Mark's Journal

Placed a rental ad on backpage. (Expectations couldnt be lower for this.)

Took a tenant call re. their A/C. It's weak (that time of year). Gave them the name and number of my HVAC guy.

Printed out the email-invoice from the landscaping guy.

Called the flooring lady to get her started (measuring, estimating etc). Carpet only.

Got a call from lender that none of their records show my address as the proprty address so someone is pulling from the county records (ALREADY!!!) and sending me junk mail. Eventually they will get tired...I guess.

I had already told the tenant to forward them to me- thinking they might be payment coupons. From now, on they can trash everything. Lender asked me to tell them what they were once I found out.

Called the PM for my condo back. The upstairs unit lets their dog live on the patio and then hoses their dog's "stuff" down onto my patio below. THAT has gotta stop.

Got a couple of responses to the backpage ad. They don't look that promising.

One asked about Section 8 and I'm not doing that anymore. Section 8 can be great for apartments but there is no way Im dealing with it for middle/upper middle blue collar SFRs.

Modified and re-ran the ad in the newspaper for this weekend.

Read some Craigslist and backpage today. Mostly junk. junk and more junk.

There was one ad (from a realtor) about a seller looking to get out of the rental biz and sell 14 properties (with renters intact). I emailed on that one.

Got the bids for the 2nd house.. I was a little uncomfortable with the pricing on the last house and MORE uncomfy with it here.

Im wondering if my maint guy is now figuring Ill pay whatever is on the bill so is jacking the price.

Flooring seemed a little high as well... but that is at least based on yardage. I just didnt think there was that much carpet to be replaced.

that you were too busy to see me. What you had to go through and deal with its a amazing you don't give up sometimes because of how other people can screw-up one dreams and goals. I hope I have the patience that you have when things go wrong.
The deals I have done really never made me money but they did help people that I cared for or I knew who needed a break but I know my day will come. This is why I started this whole thing so I could help my family and me live a better life with less worries about money and spending more time with the family than working 60 hours a week. Mark you are my biggest inspiration ( not taking away from the other contributors you guys are great too ) but I seem to understand you better. When you do get the chance to see me on the next avavilable time I will be here wanting to pick your brain.

My realtor sent her guy out to look at both homes.

The 1st house does NOT need paint. That is good news. I dont have time to get it done.

He quoted on the 2nd house and the savings was in the 25-30% range. So OFC I cant use my guy. He is reliable and does good work. But his prices have gotten out of line. That is what I was afraid of.
AND.. it's one stop shopping.. repairs, paint AND glass replacement.

Got only 1 call on the ad. That is disappointing. And it was a Section 8 call. Im still not ready to turn either of these houses over to S8. Maybe the rental market has worsened even since October?? I guess I will see for myself this weekend.

I did get a response from the email inquiry about the 14 homes. Yes, it's still available (and OFC.. the owner is motivated.) But no other details.. NO prices, no locations, no rental info, no condition info. sigh.. No WONDER it's still available.

Did get an email back on the 14 homes... Maybe my server's spam filter ate the original.

A 3.7M (total) list price with a cash flow of -13.455K per month.

On the bright side, I guess losing 13K a month could be a motivator. LOL.

Only one property is positive and that is only 40 a month (so basically NOT really positive.)

List prices look to be ~100% of FMV.

Off the top of my head, Im not seeing anything here.

Plus 3-4 of them are condos/townhomes, one is in a 55+ community and 2 of them are high end properties.

I may look at cherry picking but I think the rest of them go back to the bank.

Got another email from the agent on the 14 props. Said that the seller is just looking to make a little money and then get out of RE for good.

I'm sure he is... what with a 13.5K neg cash flow each month.

But I don't see that as a reasonable expectation.

He said that many of the homes are nearing forclosure and some are beginning the process. I think these get bought from the bank at some point. Short sale is the only option I see right now.

Anyone else see something?

I did some more thinking about Section 8 last night.

I was trying to do things: First, decide if I was 100% committed to rejecting all Section 8 tenants and second, decide what price would be worth it for me to deal with all the Section 8 hassles.

I have had some really bad experiences with Section 8 and am loathe even to consider it. The rent premium I might be able to get hardly seems worth it.

Im still thinking about the whole situation.

My landscaper emails me last night and asks what I am going to do with the carpet since it needs to be replaced.

And I am like.. HUH???

Why is the guy saying the carpet needs to be replaced and what was he even doing INSIDE the house anyway? (Last I checked... landscaping is OUTSIDE!!)

So my realtor (who got the bid from the guy) and I trade some frenzied emails and she yanks him onto the phone.

Turns out he was trying to "make up" work that needed to be done so that he could be the one to do it (and get paid natch.)

Neat. Just what I need. An over-achiever.

My realtor read him the riot act (ALL parts). Saying that if he EVER wanted a referral through her again then don't pull that kind of junk.

Some days... it never seems to end.

I keep getting automated soliciation messages from AceRenting.com

Anyone ever heard of them??

Supposedly, they have a "guarantee". I guess I can call and check them out at least.

Ah yessssss.. the guarantee is that if I dont rent the house the 1st week, they will run the ad a 2nd week for free. That doesnt seem like a guarantee to me.

It also seems like they do not have many ads at all. Being a national web site has got to make it tough.

Took a flyer and called on a private $$$ ad today. It was hard money (12-16% @ 60% LTV). So of no interest to me.

But what was food for thought was that that the same company has an ad looking for LENDERS as well (at 14%). So that would be a 7% spread on my money. I am just not sure that I want to deal with it for 7% a year.

(Oddly enough, I was actually looking for trust deeds for SALE but turned up nothing on that.)

I must be in a weird mood because I was actually scanning craigslist for proprty managers. Something else I basically never consider.

I emailed a property management company asking for info about the 2 properties I have vacant.

Maybe it's time to just start turning properties over once they go vacant. (Once houses have a good tenant in them- or TBH even a not so good tenant) there just isn't that much to managing them. But the transition from tenant to no tenant to tenant is a pretty big hassle.

Obviously, I have a lot to think about this weekend.

I'm finding these posts fascinating. I'm really paying attention to what you find out, JUST in case I run into the same stuff. Thanks for thinking aloud.

Rina

I made parking reservations for my trip on Saturday. (VERY odd for me to think that I have to make reservations to park offsite at the airport but the lots absolutely DO fill up.) Plus, it's pre-paid so that is a bit more convenient. Should save a little time on the backend...

I am thinking that I will send out a letter to all my current tenants offering referral fees (both for renters AND for new properties to buy). I have very good relationships with ALL of them and they are "boots on the ground". Maybe they know someone or know someone who knows someone...

6 degrees of Kevin Bacon kinda thing...

I am going to be in San Francisco tomorrow (Thursday 6/26). What part of CA are you in? Would love to meet up for coffee if you are in the area.
Thanks
if anyone else is in the SF area, would love to meet up as well

San Diego.... so the other end of the state.

When I look at deals nowadays one question I always ask myself is: Is it sustainable?

In other words, could I do this deal today and another just like it tomorrow and then another and another. If the answer is no then I am not as interested.

Sustainability requires either a very quick exit or monthly cash flow with minimal to zero down payment or some kind of cash out refinance that gets my investment out of the deal.

A guy I know buys lower income SFRs (often in bulk), rehabs and then refinances out via a commercial loan and then rents for a positive cash flow. Sustainable.

I looked at bulk REOs. Buy for cash, sell on land contract, collect 6 months of cash flow then sell the seasoned note. Not really sustainable. I didnt want to wait 6 months.

I looked at a different REO program. Buy with new financing, sell on LO, tripling your down payment money in a year. Not sustainable for the same reason. Takes a year.

Sent emails off on a couple of REO properties.

One is a 2BD townhome for 118K. That is a pretty impressive price. Looks to be around 70K off FMV and from the pix, the property needs little work.

The other was a 3/1 SFR. Looks like it needs a lot of cosmetic work (NO flooring in the place at all) but the price is under 200K which is a good starting place. I don't have an address yet though so I can't be completely sure.

Anyone feel like a little rehab project?

Re-ran my backpage ad. I guess we will see what we will see in 2 days.

The SFR has a cracked slab (and apparently a NASTY one). Not much scares me off, but that does. Possible that it's a bulldoze and re-foundation project ie that there is ZERO value in the structure.

Too bad because otherwise it looks ideal for me. Inside is whacked so no OO would be interested. But easy fixing...

I did talk to the realtor for a while and he said he would send me a list of properties. We'll see how that pans out.

I emailed a couple of people I found off Craigslist who seem to be wholesalers.

They are out of state and in low cost areas (which has sort of been a fantasy of mine for a while now).

With the absolulte price plus the rent/LO to price ratio they very wel could be sustainable with the right financing. (That was one of my big questions. How are you getting in for 10% down or so as a NOO.) If that happens then it's about 67% cash on cash. That got my attention.

The trip went ok. But no renters.

I am definitely looking to turn it over to a property manager. I talked to a lady today. I was definitely impressed with her. A lot of the negatives were answered (basically I pay the repairs out of the rent rather than her doing it). She is more focused on filling the vacant units which is what I want.

Also, it will give me a layer of separation from the tenants- potentially increasing the income. And her pricing was more than fair. Finally, she gets NOTHING until the place is rented.

I am thinking the first house may need paint and carpet after all. They were both marginal. Not obvious replacements but not great either. Master sink needs work. Front yard looked good. Appliances looked good. AC worked good. That's about it.

I took down a couple of phone numbers for LO and for rent properties to compare. And a couple of houses that looked vacant/neglected.

The 2nd house is in progress. Blinds were going up, door knobs being changed etc. A lot of open area. Big house. Carpet MUST go soon though. Previous owner had pets in there

I took down a couple of listed homes. One a short sale (for more than I paid) and one regular listing for WAY more than I paid. NO WAY that the rgular listing happens. Total waste of everyone's time there.

Oh... one thing the PM said was that June is always a slow month but things get cranking after July 4. I have NO explanation for that but I guess I'll take her word for it.

I got a list of local REOs in areas I designated. All were at least 20 years old and many were FIFTY years old. Dont think Im interested.

My realtor has offered to put my rentals on MLS and take nothing (thus freeing up the entire 5% to go to the renter's agent.)

That seems like it would work better for me as all I really need is a tenant. I have the maintenance people in place and it's not like going to the bank to deposit the rent check is rocket science. (Actually, I mostly have the tenant direct deposit it for me.)

My realtor has basically nothing good to say about property managers (which has mostly been my experience as wdell though apparently I didnt learn my lesson).

you would think that property managers would be a good investment. I mean they are paid on total monthly cash flow, so they would work on getting the place rented 100%. i thought they would be good at dealing with problems - tenant issues, maintenance, etc... I would love to hear more from anyone else with either positive or negative PM feedback.

Well.. yeah.. a couple of comments.

First, they are paid on the GROSS, not on the net so their only incentive is on the income side ie up until the point where they get fired, they have NO incentive to keep expenses down.

And I asked your 1st question as well... my realtor said that they have so many properties right now that they dont have to care. But yeah... it's a good question.

If you don't mind saying, what are the section 8 hassles?

1. Annual inspection. It seems like the inspectors feel they aren't doing their job if they dont find something anually. I wont make small fixes prior to an inspection. Just easier to "let" the inspector find them.

2. Inspectors have virtually unlimited power to fail the property whenever they feel like it. And there is no administrative appeal.

3. Tenants. It seems like the tenants come with an entitlement mentality, especially if they pay little or nothing. They treat your house the same way. Screening is at least as important with S8, maybe more so than with non-Sec8 tenants. The "stick" that you do have is that if they get evicted they can lose their benefits.

4. Per #1 and #2, this a FEDERAL program that is administerd LOCALLY so you will be dealing with municipal employees ie bozos. For example, I was getting the run around from a male-female team, call them "John" and "Jane". My normal strategy in this case is to get to the supervisor. Imagine my suprirse when John tells me that Jane is his supervisor and Jane tells me that John is her supervisor. I eventually got to the Federal contact who works with that particular city and she sent them a cease and desist email. But that was a few hours of my life I will never get back.

5. Leases are required ie a month to month rental agreement is NOT acceptable. The local office will not provide a lease but they can and will fail your lease.

The good side is that the checks WILL clear and they ARE on time. So the revenue side is pretty much NOT a problem.

For lower income places, S8 makes a lot of sense.