All Forum Posts by: Robert Steele

c) Too Much

I have "too much".

If you plan on acquiring more properties using conventional financing then you better have 6 months reserves for each property or no loan for you!

Most of us are probably not "applicant whisperers" like you so I will stick to income verification, credit reports and landlord references thanks. However you do make some interesting points.

One thing I like to do is peek inside their car and see if its nice and clean or if it looks like a junk bomb exploded in it. Likely a good indication of how they will keep the property.

I totally agree with the cell phone thing. Up until this year I carried around a $25 cell phone I bought off ebay that's biggest feature was it went "ring ring". I have a fancy company phone now. I always felt a little strange pulling it out to swap contact details in front of tenants who had the latest iPhone.

All of my tenants have flashy big screen HD TVs. I finally broke down and bought a modest HD TV 3 years ago after living with a cathode ray tube TV for decades.

That's why 9 times out of 10 no one does a better job of managing your properties than you do. Personally I believe that applies to managing your money too. But maybe that's just me being a control freak.

I got something like this too. Brand new carpet in the bedroom and they wanted me to rip it up and install hardwood flooring because they were afraid they would ruin the carpet.

Another occasion was after a tenant moved out. Note sure how dumb this was but it was definitely unusual. She wanted my social security number so she could issue me a 1099 for all the rent she had paid. Err, no.

LLC's are way overrated.

"Oh but if my tenant falls and breaks their neck then they can only take the one property owned by that LLC". Yeah, but what happens when you run down grandma in your car. Then they can take all your LLC's.

A personal umbrella policy is the way to go. It is a lot cheaper than having to incorporate and maintain X number of LLC's. Plus it protects you from a lot more contingencies. Pierce the corporate veil anyone?

Prospective tenants wanted to paint the interior walls military style mottled camouflage green. I said only if they gave me the an additional deposit to paint it back to normal when they moved out. They passed.

The games they play with the CPI would make your head spin.

When people can no longer afford t-bone steaks because the price increases have outpaced incomes then they figure that people switch to eating Hamburger Helper. Problem solved. No price increase there.

This year you can buyer a faster computer with more capacity for the same price as last year? Then that means that the price has actually gone down and this negative percentage gets put into the CPI mix.

I have waived late fees in the past even though I knew I should not have. It's a bad way to train tenants. But like Dawn said; if they are long term; have a good payment history and communicate up front then the pros can outweigh the cons.

If you can pick the top in the CA RE market then hold it and sell at the top otherwise get out now while the getting is good before CA blows up again. ;)

Dawn A. That's because you invest in 25-50K houses that the rule is calibrated for. It doesn't scale to 250-500K houses.

Personally I think BP promoting the 2% rule does more harm than good in that it scares off a lot of new investors that cannot find a house that meets the criteria in their market.