I think would be good resources for this.

Also, again I strongly recommend consulting with and using an attorney, but it seems pretty clear to me that RI laws prohibit just changing the locks as @Thomas S. suggested - see RIGL § 34-18.1-15. Right of "self help" prohibited, as well as a recent RI court case (2014) where the Superior Court discussed that prohibition against self-help evictions in detail.

@Matt Romano it won't surprise you that one strong recommendation is to consult an attorney, in this case one who specializes in commercial real estate.

It's a little unclear from your description what's going on, but it seems like the tenant was renting a garage space as storage only and not living there?

If so, yes my understanding is the same as yours, that it's easier to do a commercial eviction than a residential one.

In fact, looking at what I think are the relevant laws, I don't see anything at all about a 5-day demand. The section on delinquency in rent - repossession by ejectment has the following:

"If, in any case of a letting covered by this chapter, whether by writing or parol, the stipulated rent, or any part of the same, be due and in arrear for a period of fifteen (15) days, whether demanded or not, the landlord or reversioner wishing to repossess him or herself of the lands, building or parts of buildings let, or recover possession of the same from the tenant, or any person holding under him or her, shall, without the necessity of notice, institute a trespass and action for possession in the district court where the premises are situated, and in this action the court may award a plaintiff judgment for possession and for all rent due plus costs." (emphasis added by me)

I strongly urge you to consult (and use) an attorney to go through this process (in fact, if you own the property in an entity you'll have to use an attorney anyway), but at least to my layperson's reading of the law it seems much simpler and quicker.

(In fact, further down in the same section it says "All such court actions shall have precedence on the calendar and shall continue to have precedence on the calendar on a day-to-day basis until the matter is heard" - which sounds pretty expedited to me.)

I can't comment as to any items left behind, that would be something to ask the attorney. But it doesn't seem like the relevant laws mention anything about putting things into storage, having an auction, etc.

Good luck and let us know how it turns out of course!

@Casey Charkowick I think you need to do some more research to narrow down your expected rents a bit more - the range $2400 to $3000 is pretty wide, and makes a big difference.

By my estimation, it's about a 2% cash on cash return if the rents are $2400/mo, and about 5.5% if they're $3000/mo, with debt service coverage ratios of about 1.18 (bad) and 1.48 (very good), respectively.

If the realistic expected rent is $2400 I would not do this deal. I like the DSCR on the $3000 rent scenario, but the CCR is still kind of meager. I'd only do that deal if you really liked the house/area/tenant quality and didn't mind a mediocre return.

I would urge you to be realistic in your assessment of the potential rent and not convince yourself you could get more than you could realistically get. I would seek several sources to converge on a realistic rent #.

And above all, try to get past the fear of missing out. Just because properties are going fast and lots of other people are buying doesn't mean you need to buy, if the #s don't look good for the amount of work and aggravation involved.

A good article I read recently was Impatience: The Pitfall of Every Ambitious Person. It reminded me that in 2006 people were falling all over each other to buy property at prices that didn't make sense, with properties regularly having less than a week on market and above-asking prices.

I'm not saying we're at that point now, but it's worth thinking about when evaluating deals. Sometimes the best investment is no investment at all.

@Gerald Lepore another option to consider, especially with 5+ unit properties, is the possibility of seller financing. You may want to attend tomorrow night's RIREIG meeting as there will be a panel of several people discussing the topic.

With seller financing you may be able to put much less down on the property, depending on the seller's needs of course (which is the most important part of seller financing and arguably all real estate - understanding the seller's needs, and it's not always about money!).

@Tyrell Yorke I'm also glad you saved the 30K! I tell every new investor I meet, you'll learn a lot more putting the same amount of money down for an actual property, than you will for a seminar.

The usual thought process is, "but I'm afraid I'll buy the 'wrong' property so the 30K (or whatever amount) will make sure I buy the 'right' one."

However, besides the abundant free resources here on BP and elsewhere (as @Anthony Dooley mentioned), I think as a beginner it's more important to take action and avoid "analysis paralysis".

There are two easy things a new person can do to make sure their first property is decent (as in, not a disaster and something to learn from and build on). First, use a good real estate agent who can help you avoid common mistakes (same for a good home inspector).

While it's true the agent isn't buying the property her/himself, most good ones know it's a relationship business. Someday you'll want to sell that first property, or buy another one, so they want to make sure you don't get burned on this one and will be likely to call them when that time comes.

Second, go to your local real estate group (as @Nancy DeSocio mentioned) and "make friends". I'm not talking about "find a mentor" because that word has a heavy connotation and implies finding the Most Experienced Investor and trying to convince them to spend a lot of time with you.

Instead, just try to make a few friends in the group who are maybe one or two steps ahead of you in real estate. If you're buying your first property, try to find someone you like who maybe owns one or two properties.

Those folks will almost certainly remember being new investors, and will probably be happy to help you out with some questions you have along the way.

(That said, be sure to find as much out as you can on your own, such as searching the BP forums, before you ask others for help - so you can show you made an effort to answer it on your own first, and so you can ask a more intelligent question when you ask for their time.)

I hope this helps, congratulations on getting started (and dodging the expensive seminar/coaching bullet!). Be sure to keep us updated on your progress of course!

@Raymond Lewis It's not as hard as it is in Massachusetts, by all accounts.

In my experience it usually takes a couple of months, though it really depends on how quickly you act on the unpaid rent, e.g. sending out the 5-day demand letter on the 17th of the same month the rent is unpaid.

It can be delayed if they are "professional tenants" who really know the tricks of gaming the system (which can buy them an extra month or more depending on whether you use a good attorney or do something else like DIY and make any mistakes).

And sometimes you just get a bad judge and s/he gives the tenants extra time just because.

Also I'm assuming this is for unpaid rent. In RI there are evictions for unpaid rent (faster track) and "everything else" (which are slower). If the latter, for example you want to make an apartment vacant to renovate the apartment or sell the property, it will take an extra month or two in general, and then add another month if the tenant(s) are aged 65+.

I'd recommend reading the RI Landlord-Tenant Handbook or the laws themselves (Residential Landlord and Tenant Act). And of course, I do not recommend DIY evictions since it's very easy to get tripped up on technicalities and have to restart the whole process over again (very costly mistake).

Instead, I recommend using an attorney who specializes in evictions and if you end up going that route I can recommend a couple of names (PM me if you want their names).

@Robert Chen Yes, the podcast guests are right, it definitely takes persistence (grit) to succeed in this business.

Think about it this way, over the course of your real estate career there will be good times, bad times, very good times, and a few very bad times. You just happened to get a bad/very bad one from the start, but it won't always be this bad, and someday you'll find yourself telling this story (maybe even laughing) to a new real estate investor who's thinking about buying her/his first property.

You can always try to minimize the odds by researching things and being proactive (e.g., servicing your heating systems in the fall to reduce no heat calls in the winter), but you can only much too.

When they say "it's a numbers game", they don't just mean income and expenses. It's also about trying to tilt the odds of good things more in your favor and bad things less in your favor, through education and establishing/improving processes.

Good luck and keep us updated on your journey of course!

@Jacob A. Providence taxes are pretty high actually, and there is a special higher "landlord tax rate" for non-owner-occupied properties. It's billed as a special "reduced tax rate" for owner-occupied properties, but the effect is the same - landlords pay a lot more taxes. I'd recommend checking out the "Providence Apartment Association" if you're actually going to own property there.

It's not to say the #s won't work for properties in Providence but I know I personally have a higher bar to get involved in a property there, than other municipalities in RI. As a general rule, if property taxes are high in a city/town now, and they have a looming pension crisis coming in the future (many do), the trend is not in your/our favor.

I admit that I don't have a lot of Massachusetts experience/exposure however, so it may be that the price point and lower assessed value more than makes up for any higher tax rate.