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Miscellaneous => Random Ramblings => Topic started by: John_in_NC on February 11, 2010, 07:28:55 pm

Title: My rentals are making me crazy
Post by: John_in_NC on February 11, 2010, 07:28:55 pm
And it's only been three years. I am a meaner, bitter person in a short amount of time. I drink a lot more too now. Ditto for my wife, who handles the Hispanic speaking tenants. And I'm starting to ask myself if it is worth it or not. I find myself doing things that are not as financially motivated as they are revengeful against the looser tenants. It's not that all of them are bad, but at any given time at least one of them is giving me an unnecessary grief.

Am I making money? Yes. Do I have a net worth more than I would have imagined three years ago, well I bought right so yes. Is this really worth continuing?? I am starting to think not. I actually have some bites on a couple of them that are not on the market yet.

Somebody try to give me some sanity here. Should I dump cash flowing rentals because I am not as thick skinned as I thought? Or is this a phase every low income landlord goes through?

Or I could sell and have a good chunk of change to play the RE game a little differently? What would be the right angle during this economic time?
Title: Re: My rentals are making me crazy
Post by: phlemboy on February 11, 2010, 07:42:47 pm
I'm willing to guess that you have plenty of bad tenants.. which is to be expected with low income rentals.. These people are poor for a good reason.. Not all of them are bad but generally the "fleas come with the dog". Perhaps you can sell the properties and upgrade to a higher cl*** of rental/renters.. Then you can take better look at your screening process and see how you can improve.. If you don't have Propertymanager's book yet, GET IT.. It's packed with tons of useful information. This is certainly not worth the stress you're putting yourself under.. You're bound to "snap"... Get ahead of this now..
Title: Re: My rentals are making me crazy
Post by: propertymanager on February 11, 2010, 09:16:34 pm
John,

Everyone is different, so whether you should continue or not is a question that only YOU can answer.  However, I'll give you my observations as I am into my 7th year of business. 

I got into this business primarily because I wanted to set up some sort of retirement that I could count on (if anything can be counted on in the current environment).   To that end, I have been very successful.  I don't know of any other business I could have started that would have allowed me to build such a net worth in as short a period of time (and I have owned many businesses over the years).  My other goal was to be able to work a lot fewer hours than I had in the past.  I didn't want to be working 40 hour weeks forever.  To that end, I have also been quite successful, as I typically work 12-16 hours a week, and yet still have a nice monthly income from the cash flow and management/maintenance fees that I earn.

As for the negatives you mentioned - yet, tenants are a pain in the **s.  There's no doubt that I am quite cynical.  Going from being a normal middle/upper middle class person to being a landlord is a big shock.  As a "normal" middle/upper middle class person, where the majority of people you deal with are honest, hard working people - it's quite a shock to find out that 1/3 of our population is nothing but dishonest, lazy scum that will lie, cheat, and steal if given half a chance!  Unfortunately, that's the reality of our failing country and although ignorance is bliss, it's also quite enlightening to understand what the bottom 1/3 of our citizens are like.  This shock can't help but have an effect on any normal person and certainly can cause stress.

My experience is that this stress gets much better as time passes.  I have gotten to the point where I can easily separate the tenant's problems from my problems.  For example, I took most of today off, except for about 1/2 hour late this afternoon when I needed to go pick my wife up anyway (we've had a bunch of ice and snow and my wife doesn't like to drive on ice).  I like to backpack in the snow, so I decided to go to a nearby state park and hike this afternoon.  As I was packing up at about noon, a tenant called to report that she was locked out of her house.  My thought - too bad for her!!!  I told her that I was busy until about 4:30 and that I would be happy to meet her then to let her in.  I went backpacking as planned and met the tenant at 4:30, just before I picked my wife up.  If I'd been doing something else, I would have felt just as comfortable telling the tenant to call a locksmith.  Since I was going in town, I also scheduled an appointment to show a rental to an applicant at 4:40.  I met my wife on time at 5pm and that half-hour was my work day.  To me, being able to do what I want (for the most part) is very much worth dealing with the scumbags!!!!!!!  How many other people could get up on a week day and decide to go backpacking?  Not many!

Another thing I have done that has helped is to only do month-to-month leases.  In fact, I tell all the tenants (including Section 8) when they apply that I only do month-to-month so that I can kick them out if I don't like them!   

Finally, as I said, I've owned many businesses, including one where I had 50 employees.  I can tell you with absolutely certainty, that I'd much rather have a couple hundred tenants than 50 employees!  EMPLOYEES SUCK!  The point is that EVERY business has stress in one way or the other.  In my opinion, dealing with a few bad tenants is less stress than that of most other businesses.



   
Title: Re: My rentals are making me crazy
Post by: allagash on February 12, 2010, 12:48:24 am
John,

sounds like that DC snowstorm did you some good....

the Willard is a nice place for a drink....(used to work around the corner for Bowne).

look at it this way....you're in the Driver's seat....literally and figuratively.

as a pilot....navigate what's best for you and your wife.

-Mike



Title: Re: My rentals are making me crazy
Post by: tatertot on February 12, 2010, 12:56:53 am
There are other things that you can do in real estate to make money. If you really can't stand the tenants, go into a different area of real estate.

My tenants are pretty decent people, because I screen like a rabid maniac.  I will confess, however, that I hate having vacancies because I have to be polite and take applications from so many sorry lying losers.

The truth is that I think most tenants are moderately decent people, but most tenants stay where they are. Only the deadbeats and losers keep getting kicked out, so they are all homeless on a yearly basis, making a lot of them seeking housing at any given time. They are the largest percentage of applicants, but they are not the largest percentage of renters.

I screen hard and I give my tenants notice to move out if they give me any grief. That cuts down on the stress of being a landlord.

For years, I tried to make the jump into commercial, and right now I am sure glad I never made it.  The commercial guys are really hurting in my town, with small businesses going bankrupt and vacant store fronts begging for tenants with no luck.
Title: Re: My rentals are making me crazy
Post by: fdjake on February 12, 2010, 05:22:02 am
Your BUSINESS is TELLING you something......

The QUESTION is.........WILL YOU LISTEN?????

Propertymanager has what I consider to be the best mental outlook anyone can have in the residential rental business....

He consistantly mentions that he works just 12-16 hours/week....I believe him 100%.....What Mike is going is actually very smart.....He has to deal with idiots constantly....BUT....Mentally he REMINDS himself he ONLY works 12 hours/ week!!  It's a great strategy.  When you look at it like that......

IT'S   M A N A G A B L E!!!!!   

BUT.....unlike YOU...That's all Mike does!!!  BIG DIFFERENCE!

The PROBLEM you have is you're working a LOT more than Mike and the STRESS is starting to get to you.....Flying for a living can be a VERY stressful job, add in the losers you deal with for your rental business, the long distance phone calls from your wife about the latest DOPE....
And honestly.....I'm surprised you lasted THIS LONG!!   And here's what you need to come to terms with....

THE BULLSH*T is NEVER GOING TO END!!!!

So...............You have a few CHOICES here...

One you SELL your rentals like I did YEARS ago and just BUY & SELL homes....The market we are currently in is THE BEST I have ever seen for this.....INVESTORS are CRAWLING all over the place, they HATE dealing with the BANKS on FORECLOSURES so what I do is MARKET to OLDER people (with LOTS of EQUITY) buy their old run down homes and put them on the MLS for 30 days....Highest/best offer....I put in the AD that the property is NOT BANK OWNED.....NO BANKS INVOLVED.....Bring your HIGHEST/BEST offer by 3/11/2010 at 5pm and WE'RE SELLING IT!!

Have YET to see ONE of these properties sell for ASKING..ALL OVER ASKING with MULTIPLE offers...I UNDER PRICE all of them, it creates a sense of URGENCY on the buyers side..... I just CLEAN then out (using a banks clean out contractor) and sell them AS IS....

In few cases where the homes were is excellent condition....I've been the bank for the buyer.....I require a FAT down payment....Which surprisingly people have no problem producing now that their allowed to raid their retirement accounts for home purchases....and from that point "I" become the bank....NO PHONE CALLS, NO TAXES, NO MAINTANANCE, NO PROBLEMS.....

My flipping profits allow me to bankroll a few select properties that return HUGE numbers with almost NO EFFORT on my part. 

I dealt with low lifes for years in this business......WHY DO THAT TO YOURSELF???   I made PEANUTS doing it......BUYING & SELLING houses has put HUNDREDS of THOUSANDS in my POCKET already in 2010.
I LOVE THE BUSINESS......You're in and out.....YOU RUN the show.....and even the marketing is a blast because it's so creative.  NO BANDIT SIGNS, NO REALTORS FINDING ME DEALS.....I use PEOPLE....PEOPLE that come into contact with OLD PEOPLE......They send me a lead.....If I buy that house????  They get $5000!!!

Want to see a MOTIVATED HUMAN BEING?????

Put $5000 in CASH in their hand because they gave you a PHONE NUMBER and you'll see the worlds most MOTIVATED HOME FINDER EVER!!!!  If I can make $80K on a house they found me.....Why not give them $5K????   I've had these people burst into TEARS when I counted that money out to them....

And make sure you ALWAYS count that money out to them.....It's like a HUGE GAME......The hundreds just keep coming....

OH.......and be SURE to do it in front of their FAMILY!!!!   If there's 6 of them there.....YOU JUST RECRUITED 6 MORE SETS OF EYEBALLS!!!!
I usually call and ask if I can come over on a SUNDAY around 2pm....There's almost always an AUDIENCE!!!

Want different results????

DO SOMETHING DIFFERENT!!!

Title: Re: My rentals are making me crazy
Post by: rookieNYC on February 12, 2010, 06:11:05 am
John,
Do as we spoke about..Better than chasing those tenants around..



Title: Re: My rentals are making me crazy
Post by: John_in_NC on February 12, 2010, 06:00:09 pm
Wow a lot of great info from some smart people here.

FDJake, I am leaning on doing something similar to what you do right now. I think this is my most likely next step. The only concern I have at the moment, is that according to the public transfer records, it is VERY rare I see somebody in my county at around 50% to market value. Most of them have been REO's in bad shape and I bought a handful of those as rentals. I think realistically I could buy one or two of these a year and make some money, but I can't imagine doing the volume you are speaking of. I can count on one had transfers in my county that have made me jealous. These are public record transfers I am speaking of, not just mls sells. Maybe raleigh is too good of a market for this approach? Only one way to find out. Thanks again for the advice. I would love to try and build a block commercial four unit building like you have in the past. If I can find a lot reasonable enough, I think that would work here in Raleigh. Finding one of these under 100K will be a real challenge though. Would you mess with an underdeveloped lot that needs to be cleared? Or maybe buy a residential zoned in an area that is begging to be rezoned? This is something very outside my past experience, and that alone will be a huge challenge.


Rookie, I'm not sure that I would have enough capital to lend to do it with the "loan to own" business. How much money realistically to start a business like this would I need? I like the passive style you have, I'm just not sure that I could do this yet?
 

Allagash (mike) I don't know DC too well and rarely overnight there. The snowstorm was a freak incident and I was confined to crystal city. About the only time I go to DC is to attend a tea party, and with the sarah palin incident, I'm not too sure I want to be associated with that party anymore. But i will be sure to check out the willard. Where is it?
We hung out at KING STREET BLUES and Bailey's last weekend, only becuase they were the only places crazy enough to open that we could walk to. I'm in Charlotte right now and it is snowing again. I think it's following me.

Tatertot, if I screen any harder, my vacancy rate will soar.

Phelmboy, I really wish I could rent to a higher class. Maybe college kids. I understand them MUCH better than my current tenants. Unfortunately, the margin is not there for me. Real estate near NC state carries a premium even now, a premium the rents do not hold up to.

I hate to sound negative with everyone, but before i change paths, I have to look at worse case scenarios. I really like Petes way (fdjakes) but I'm afraid I won't be able to unload them, and god forbid I have to rent a nice flip. That would be a nightmare.



Title: Re: My rentals are making me crazy
Post by: John_in_NC on February 12, 2010, 06:31:00 pm
And Propertymanager,

I just don't think I can handle it much longer.In the past month, we have had to file two evictions, one moved out just before the lockout, the other actually paid all the court costs so we canceled it, or better put , postponed the eviction until next months excuses start to pile on. Also, we might be getting sued. We didn't follow state laws as closely as we should have, and thought the apartment appeared abandoned,  and it looked like it was, she came back for something and realized we threw out all the trash. She didn't pay rent and changed her number, so I made a judgment call. Turns out she was "gonna pay rent this month" even thought she moved out(yeah right), and we threw away a lot of "priceless belongings" along with some expensive medicine THAT SHE SAYS her mom needs to survive. Drama Drama, now we are getting voicemails from a legal firm.

I could go on about the good tenants that had their window broken out a few days ago and are moving becuase they feel unsafe, and that their family members rent another apartment int hat same building that will probably follow. I could go on about the deadbeat in another apartment that refused to pay last months rent and told me to keep the deposit so he didn't "get screwed" by damages. He was nice enough to give me permission to "do what you got to do" because he already knows evictions take 30 days anyways.  I could tell you about the drug dealers I evicted back in october whose cars left behind I crushed as scrap that are making death threats via text messages now that they are out of jail, I could tell you about the roach infestion at our own house because I didn't go directly to the dump that day with the broken stove, the social worker who calls us at dawn to make threats, the city of raleigh trying to charge me with deadbeats unpaid waterbills, the city of raleigh "striking" me because a past tenant was finally convicted of stolen property that was on my property when discovered, but you've been there done that. How do you keep going? It's to the point where it's more of a game of cat and mouse, instead of making money. And i'm getting sick of it. And yes, I blame our federal government the most. These deadbeats SHOULD BE HOMELESS, they SHOULD BE STARVING on the streets, They SHOULD have to choose between working for a living and dieing. Sorry but the world isn't a perfect utopia, and idiots should be punished.
Title: Re: My rentals are making me crazy
Post by: rookieNYC on February 12, 2010, 07:19:51 pm
John NC,
..Worth a read...
Title: Re: My rentals are making me crazy
Post by: propertymanager on February 13, 2010, 08:11:34 pm
John,

I agree with the others - it's not worth getting all stressed out.  Being a landlord isn't for everyone.  You've got to be a genuine horse's **S and have skin certified to be 1 inch thick to thrive in this business.  I am and I do!  As FDJake said, in addition to the rentals - you've also got a full-time job.  That's a lot on your plate.  I don't have all that.

Quote
How do you keep going?
 

I only work 12-16 hours a week!  So, my reward for dealing with the scum is that I work 16 hours a week and get 152 hours off!!!

Quote
And yes, I blame our federal government the most. These deadbeats SHOULD BE HOMELESS, they SHOULD BE STARVING on the streets, They SHOULD have to choose between working for a living and dieing. Sorry but the world isn't a perfect utopia, and idiots should be punished.

This scum is going to be punished - punished more than they can imagine and it's going to be happening very soon.  With unfunded liabilities of more than 100 TRILLION DOLLARS and deficits of more than $1 Trillion dollars per year as far as the eye can see, the game is up.  When the economy collapses, all the entitlements will stop and I would expect that these people will pay a TREMENDOUS PRICE!  The most pampered and selfish generation in history is about to learn the mother of all lessons!
Title: Re: My rentals are making me crazy
Post by: justin0419 on February 13, 2010, 11:59:23 pm
John,
As our business is growing, we're seeing a few more tenant problems but nothing like you have.  I definitely feel you WRT having a full time job and doing this too.  It's very busy...more so than most people realize.  I hope to one day work very few hours like Mike is, but for now this is definitely an extra job.  Sounds like we've both been doing this for about the same amount of time.  I hope you're able to figure out what works best for you and your family.
Title: Re: My rentals are making me crazy
Post by: REIER on February 14, 2010, 02:04:13 pm
John,

I was somewhat in the same situation you where in but the only difference is, I didn't have to deal with the kind of stupidity you are dealing with. Sounds like you have properties in the warzone or borderline.

Personaly, I'd get rid of them the money is just not worth it UNLESS there is some major upside on those properties that made it worth holding on to. Things like..

- Is the neighborhood going to improving to the point of you attracting a higher quality of tenant? Is it convenient to get to major employers?

-Is the town going thru some sort of rehabilitation where there is growth of businesses and jobs?

- Do you see homeowners buying homes, improving them and living in the immediate area?

If the answer is no to all those questions, I'd dump them because you'll have more of the same issues in the future.

Now, just because you get a higher quality tenenat dosen't mean you won't have to deal with dumb people. The issues never go away, they just don't get as bad as what you're dealing with. From my experience the better tenants are the ones who consider your place their home and not just a rental. If they consider it "their home" they will be more careful (not always) and will stay longer not bugging you as much becasue they want to live there and not piss you off. Most of the calls will be about major things breaking such as water heaters, boilers etc. So make sure the place has newer mechanicals.

I am down to 1 rental and I can deal with it because it has all the upsides I just mentioned above. If I HAVE to hold anymore, it needs to have some major upside that will make it well worth it for me to put up with BS. Otherwise, flipping is my deal.

Also, I'm going to be venturing into owner financing just like fdjake and rookie talk about.
Title: Re: My rentals are making me crazy
Post by: fdjake on February 14, 2010, 03:14:06 pm
John,

Give me some more info on your situation and maybe I can shed some light on what I do so you can then decide if it would be worth your while to try my methods.

The first question is.....

HOW MUCH ARE YOU ACTUALLY MAKING PER YEAR with your rentals TOTAL NET.....Make sure you back out the mortgage payments, taxes, insurance, maintenance, ect....

WHAT DO YOU PUT IN YOUR POCKET AT THE END OF A TYPICAL YEAR and HOW MANY UNITS DO YOU MANAGE???

The reason I ask is simple....

You may be 100% correct in your market assessment, and you CAN'T do VOLUME in your area....BUT........Volume is MEANINGLESS.....PROFIT is all that matters...If you run the numbers you may find that doing just 2 rehab/flips per year makes you MORE MONEY with 1/100th of the aggrevation.  YOU are in total control of the process...From the buying end, to the rehab, to the marketing and sale......If you don't want to deal with some idiot.....YOU DON'T!!!  I've had real jerks show up to my open houses and run their mouths about this or that....I listen to it for about 5 minutes then say....."Listen, I'll make this easy for you.....This house isn't for you.  You need a $500,000 CUSTOM BUILT HOME!  This is a $250,000 REHABBED HOME....So go down to the local bank and see if they'll lend you about $500,000...Then BUILD WHAT YOU WANT!  BYE, BYE...Thanks for coming!"  (then the door slams on their way out of MY HOUSE!)  I LOVE DOING THAT!!

Until we know what you put in your pocket from your rentals it's all just speculation.  And until YOU KNOW what alternatives are out there based on what other people are doing....You won't really know.



Title: Re: My rentals are making me crazy
Post by: John_in_NC on February 14, 2010, 09:03:01 pm
Jake, I'm still working on my income/expense reports from 2009. When I'm done I will give you those numbers. I can tell you that my gross rents are 7200 and my payments are 3200 per month. 2200 dollars in mortgage payments and 1100 in lot rent for the mobile homes. Expenses are all over the place each month. I was getting around 8000K a month gross but rent's have had to come down here from the downturn. Oh and I have 14 units now.

What I put in my pocket isn't that much. I'm really leaning towards trying to flip a home or two, but I am very skeptical on finding a real steal that would sell after rehab.





Title: Re: My rentals are making me crazy
Post by: fdjake on February 15, 2010, 08:02:34 am
That's OK John.....I don't need exact numbers...What you provided is plenty....

Here's how I see it.....

I'm gonna carry $500/month for those 14 units...As you know this could be for evictions, late or no payments, heating, electrical, plumbing or any of the other 2 million things that go wrong in these homes.

So let's say BEFORE taxes you clear $3500/month....

Sounds good......or IS IT????

$3500/month is $42,000 per year.....I just spent a few minutes trolling Raleighs real estate listngs....The MEDIAN home price there is OVER $200,000!!!   The SAME as MY BACK YARD....

Here's the REALITY.........You could EASILY do ONE FLIP a YEAR and make MORE than you're making now dealing with 14 roofs, 14 heating systems, 14 bathrooms, and COUNTLESS MORONS!!!

What you need to do is FIND that HOMERUN first deal!!!!   And you FIND them by THINKING DIFFERENTLY than everyone else....

Ask yourself WHO comes into CONTACT with people that are ELDERLY, have lots of EQUITY in their homes, and don't have the INCOME required to FIX THINGS!!!  These people are.....

PROPANE DELIVERY DRIVERS  (they stop by these homes MONTHLY for deliveries)....Offer the drivers $3000 CASH if they find you a deal and TELL THEM what you want....keep in touch with them even if the lead is crap.......Your WIFE can handle these calls EASILY.....She takes the info, looks it up on line...She or YOU make the intial contact and within 5 minutes you know if a lead is WORTH PURSUING.

MAILMEN.........GOLD.....GOLD....GOLD......They SEE everyhouse, EVERYDAY in EVERY NEIGHBORHOOD....They know who DIED, who's DIEING, who's getting DIVORCED......Offer THEM $3000 for a deal.....these guys are GREAT because the POSTAL SERVICE already divides their routes....You can actually PICK the neighborhoods you like and they see these houses 6 days a week!!!

FIREFIGHTERS........GOLDMINE......Pipe bursts in a house.....Who do you call????  House BURNS, no insurance????  Right there in the FIRE REPORT.....Make up a flier and put in it EVERY FIRE STATION in your area.  These guys also see LOTS of elderly people on a DAILY BASIS....Once you tell them what you are looking for THEY WILL CALL...

OH and MAKE SURE that the DAY a Firefighter finds you a deal and you close on it.....You find out WHAT shift he's working on and precisely at LUNCH or DINNER you stop by that Station with an envelope STUFFED with $3000 in 20 dollar bills and slide it across the kitchen table to him.....Say......"Here's the $3000 for that house you found for me."

THEN LEAVE!!!!

THAT will get talked about for YEARS!!! and then the calls will come POURING IN!!!

Get off your @ss FLY BOY.....and don't try and bullsh*t a bullsh*tter with the......"There aren't any DEALS in RALEIGH.".....

They're OUT THERE....YOU JUST AIN"T LOOKIN in the right spots!!! :beer

You could EASILY DOUBLE your current profits and deal with a FRACTION of the BS....

Even the buy and hold part doesn't hold up against the FLIP.....

Do the math......You now own 14 units and are going nuts.....Some are TRAILERS so they'll NEVER be worth anything...But even the houses, how long will it take you to pay them ALL off???  10, 15 YEARS....

In just 10 years you could have EASILY flipped 30 houses......E A S I L Y !

In a  market with a median price of $200K you should be making at LEAST $40K NET per deal....AND you DO NOT have to REHAB all of them....I sell a TON of these on the MLS in AS IS condition.....The investors out there are SICK of dealing with banks on foreclosures so I put in BOLD LETTERS....NOT A FORECLOSURE, NO BANKS INVOLVED....ALL OFFERS PRESENTED TO OWNER ON 3/3/2010 at 5pm....

Do the math........30 X $40K = $1.2 MILLION.....

Let's say you SUCK at this and can ONLY find 15 (just over one per year) X $40K= $600,000 and your KIDS could run this once you get it going.  You'll find GREAT, RELIABLE CONTRACTORS who know what their doing.....YOUR WIFE will be in heaven picking out colors and interior details that MAKE YOU BOTH MONEY!!!

AND NO MORONS!!!   If you do encounter a LOSER......SHOW THEM THE DOOR.....They'll be another buyer tomorrow!

How much is your LIFE WORTH???
Title: Re: My rentals are making me crazy
Post by: John_in_NC on February 15, 2010, 11:13:18 am
Pete,

Thanks a ton for your advice. It is weighing heavily on this big decision I have. My wife has been keeping up with this thread too. We are thinking of testing the waters a bit before we sell everything. We have two properties that don't have much upside potential, and would net around 100K at current market values. I am thinking from what you are telling me that is about the right amount to try this.

Well thanks for the tips again.

John
Title: Re: My rentals are making me crazy
Post by: fdjake on February 15, 2010, 12:34:06 pm
The decision will be EASY once you find that first great deal.....

Just BLOW IT OUT......Have it cleaned out, sweeped out, and DUMP IT to a rehab contractor.....You might own it for 30 days...

You do this ONE TIME John......and you'll have every house you own for sale in a week.

It's a great business....You just can't expect to find these deals through realtors or from normal sources....

BE CREATIVE.....THINK....THINK.....THINK!!!!
Title: Re: My rentals are making me crazy
Post by: propertymanager on February 15, 2010, 12:51:33 pm
Ok, I wasn't going to comment again, because I truly believe that John should get out of the rental business if it's making him miserable and I believe that the business that FDJake is talking about is as good as any other.  However, I feel as if I must make a few comments:

Quote
You could EASILY DOUBLE your current profits and deal with a FRACTION of the BS....


I'm not buying that.   EVERY SINGLE BUSINESS has b.s. and flipping is certainly no exception.  Dealing with buyers; dealing with contractors (YUK - worse than tenants if you aske me); dealing with the building code department; dealing with real estate agents if you put them on the MLS, these are only a few of the many sources of b.s. in the flipping business.  You already know that.

Quote
Do the math........30 X $40K = $1.2 MILLION.....

Yes, 30 X $40K = $1.2 Million, but unfortunately if you're flipping - the government isn't going to allow you to keep it.  Profits from flipping are taxes as ordinary income -  OUCH!  That's one of the BIG differences between rentals and flipping.  With rentals, your taxes are shielded because you get to depreciate the property.  In addition, as you know, you're not only getting the $42K per year in profits from operating the rentals (cash flow + management/maintenance; FDJakes numbers), but you also get all the equity buildup as the tenants pay down your mortgage).  Obviously, any long term appreciation is just icing on the cake.

So, again using FDJake's numbers, you would have $1.2 MILLION dollars at the end of 10 years flipping LESS TAXES.  If you were in the 28% tax bracket, that reduces your actual profit to $864,000 after income taxes.  With the rentals, you would have the $42,000 X 10 = $420,000 (largely tax free) plus all the equity from the principal paydown + the equity you picked up by buying at a discount in the first place.

Again, I'm not suggesting that John should stay with the rentals.  What I am saying is that EVERY business is filled with B.S. and no business is easy money.  Maybe another option is to get rid of the trailers and move up the rental ladder one or two rungs.
 





Title: Re: My rentals are making me crazy
Post by: rookieNYC on February 15, 2010, 01:03:20 pm
Mike,
 Why is the rental income tax free?
Title: Re: My rentals are making me crazy
Post by: Bluemoon06 on February 15, 2010, 01:15:40 pm
Mike,
 Why is the rental income tax free?

You depreciate the house and take that off the taxable income.

Example:

Buy a house for $100k

You rent the house for $1,000/month minus expenses of $700/month you make $3,600 year.  You depreciate it over 27.5 years.  That is $3,600/ year
After you subtract the depreciation of $3,600 you end up with no taxable income.


This is of course simplified but pretty close to reality.
Title: Re: My rentals are making me crazy
Post by: rookieNYC on February 15, 2010, 01:26:11 pm
what about if you sell the house after the 30 years after you depreciated it down to zero and sell it for 200k because of market appreciation???.,...You owe long term capital gains on the sale..
Title: Re: My rentals are making me crazy
Post by: fdjake on February 15, 2010, 04:43:55 pm
Mike makes some good points....

Notice I NEVER said.....NO BS....

What I DID SAY was.........a FRACTION of the BS....

As to Mikes other points...

Dealing with....

Realtors........EASY.......I've COMPLETELY ELIMINATED all my realtor issues with the   "FDJAKE 30 day listing agreement"
You can not BELIEVE how telling a REALTOR they have just 30 days to sell your property MOTIVATES them!!!!!.....It cuts through ALL the BS....I get REAL PRICES, not BS realtor "get the listing/make believe prices"  I get SERVICE too......As ANY rehabber will tell you....You usually won't HEAR from your realtors until 5 days BEFORE the LISTING EXPIRES....THEN LIKE A MIRACLE, they call you EVERYDAY telling you about all the sudden "activity" the property is generating!!!  With the 30 day listing agreement.......THEY CALL ME EVERYDAY FROM DAY ONE!!
I make it ABUNDANTLY CLEAR to them that unless they produce a BUYER in 30 days they will NOT have that listing on day 31.

BUYERS PROBLEMS........All my buyers get their PRE APPROVALS Through 1 of 5 banks that I use.....They can pick anyone they want, and they are under NO OBLIGATION to use them....But....I will NOT accept a pre-qual from ANY BANK other than those 5....If they are REAL BUYERS they have NO PROBLEM with this.....This one tactic has eliminated 99% of my buyers issues.....and I put it right in the listing agreement so there's NO ISSUES.

BUYERS ARE EASY compared to TENANTS.....I see my buyers ONCE at the CLOSING table ....Unlike JOHN who's seeing WAY TOO MUCH OF HIS TENANTS!!!

Contractors.....Even EASIER!!!!   I buy ALL the materials for my rehabs.....I pay them JUST LABOR.....THEY GET NOTHING upfront...NOT A CENT.....and if they DON'T SHOW UP without CALLING????   They can swing by anytime to watch ANOTHER CONTRACTOR finishing THEIR JOB!!!
Works WONDERS......These guys might blow off other people....They don't blow off ME!!!!  I treat my guys great.....I've used the same group for years....They are NOT the cheapest but they are GOOD!!  and THEY pull the permits....THEY deal with the inspectors....I never understood WHY investors do it any other way.....A GOOD contractor should know that building inspector on a first name basis.....They know his pet peeves...I AVOID all the BS by simply letting my contractors DEAL with the building inspector...THEY are doing the work....So they do it the way the inspector wants it done.....SIMPLE.

TAXES.......Again Mike is RIGHT,  but also wrong......That $846,000 you'll have AFTER taxes........can BUY YOU A FEW SELF STORAGE WAREHOUSES!!!!
The other point Mike forgot to mention is he's LIVING on his rental income...HE DOESN'T HAVE A JOB...So he WON'T have all that accumulated return because he uses it to SURVIVE.....YOU aren't in that position....EVERY PENNY you net from your flips can go right into OTHER investments.

Bottom line.....

I don't HOUSE my BUYERS......If they lose their jobs 1 year after BUYING my house.....IT DOESN'T AFFECT ME......It WILL AFFECT MIKE!!!   IT WILL AFFECT JOHN!!!

They don't call me when the countless parts and pieces in a home start to FAIL!!!!

Mike is right.....EVERY BUSINESS has it's BS......I've done BOTH....and FLIPPING HOUSES is INFINITELY LESS BS than RENTING!!!!!

There's is NOTHING out there (other than a properly timed investment in FORD stock!) that has created the VOLUME of INVESTABLE CASH that flipping does....You're making it 5 or sometimes 6 figures at a clip.  Once you get to a certain point EVERYTHING gets easier....You're courted by PRIVATE BANKS, You can buy 2 or 3 properties at a time whenever they become available.....It just picks up speed!
Ask yourself....How many PROPERTIES can I buy on $42,000/year with it coming in at a rate of $3500/month????  BUT......If it's coming in ALL AT ONCE in $42,000 chunks 2 or 3 times a year.....In a few VERY SHORT years you'll be buidling your first COMMERCIAL PROPERTY.....THEN you'll understand why NO ONE STAYS IN RESIDENTIAL RENTALS!

The bottom line is this........Mike does VERY WELL renting his properties.  It WORKS for him and he is building REAL WEALTH...I just didn't like being a landlord.....The LAWS all favor TENANTS RIGHTS and I HATED IT...Buying and selling houses is a blast.

Been there, done that, bought the T-shirt!
Title: Re: My rentals are making me crazy
Post by: allagash on February 23, 2010, 12:16:19 am
Quote
But i will be sure to check out the willard. Where is it?

about a block or so from the White House....old money though....

The Tombs is pretty cool....low key....a Georgetown hangout:

http://www.tombs.com/main/index.cfm

hail a Diamond cab...

-Mike
Title: Re: My rentals are making me crazy
Post by: rookieNYC on February 23, 2010, 06:44:40 am
Not to change course on this thread but there are many ways to derive income by using the capital tied up in these rentals besides playing landlord..Why not hire a management company if you hate the job of being landlord so much..Money doesnt seem to be an issue for you so why not give up a portion to add that cushion between you and the rent roll if you arent ready to sell yet..Just an idea...
Title: Re: My rentals are making me crazy
Post by: HoldAndBuy on February 23, 2010, 06:39:37 pm
Try to rent my rental is driving me crazy.

I had someone call today. I waited for her at the property while she got lost twice on the way, calling meon the phone for directions enroute.

At the end of her visit she asked if I was flexible on the rent of $950. I said I could rent it for $925. Then she said she was looking for more like $850 or $875.  :rolleyes :rolleyes :rolleyes Couldn't she have just told me that on the phone in the first place before making me drive down and dick around at that empty house waiting for her while she got lost multiple times? Or did she really think I was going to drop the rent $100 for her.
Title: Re: My rentals are making me crazy
Post by: John_in_NC on February 23, 2010, 07:27:09 pm
HoldandBuy

If that is the extent of your rental problems I'll trade with you! I'm getting sued!

Rookie, I am selling two properties next week. So I guess that is how I will stop playing landlord. Try to sell them off. These two were very easy to sell, I had some guys that have been bothering me about buying them. Emailed them and a week later they are under contract. I don't want to complicate things by being creative, just sell my problems.

I'll have six figures from this sale to to reinvest. I'm really thinking I'll try to flip a starter home in a decent area. Sorta like FDJake does. It's funny, a year ago I would have thought flipping was nuts. Somehow I've convinced myself I can do it now, if I can find a no brainer. Wish me luck. I'll report back.
Title: Re: My rentals are making me crazy
Post by: justin0419 on February 23, 2010, 07:51:41 pm
H&B,
If you're asking a rent amount that's in line with other units in your area, be careful about being flexible with the rent amount.  As you can see, you offer an inch and the applicant wants miles. 

John,
That sounds like some pretty good equity off a couple of your properties.  Good luck with your transition.
Title: Re: My rentals are making me crazy
Post by: HoldAndBuy on February 23, 2010, 07:57:23 pm
Yeah, I know my problem isn't that big of a deal. I think my rent is in line with the market now, I was asking $1000 before and that was probably too much.

JohnNC, good luck, I hope the lawsuit gets settled or just goes away.
Title: Re: My rentals are making me crazy
Post by: fdjake on February 24, 2010, 08:52:23 am
Alright John......I got you into this so now I feel it's my job to help you out on your first flip...

SO....................DO NOT........Let me REPEAT THAT........DO NOT....Buy a flip house off the MLS or through a REALTOR!!

I see new guys screw this up ALL THE TIME.

Here's WHY you don't do this....

I spent YEARS in the car business....BUYING and SELLING......Flipping Real Estate is the SAME as buying and selling cars....except you add an extra ZERO onto the end of every number...Most of my competition purchased their cars from NEW CAR DEALERS.....these were the HIGH MILEAGE cars they didn't want on their lots....The ONLY PROBLEM???   You're trying to buy a used car from a guy that was so good at SELLING USED CARS that he purchased a NEW CAR FRANCHISE!!!   IT WAS A COMPLETE WASTE OF TIME...These guys knew to the PENNY what that 100,000 mile Honda Accord was worth...So I developed my OWN system for buying used cars directly from the OWNERS....I had a HUGE advantage....I purchased cars in EXPENSIVE NEIGHBORHOODS where people didn't want STRANGERS coming to their homes.....I'd buy one car on a street and 6 other people their would call me to unload their OLD Hondas and Toyotas...I always dressed nicely, spoke well, was very polite and would handle the transaction ANY WAY they were comfortable.....These people all thought a Honda Accord with 100,000 mile on it was WORTHLESS.  I'd leave 10 business cards with ever person I purchased a car from and would send them $200 for every referral they sent me...THEY LOVED THAT!!!

It is LITERALLY the same business......Believe me on this.....With that in mind I'd like to present you with my REALTOR/CAR DEALER analogy.

Scenario number 1...

A young man drives by an open garage door and sees a familiar set of headlights.....They belong to a 1973 Porsche 911S.....He pulls into the driveway and knocks on the door....And older gentleman appears and the young man introduces himself....They strike up a conversation about the Porsche....The old man hasn't driven the car in a while because it needs some minor work but still runs good...The young man offers to buy it....They agree on a price of $10,000 which the old man is very happy with...The young man takes the car home, cleans it up, fixes the brakes, gives it a tune up and fluid change, puts a new set of tires on it and it runs and drives like all Porsches do....The young man now has a $50,000 car!!

Scenario number 2

The old man decides to drive his old Porsche down to his local Porsche dealer to see what it's worth....The new car DEALER (the same as a REALTOR in real estate) KNOWS to the PENNY what that car is worth....He offers to BUY IT from the gentleman for $30,000 because this is a RARE CAR and he WANTS IT....The gentleman agrees to this.....The NEXT DAY....That "CLASSIC" is sitting on the showroom floor with a $60,000 price tag on it and the words ONE OWNER, ALL ORIGINAL written on the windshield...Now imagaine that same YOUNG MAN (in scenario 1) walking into that dealership and TRYING to buy that Porsche from a Porsche dealer so he can RESELL IT and make a PROFIT......NOT HAPPENING!!!  Buying flip properties off the MLS is like WALKING into a PORSCHE dealership and attempting to buy a car and PROFIT from the exchange.

Buying a FLIP property from a Realtor is EXACTLY the same thing.......Even if it's a DUMP they know what similiar houses have sold for in similiar condition. 

AND.....YOU'RE COMPETING WITH THE ENTIRE MARKET!!!!

Your ADVANTAGE dealing with an INDIVIDUAL is that they DO NOT have this level of knowledge...AND.....In most cases YOU and the OWNER are the ONLY 2 people that know the house is even for sale.....That is a HUGE advantge for you.

I buy ALL my properties directly from the owners....I RARELY rehab these homes....I simple roll them into that PORSCHE DEALERS showroom (the MLS SYSTEM) and then let THE MARKET fight over the property...

I give the listing realtor 5% on a 30 day listing......I also make it clear in the lsiting that the home is NOT bank owned....NO BANKS INVOLVED...Offers will be presented to owner on 4/4/2010

I hire a clean out crew to empty the crap out of the home and I take care of any BIG issues...I'll throw a new roof on a home...2 days for a crew, it's quick, the dumpsters are already there for the clean out crews and within 1 week the property is listed on the MLS then the FEEDING FRENZY starts...

I LOW BALL ALL MY HOMES.....I want to come on market at the LOWEST price for that type of home by at LEAST 10%.....This gets EVERYONES attention and it gets the houses SOLD...

DON"T waste your time flipping homes like these idiots on TV...Fixing every little detail, landscaping, painting.....DON'T BOTHER....This market wants CHEAP and it's SWARMING with investor looking for deals....A lot of them are CLUELESS....

I SELL HOMES to them.......VERY PROFITABLY I might add!!!

NO REHAB

NO DISCLOSURES

AS IS SALES

30 day LISTINGS

VERY LITTLE BS!!!!!!

I have sold 7 of these so far THIS YEAR.

The KEY is creating a NETWORK of people that are out there LOOKING FOR YOU...OIL DElIVERY DRIVERS....MAILMEN.....FIREMEN...ANYONE that comes into DAILY contact with PEOPLE.....I pay them BIG finders fees...I've paid out as much as $10,000 on a single deal.....But I made $100,000 on that home.....That guy is one of my best DIGGERS...he doesn't want to take any risks so this is PERFECT for him....I TRAINED HIM.....Told him WORD FOR WORD what to SAY to these people.....It took YEARS to build this.....BUT it's a MACHINE now....It goes to work EVERYDAY for me wehter I do anything or NOTHING....."IT" still is out there WORKING!!! 

 I just DISPOSE of the items it PRODUCES!!!
Title: Re: My rentals are making me crazy
Post by: John_in_NC on February 24, 2010, 12:01:51 pm
Pete,

Can you give me some phrases you use to convince them to sell at such a low price? I'm pretty direct with people, and I'm afraid that is going turn some off. I've already called up some investors that brought me a house a long time ago for a rental, to let them know i'm back in the game.

Also, I was thinking about running an overpriced ad in my local paper. It's gonna cost more than it should, so I want it to be right. Any ideas, or is this a waste of money?

Title: Re: My rentals are making me crazy
Post by: fdjake on February 24, 2010, 12:51:02 pm
You are 100% right....That direct approach WILL turn them off.  TAKE YOUR TIME but be realistic.....If some idiot wants $400,000 for a 3 family home in Fall River MA....That isn't going to be a LONG conversation.  LISTEN to them and see if there is any FRUSTRATION in their story!!!

Ever sitiuation is different but here's how I do this from a recent example.....

Last weekend....

A couple had a property left to them from a death in the family NOTHING OWED ON IT....

The house was JUNK.....WORTHLESS....but the LAND was zoned COMMERCIAL and was on a very busy street.   The property WAS NOT lsited on the MLS....I got the lead from a "digger" of mine and called them.

I met them at the property on Saturday......I SOFT SELL everything...I NEVER push....So we talked and talked....I asked them what THEY wanted for the property???   She said $250,000....I said, I didn;t think anyone would come near that number and I also pointed out that a BANK would not finance a deal on the house because it was failing down....That meant they needed a CASH BUYER...

I asked them what the intended to do with the proceeds from a sale???  ALWAYS, ALWAYS ASK THIS QUESTION!!!!

They said they'd probably just pay off their own house....I asked HOW MUCH DO YOU OWE ON IT???  They said $75,000.

I explained to them that they needed to look around and see what was selling in this area.....It wasn't commercial property.....It was STARTER HOMES...I told them that right NOW would be a perfect time to SELL this albatross and use the $75,000 to PAY CASH for a 2 bed house......RENT IT OUT for $1200/month....In 5 years when the real estate market is better...Look at where they would be.....The house would have generated $1200/month x 12 months=$14,400/year X 5 years=$72,000.....So, 5 years from NOW you could have, not only your $75,000 back....But ALSO a home that by THEN could be easily worth $140,000...Take the $72K add in the $140K and you have $212,000!!!   The property you have here is UNRENTABLE.....USELESS...SELL IT and BUY something during one of the WORST real estate busts in history....HOW DO YOU LOSE???

You could SEE the light bulbs going off in their heads!!!

It made SENSE to them.....They could understand it....Will it work out exactly like that???  Probably NOT....But THEY could SEE the end game..The numbers didn;t include taxes or anything else...But so what???  they keep the place 8 years, THEN sell it...Either way they could SEE the potential there!

They called Monday morning.....We signed a sales agreement for $75,000!!!

LISTEN to people and FIND A FIT......PAINT A PICTURE FOR THEM.

ASK QUESTIONS......The KEY to your DEAL lies in giving them possible ANSWERS to the QUESTIONS you asked!!!!

Now I understand why you haven't gotten any really GREAT DEALS....You can't just drop a NUMBER on these people....You have to JUSTIFY IT....You have to be able to PAINT THAT PICTURE.....EXPLAIN to them WHY this is a great deal.  Get them to do what YOUR DOING RIGHT NOW!!!

Look at things from a DIFFERENT PERSPECTIVE!!!!
Title: Re: My rentals are making me crazy
Post by: John_in_NC on February 24, 2010, 03:16:06 pm
Thank you!! Very useful info. What you do sounds almost too good to be true, I imagine the real art in this is in the negotiation.

Title: Re: My rentals are making me crazy
Post by: fdjake on February 24, 2010, 05:53:25 pm
You're right John.....It IS too good to be true....

DISREGARD everything I've told you and go back to YOUR original plan.......

Drag a dishwasher into the middle of the street and beat on it with a baseball bat so the neighbors think you're crazy! :biggrin

Hey......

"My rentals are making me crazy."

IT WORKED JOHN!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

This is WHY guru's offer a 100% money back guarantee...They KNOW ONLY 4 out of 100 will ever DO anything with it.   

"THIS CAN'T WORK...IT'S TOO GOOD TO BE TRUE. :help

Why do I even BOTHER??????????????????
Title: Re: My rentals are making me crazy
Post by: John_in_NC on February 24, 2010, 06:24:35 pm
Hey man, everyone has to start somewhere, and I wasn't born with a silver spoon in the kisser,  and 30K dollar houses was about it between me and my banker at that time. But i'll admit my original plan isn't going to be as doable as I thought long term. At least what I bought is still worth more than I paid. But I'm gonna need hypnosis therapy soon if I continue renting to deadbeats who stiff me on rent and destroy my property. It's just a matter of time before I snap, and it wont be a dishwasher or a baseball bat anymore.

I can do what you do, maybe even better. Like I said, I'll report back. But I am very appreciative of the help you don't have to give me.


John


Title: Re: My rentals are making me crazy
Post by: REIER on February 24, 2010, 06:37:31 pm
Quote

What you do sounds almost too good to be true, I imagine the real art in this is in the negotiation.



John,

I think what fdjake outlined is very doable.

You might be giving these home owners too much credit. Think about it, these people where handed a piece of property they did not work for and have no clue what this place is worth on the market. Everyone's reaction is to spit out an unrealistic number when asked what they want for their place. It's your job to bring these people down to reality. If you are in front of the right prospect, who is somewhat rational, motivated and is willing to listen, you have a very good chance of striking a deal. Will this work with everyone 100% of the time? No way! Will it work with the right folks? You bet.

If you're serious about flipping, it's going to take some time and you need to inject your own spin on this.

You can also find REO's, submit low ball offers on them. Most won't pan out, but some will.
Title: Re: My rentals are making me crazy
Post by: HoldAndBuy on February 24, 2010, 06:49:16 pm
This sounds like good advice that FDjake is giving.

I'm on my first rental but I'm keeping the idea of flipping in the back of my mind as an alternative in case the insurance situation for rentals becomes too onerous, or I find I don't care for dealing with tenants.

I don't feel that I have the expertise at this point to manage a flip, but I've learned some about how much things cost by managing the different people who came to fix up the rental I bought from the bank.

I don't want to put all my eggs in the rental basket long term though.
Title: Re: My rentals are making me crazy
Post by: fdjake on February 24, 2010, 06:54:17 pm
"I can do what you do, maybe even better."

Now THAT'S what I like to HEAR!!!!!! :banana :elephant :bouncemulti

Of coarse you can...and don't forget to SHARE any IMPROVEMENTS you make with ME!!!! :beer

I KNOW you can do this!!!
Title: Re: My rentals are making me crazy
Post by: John_in_NC on March 01, 2010, 04:26:13 pm
Well sold two of my DUMPS today. It's pretty cool to get a 6 figure check. Never happened to me or my parents before. But I grew up a poor kid in Arkansas.

Anyways i've located a commercial DUMP for about 50% FMV. It's a garage/service center 2900 SF. Old, beat up, and looks like something I would buy. Market rent 3K-3.5K. It's rented now but I don't think they are paying. The current owner can't pay his bills because of so many non-payer commercial tenants. It's on major street that flows out of  downtown. It's actually in downtown, like the 900 block. There are NO vacancies withing a mile or two radius of this property. Last sold for 400K about three years ago. Previous owner financed it that I would be buying it from. I have a price of 189K. Would you guys do it?







Title: Re: My rentals are making me crazy
Post by: badmash007 on March 01, 2010, 04:33:26 pm
John_in_NC,

Congrats on the sales.

You've done your research on the supply side. What about the demand side? How's the local economy doing? What kind of industries will utilize this space? How are these industries doing locally?
Title: Re: My rentals are making me crazy
Post by: John_in_NC on March 01, 2010, 04:47:55 pm
John_in_NC,

Congrats on the sales.

You've done your research on the supply side. What about the demand side? How's the local economy doing? What kind of industries will utilize this space? How are these industries doing locally?

I really have no idea. They are still there, I guess I could drive up and ask, but i'd be talking to mechanics.  Our stupid state still requires car inspections, so I know that is what most of them do. I never take my car or truck to downtown, because they charge a pretty penny for labor. Like 60-90 dollars an hour!  But I suppose a lot of the state workers probably don't care. Raleigh is the capital of NC and we have way too many lazy overpaid state workers that don't care.
Title: Re: My rentals are making me crazy
Post by: allagash on March 01, 2010, 11:55:49 pm
Quote
Ever sitiuation is different but here's how I do this from a recent example.....

Last weekend....

A couple had a property left to them from a death in the family NOTHING OWED ON IT....

The house was JUNK.....WORTHLESS....but the LAND was zoned COMMERCIAL and was on a very busy street.   The property WAS NOT lsited on the MLS....I got the lead from a "digger" of mine and called them.

I met them at the property on Saturday......I SOFT SELL everything...I NEVER push....So we talked and talked....I asked them what THEY wanted for the property???   She said $250,000....I said, I didn;t think anyone would come near that number and I also pointed out that a BANK would not finance a deal on the house because it was failing down....That meant they needed a CASH BUYER...

I asked them what the intended to do with the proceeds from a sale???  ALWAYS, ALWAYS ASK THIS QUESTION!!!!

They said they'd probably just pay off their own house....I asked HOW MUCH DO YOU OWE ON IT???  They said $75,000.

I explained to them that they needed to look around and see what was selling in this area.....It wasn't commercial property.....It was STARTER HOMES...I told them that right NOW would be a perfect time to SELL this albatross and use the $75,000 to PAY CASH for a 2 bed house......RENT IT OUT for $1200/month....In 5 years when the real estate market is better...Look at where they would be.....The house would have generated $1200/month x 12 months=$14,400/year X 5 years=$72,000.....So, 5 years from NOW you could have, not only your $75,000 back....But ALSO a home that by THEN could be easily worth $140,000...Take the $72K add in the $140K and you have $212,000!!!   The property you have here is UNRENTABLE.....USELESS...SELL IT and BUY something during one of the WORST real estate busts in history....HOW DO YOU LOSE???

You could SEE the light bulbs going off in their heads!!!

It made SENSE to them.....They could understand it....Will it work out exactly like that???  Probably NOT....But THEY could SEE the end game..The numbers didn;t include taxes or anything else...But so what???  they keep the place 8 years, THEN sell it...Either way they could SEE the potential there!

They called Monday morning.....We signed a sales agreement for $75,000!!!

I love this soft sell stuff....

You are vicious fdjake....vicious...

if we meet at that Coast Guard restaurant up your way....I may need to get one of those silver heavy biker chains for my wallet....

lmfao...

-Mike
Title: Re: My rentals are making me crazy
Post by: fdjake on March 02, 2010, 06:37:23 am
John,

A couple of thoughts here.....

First:  Was this service station ever a GAS STATION???  If they ever had UNDER GROUND TANKS there MAKE SURE you have documentation from EPA that the ground passed all testing...If it was NEVER a gas station also make sure there aren;t any contamination issues with the property. (dumping oil, anti freeze into FLOOR DRAINS)  That's why I NEVER put floor drains in my buildings...You're INVITING people to dump nasty sh*t into them.

Second:  If everything looks good enviromentally......You said it sold for $400K 3 years ago, which puts it at the PEAK of the bubble years....Now it's for sale for $189K???   I thought you guys never had a BOOM down there????   A more than 50% price drop in 3 YEARS???   THAT'S BOOM/BUST pricing!!!
If those numbers are correct and comparable to what I'm seeing up here, even at $189K you could be paying full market value...You need to find out what OTHER repair shops are paying for their monthly LEASES.

Third:  What did you walk away with from the sale of those 2 homes???? Dollar wise....HOW MUCH???  I ask because it an important issue if you're dealing with someone that isn't getting PAID for his properties....CASH is gonna be HUGE for him right now.

Fourth:  If you do buy it:  The first thing you do with this building is.....
Have the entire outside painted....WHITE preferrably.....Clean, bright and it contrasts nicely with the next thing you're going to do.....AWNINGS....If you have just ONE window or door (or mulitples) get AWNINGS up there....I use Greens or Reds....They contrast perfectly with the white building and white letters really stand out on them..THEY CAN TRANSFORM BUILDINGS!!!!
I'd replace the garage doors too....Then the ENTIRE BUILDING looks new from the street.  THIS BUILDING WILL GET A LOT OF ATTENTION AS YOU DO THIS!!!

Finally....Pay a seal coat company to come in a spray the entire parking lot and stripe it...This willl blow your mind!!!  Dark Black lot against a bright white building with some color thrown in on the Awnings!!!  HOME RUN for ANYONE looking to have their BUSINESS stand out on that road...And THAT is EXACTLY what BUSINESS OWNERS WANT!!!

Then step back and look at your NEW BILL BOARD!!!

Here's what I LOVE about commmercial real estate.....

The ENTIRE time you're out there PAINTING, having AWNINGS installed, installing new garage doors....You have a BIG SIGN out front that says FOR LEASE....The entire BUILDING has now become a BILL BOARD!!!   Business owners renting from land lords that DON'T take care of their buildings will be DRIVING BY EVERYDAY and start THINKING!!!!   So will their CUSTOMERS!!!
The daily progress on this building will draw HUGE ATTENTION...Make sure you've got a PHONE NUMBER on that sign because you WILL get calls...MAKE SURE your contractors keep the front of that building CLEAN and CLEAR of CRAP......Put the DUMPSTER BEHIND the building...You don;t want ANYTHING blocking the view to "THE SHOW".....The TRANSFORMATION is what will get this building RENTED for you....I won't even let my contractors park their TRUCKS in the front of these buildings!!!!
DON'T BLOCK THE VIEW!!!!!!!!  People LOVE seeing these buildings TRANSFORM as they drive by everydayand everyday it looks BETTER!!!

Every single one of my buildings got this treatment.....Every single one was leased PRIOR to it being completed....Usually by the time you get it painted and the AWNINGS up the calls start coming in....I make sure my AWNING company leaves the most prominent window UNFINISHED so  the NEW TENANT can put their business name on that AWNING....They usually install a temp front that says YOUR BUSINESS NAME HERE!!!!

All totaled.....A cosmetic rehab done like this MIGHT cost you $5000-$8000....and most of that is for the awnings and garage doors.

Building like this are ALWAYS in demand because the BUSINESSES that lease them usually do well in RECESSIONS!!!  (Repair shops)

I put a 5% anniversary rider in ALL my leases.....The rent goes UP 5% every year UNLESS the tenant notifies me in WRITING 30 days prior to the lease anniversary that they are MOVING OUT....That 5% ADDS UP over the years and having it in the lease removes the negotiations...They signed it....That's the deal....If the LOCATION is GOOD and the BUILDING has INCREASED their BUSINESS.....THEY AIN'T MOVING....Their PAYING the 5%....HAPPILY!!!

And JOHN........NO MORE NIT WIT DRUG ADDICTS......NO MORE SMASHING DISHWAHERS.....If they don't PAY YOU?????  You decide to put 10 DUMPSTERS around YOUR BUILDING to do ROOF MAINTANANCE!!!!!  I did this to ONE GUY....ONE TIME.....He was Late paying his lease every month...One MONDAY he showed up to work and the entire BUILDING was surrounded by DUMPSTERS.....I told him that this was the LAST TIME he would EVER be late with his rent again....OR....These dumpster would be here until he went UNDER!!!

SURPRISE........NEVER LATE AGAIN!!!!

Try doing THAT with residential rentals.....You'd be in JAIL.....Not in COMMERCIAL....It's MY BUILDING......NOT HIS HOME!!!!
Title: Re: My rentals are making me crazy
Post by: John_in_NC on March 03, 2010, 08:55:00 am
Pete thanks again, I can assure you I will be following your advice on this if I can get this thing. I was told it was never a gas station.


I did a covert inspection of the building yesterday, it's a 5 bay that has been built on to not long ago. The old part built in 1958 is a block with shingle roof that has been redone probably at the same time they built the other 3 bays on the side, which is a metal building with shingle roof. I'm guessing the additional part was built on around 2004. It's on a one acre lot. It looked to me every bay had a hydraulic lift build into the concrete slab. I'm guessing that belongs to the owner, not the tenant, that I will more than likely be evicting. According to the tax records that lot alone is worth 182K. Total assessment is at 378K, but its very common to see commercial buildings in this part sell for way more than the assessment. The price is 200K now, it's a real long story on that one. Attorney has cleared the title for me already. I am working with only a little over 100K cash. So that means a loan, which is what makes me the most nervous about this deal. I have no idea what my banker is going to say to this one. I'm gonna call him, but the standard answer for this is "it's tough out there, send me the contract and info and we will see". I'm gonna look like an A$$ if I can close this deal.
Title: Re: My rentals are making me crazy
Post by: propertymanager on March 03, 2010, 09:26:48 am
Quote
It's rented now but I don't think they are paying. The current owner can't pay his bills because of so many non-payer commercial tenants.


John, I don't mean to rain on your parade, but Pete is laying it on pretty thick and you really need to consider whether there is demand for this property.  The tenants aren't paying - not good.  The current owner has so many non-paying commercial tenants that he can't pay his bills - is that because the current owner is incompetent or is it that business owners are under a lot of stress in your area?  Unlike residential rentals, commercial property can literally stay vacant for YEARS!
 
Quote
Last sold for 400K about three years ago. Previous owner financed it that I would be buying it from. I have a price of 189K. Would you guys do it?

Has the previous owner already paid the note down to $189K (from $400K) in 3 years?   If not, can he really sell it if he is upside down?

Pete gave you great advice about painting the exterior; improving curb appeal; and turning the property into a big billboard  -  but IS THERE DEMAND or will you end up in the same predicament as the current owner?

Here's an article primarily about the trouble the banks are in as a result of commercial loans:  http://www.theepochtimes.com/n2/content/view/30405/

The point I would take from the article is not about banking, but rather the underlying problems in the commercial sector that is causing all these commercial loans to default. 

Again, my point isn't to suggest that you shouldn't do this deal, but rather to counter some of the hype being posted by Pete.  I would just be sure that there is demand for the building, unless you are willing to pay for a vacant building until the economy recovers (which could be a decade or more).

Title: Re: My rentals are making me crazy
Post by: John_in_NC on March 03, 2010, 10:04:44 am
Mike,

Point taken, and a great one at that. The best way I know to gauge demand, is driving around the area trying to locate similar properties nearby that were vacant and/or for lease. I found maybe 9 or 10 of what I would consider similar, and no vacancies, you have to drive pretty far up that road, which is really a different area geographically speaking, then yes I found TONS of office space for lease, and some retail and a two restaurants, but this is an area of strip clubs and heavy industrial. It's well known that this area of raleigh is dead. I'm all ears on other ways to gauge demand.

That 400K dollar loan (actually 330) has been wiped out through foreclosure, how I was alerted. The now tenants bought it and didn't pay the owner financing. Now they are renters again, but there is still one loan on that is an old one. It's sorta complicated buy my attorney is good and has it figured out.
Title: Re: My rentals are making me crazy
Post by: fdjake on March 03, 2010, 12:14:22 pm
JOHN....

I'D BUY THIS THING IN A MINUTE!!!!

Think about it....You currently own NUMEROUS residential rentals that are a PAIN IN YOUR @SS.....Sell a few of them and PAY CASH for this property!!!  NO MORTGAGE!!!  A property like this selling for LAND VALUE????.....THAT's a freakin STEAL!!!   How much would it cost you to BUILD it????  Land + STRUCTURE....NO WAY are you building a 5 bay garage with lifts, office, and ONE ACRE of LAND on a BUSY Commercial Avenue for $200K.....NOT HAPPENING!   So you grab a $100K loan and DUMP a few more of your pain in the @ss rentals....Then PAY OFF the commercial property, which means NO MORE LOAN!!!  SHOW ME HOW YOU GET HURT HERE????

I'm not even gonna get into the OTHER uses for this ONE ACRE PARCEL!!!
Does the company CVS or WALGREENS ring a bell with you?....That is EXACTLY the size LOTS they BUY for their DRUG STORES.  Rent it out as a garage for a while.....10 years or so from now don't be surprised if that ONE ACRE is worth a LOT MORE than all your residential trailer rentals COMBINED.....How many ONE ACRE lots are on this road???  Is it a BIG LOT for the road or a small one??

Here's a PREDICTION from someone that actually DOES THIS....YOU'LL NEVER GO BACK!!!   You'll have EVERYONE of those houses you own on the market within a couple of YEARS!!!  And you'll wonder WHY you ever waited so long to do this!!  Again.....I've been doing this for 24 YEARS...I have a LOT more experience at this than Mike does....He has ZERO experience in commercial property.

John......If YOU can't close this deal.....CALL ME......I'll close it!!  CASH!!!

Here's a TIP.....

There's NO VACANCIES at your area REPAIR SHOPS because we're in a RECESSION!!!!   I rent to 5 of these businesses and their all BOOMING right now....When people CAN'T BUY a new car.....THEY FIX THEIR OLD ONE!!!!

If the owner of that building ain't getting paid....HE'S AN IDIOT!!!  Mike THRIVES on these situations in residential rentals...My guess is this guy has other commercial property that consists of RETAIL SPACE....If he has office space or RETAIL he would be hurting right now. That end of the market is DEAD.   But that's NOT what this space is!!

A 5 bay repair garage during THESE times ain't gonna last long when the FOR LEASE sign goes up in front....DO NOT be surprised if one of the other ESTABLISHED businesses MOVES to your location for better facilities, better traffic, better visibility (assuming your property HAS those features)
Another point......For a REPAIR GARAGE.....Having a ONE ACRE parcel is HUGE....These palces ALWAYS have customers cars sitting around waiting for repairs/parts, ect.....Having all that PARKING is a BIG plus for a repair shop!

Here's an interesting news clip from Raleigh N.C. on this very subject...

http://www.wral.com/news/local/video/4583155/


Title: Re: My rentals are making me crazy
Post by: propertymanager on March 03, 2010, 04:35:58 pm
John,

If FDJake's right, this could be a very good deal.  If he doesn't understand your market and he's wrong, who will be taking the loss?  Again, I'm not saying it is or is not a good deal.  All I know is that FDJake is shoveling it pretty deep!  It's up to YOU to do the due diligence and determine the facts.
Title: Re: My rentals are making me crazy
Post by: fdjake on March 03, 2010, 04:39:17 pm
Sort of like I SHOVELED IT when I told JOHN to buy FORD STOCK last January????

He LISTENED then.......Only THAT TIME he didn't use REAL MONEY....So he watched a $100,000+ PROFIT being SHOVELED OUT OF HIS ACCOUNT!!!!!

My feeling is JOHN is getting a little TIRED of following the.....

LET'S SIT ON THE SIDELINES ADVICE!

But Mikes right on some points here......You need to do your research...BUT honestly.....I've been IN this business....Repair shops do well in bad economic times.....UNLESS you run a shop that screws people....If you do that.....You're DONE.......Especially in a bad economy.

You've got 2 repairs shops named in this piece.....Do some DIGGING...Find out WHY one shops business is UP and the others is DOWN.....Is it LOCATION or REPUTATION????   If the second guy in that piece has a bad rep.....THAT'S why his business is down and the other shop is a better barometer of activity for these businesses....

I'll tell you RIGHT NOW where you can go and get COMPLETELY UNBIASED  opinions on whats happening to repair shops in your area.....

AUTO PARTS STORES!!!!!!!

They SELL to these guys.....ALL OF THEM.....Ask a few parts suppliers how BUSINESS is these days, and ask how the REPAIR shops are doing in the area.....THEY KNOW.....They BILL those repair shops for parts.....If everyone is LATE paying things aren't good....If the PARTS STORES are BUSY......So are the REPAIR SHOPS!!!

Now how come MIKE didn't give you THAT ADVICE?????

Answer:  Because he's got NO EXPERIENCE in this BUSINESS....

Tae advice from people who KNOW what they're talking about from EXPERIENCE.
Title: Re: My rentals are making me crazy
Post by: propertymanager on March 03, 2010, 04:55:53 pm
I'm not giving anyone advice to sit on the sidelines, however I do think he should do his due diligence and not buy something due to peer pressure he's getting on the internet. I know that I'm not buying anything just because you or Rookie think that I should.  Also, just because you type something IN ALL CAPS doesn't make it right.

Furthermore, while you were right on the Ford stock, you were wrong on the QQQ Puts and if he followed that advice he would have LOST a bunch of money.  All I'm saying is that no-one, not you, not Rookie, and certainly not me, that are 100% right all the time.  My advice is to do due diligence and only play when you know you're going to win. 

I agree with your advice on quick flips.  I think that's very smart in this economy, especially if you don't want to do rentals.  In fact, flipping is probably less risky than rentals right now IF you have a job to fall back on if flipping falls apart with the economy.  If I am right about the economy collapsing in the next couple of years, then there will be significant risk with a rental property business.  Flipping one deal at a time offers very little risk if you buy right, provided you get out quick and provided you have a job or something else to fall back on if you can't live on flipping.

IF the garage is truly being sold at a big discount and IF there is demand for it and IF it doesn't have environmental issues - then it could be a good deal.  But John needs to do his due diligence since he's investing HIS MONEY.
Title: Re: My rentals are making me crazy
Post by: fdjake on March 03, 2010, 05:01:44 pm
According to YOU....You're not buying ANYTHING.....PERIOD.

You're on the SIDELINES!!!!

I just gave him SPECIFIC ADVICE on EXACTLY how to due his research....

YOU GAVE HIM NOTHING!!!!!!

NOT A THING!!!!  Z E R O...  Not even a IDEA on HOW to research a COMMERCIAL PROPERTY.......But how could you?????   YOU don't have ANY experience doing that!!!

Oh and Mike my Profits on GOODYEAR alone.....CRUSHED the loss in those Q's.....Check the posts......THAT investment was ALSO laid out here in GREAT DETAIL....And you're the guy that sold ALL your Ford stock at what???  $3 change???  NICE!!!   And ONE LAST  POINT.....I NEVER told ANYONE to buy Q's....It was a trade "I" made and I simply posted it here because YOU asked people to POST their trades.....The ONLY stocks I have EVER recommended here SPECIFICALLY were FORD and GOODYEAR.....Get the story straight.

My current position in Ford is closing in on the 7 FIGURE MARK!!!!  So don't lose any sleep worrying for me about that Q loss.
Title: Re: My rentals are making me crazy
Post by: REIER on March 03, 2010, 05:16:59 pm
John,

How about just driving down the strip and asking the garage mechanics how is business and if they need more bays and room to park used cars for sale? That should give you a pretty good idea of demand. Also, why not see if any used car lots places need a new location? Or, maybe do a combo used car/ car mechanic location where you have one owner doing fix up work and another selling used cars. I'm just throwing out ideas here.

Also, how is the traffic flow during different times of the day? Keep an eye out for the other garages during various times of the day and see what they are getting for drive in business.

I'd also want to know why the current tenants aren't doing business. Is it a marketing problem or a reputation issue.  You can make a batter assesment after you start getting some answers.

Title: Re: My rentals are making me crazy
Post by: propertymanager on March 03, 2010, 06:21:48 pm
Quote
According to YOU....You're not buying ANYTHING.....PERIOD.

You're on the SIDELINES!!!!

I am not buying anything else.  I am NOT on the sidelines.  I have a rental property business that is doing quite well.

Quote
Oh and Mike my Profits on GOODYEAR alone.....CRUSHED the loss in those Q's...

Good, maybe from now on you could tell us which of your predictions will come true and which will crash and burn.

I honestly can't understand what you're arguing about?  Did you have a bad day?  I am agreeing with you about the flipping.  I am agreeing with you about the garage, if the due diligence pans out.  I am agreeing with you not to sit on the sidelines.  Maybe those commercial properties are getting to you after all!  Not quite as stress free as advertised?  For someone who claims to have made a big pile of money on stress free investments, you certainly seem unhappy.
Title: Re: My rentals are making me crazy
Post by: fdjake on March 03, 2010, 06:37:39 pm
Or maybe it's just YOU!!!!

Maybe it's YOU telling people here I'm "SHOVELING IT ON" or "LAYING IT ON PRETTY THICK" and "HYPING an IVESTMENT"  When in REALITY...... YOU have ZERO EXPERIENCE doing this.......ZERO!!

I DO have a problem with a person that has NEVER OWNED a SINGLE PARCEL of commercial property telling others I'm "HYPING AN INVESTMENT" 

I have NEVER done that HERE or ANYWHERE ELSE.

I take my reputation very seriously...If you want to FLUSH  yours down the TOILET with your RIDICULUS RANTS about coming FOOD SHORTAGES, RIOTS and the COLLAPSE of OUR COUNTRY.....BE MY GUEST.....But when you start running your mouth about ME.....Yea...I have a BIG PROBLEM with that.

You were completely OUT OF LINE here.  Don't ever insinuate that I'm HYPING some investment. 

So in the END....You have NO IDEA what you're talking about....But why let that stop you from taking a few cheap shots at me?

Then you claim "I" have the problem.

INTERESTING
Title: Re: My rentals are making me crazy
Post by: rookieNYC on March 03, 2010, 07:11:50 pm
Not that I expect John in NC to throw me under the bus, I advised him the other day to *not*  buy the said property..Not that my opinion  matters any because I have the *least* real estate experience here...I just know that cash is king right now and I hate being any kind of landlord and I want assets for *nothing*...And the price for the commercial property doesnt seem cheap enough for me *IF* John is making a cash offer...A cash offer on that property from me would be in the 120k-130k and let them negotiate it higher...Cash is king....But if someone lets me steal (not literally,but buying very cheap) from them I will gladly do it..


Title: Re: My rentals are making me crazy
Post by: propertymanager on March 03, 2010, 07:13:53 pm
Isn't it interesting that YOU are the only one in the world that knows what they're talking about?  I guess there's no need for me to read what anyone else says, I'll just check REIClub for the latest news from FDJake!  LOL!

I think that you just like to argue.  It doesn't matter who you're arguing with or what you're arguing about - you just like to argue.

And just FYI, although I haven't owned an auto garage, I have owned some small commercial properties.  I owned a prime lot that I rented to a medical company and I simultaneously sold an easement to a phone company for a small corner of the property.  I later sold that property to a restaurant that needed the property for a parking lot.  In addition, I still own a small commercial building that was most recently rented to a company that did upholstery.  Commercial is not my business and I don't claim to have your experience in that area, but I don't have "ZERO" experience as you claimed.  Again, you are NOT the only one that knows anything.
Title: Re: My rentals are making me crazy
Post by: fdjake on March 03, 2010, 08:49:48 pm
Show me where I said "I" was the ONLY ONE that knows Commercial Real Estate??? 

We're talking about a COMMERCIAL PROPERTY that involves the CAR BUSINESS!!! 

What would I know about the CAR BUSINESS???? 

Well, I was just IN IT for over 15 YEARS, having OWNED a car dealership with a HEAVY REPAIR business for customers cars.  I STILL own that building and STILL hold the dealers license in my company name (I LEASE it to a tenant)  I ALSO own 4 other COMMERCIAL BUILDINGS that EACH have auto repair related businesses in them....I BUILT 2 of those 4 buildings from the GROUND UP....Purchased the land, developed it, obtained the permits, designed the lay outs, acted as GC for the construction...THEN found the TENANTS!!  I FOUND those TENANTS by GOING DIRECTLY to businesses in OTHER BUILDINGS and SHOWING THEM MY LOCATION and FACILITIES......That's how I found the FIRST tenant on my first spec building....The REST CAME in during the REHAB or CONSTRUCTION phases....You know, just like in the POST I WROTE on HOW TO SPRUCE UP THIS BUILDING to attract a TENANT!!

Want another one????  I put WASTE OIL heaters in EVERY BUILDING I lease to AUTOMOTIVE BUSINESSES.....That ALONE has brought in tenants...A waste oil heater runs on USED MOTOR OIL and transmission fluid....It can also run on regular heating oil, but for a CAR REPAIR BUSINESS that is constantly producing waste oil and having to PAY someone to take it off their hands, having a facility that installed these heaters is a DOUBLE savings for them....No cost to dispose it and it's also HEATING the building which drastically cut ultility bills!  It's a double win for me too...I don't have to worry about someone dumping motor somewhere it shouldn't be and the tenants LOVE the systems.....Believe me.....These guys learn REAL QUICK that every DROP they pour into that tank is MONEY NOT coming out of their POCKET!!  And If that auto business moves out...Those heaters LOVE running on regular CLEAN heating oil.  Everyone WINS!!!

I'm sure you could just dismiss these tid bits I've given away for free here as HYPE...But whatever....Want to know someone that WON'T DISMISS IT????

YOUR FUTURE TENANTS!!!!

Anyone that has been in the repair business knows a few important things..And if YOU know these things....THEY WILL LEASE YOUR BUILDING!!!

1)  A good location with a GOOD LOOKING BUILDING attracts ATTENTION!  ATTENTION attracts CUSTOMERS!!!
2) A well thought out building, designed with EXPENSE SAVING features, means MORE PROFIT for that tenant.
3) A buiding that is located on a busy Avenue will have many OPTIONS for that owner and tenants as time goes by.  That garage is just the beginning.

But what do I know????



Title: Re: My rentals are making me crazy
Post by: John_in_NC on March 04, 2010, 06:08:32 pm
First off, THANKS for the help from everyone! I enjoy the opposing views here. There are a million things running through my mind with this but I am pretty confident of this property. Tommorrow or monday, i'm going to try to buy this thing. There are two negatives i've discovered in my digging. 3500 of back taxes and it's in a flood zone. Neither are that big of a deal to me. Flood insurance is going to cost around 3K a year from what im being told. If anyone knows different on commercial please speak up! I'm wondering if my local bank will even know and make me buy it?

Well thanks again, and I'll report back on my progress with this property.

Title: Re: My rentals are making me crazy
Post by: John_in_NC on March 19, 2010, 07:32:51 pm
Well I bought it! wish me luck! I've been told by more than one real estate professional this is a hell of a deal.
Title: Re: My rentals are making me crazy
Post by: propertymanager on March 19, 2010, 08:29:16 pm
Congratulations!  I hope you make a big pile of money!
Title: Re: My rentals are making me crazy
Post by: fdjake on March 20, 2010, 06:01:14 am
Congrats John!!!!

Now remember.......The entire POLISHING PROCESS for that building is a SHOW!!!

I call it POLISHING because you probably don't need to do much to make that building SHINE.....But the PROCESS of shining it up is what ATTRACTS ATTENTION.....Use that to your ADVANTAGE!!

Get a BIG SIGN out there IMMEDIATELY with a nice COMPUTER GENERATED PICTURE of what the building will look like AFTER..... with AWNINGS, NEW EXTERIOR PAINT, RESEALED BLACK TOP, ect.....This can easily be done with a photo of the existing building and any editing software....Your sign maker can do this for you.

You want potential TENANTS to SEE YOUR VISION for this building BEFORE it's finished!  If they can SEE what you're PLANNING....THEY can start going some PLANNING TOO....Like planning to MOVE into YOUR BUILDING!!!!!

This is HUGE.....As you work, they can watch the progress....That simple sign...Is their ROAD MAP.  As each part is completed they'll immediately start to understand your VISION.....At that point YOUR VISION becomes THEIR IDEA!!!!

A nice BIG SIGN....Right out front with that AFTER PICTURE won't cost you much....I have mine installed either on 4X6 posts or it's BOLTED over an existing sign....You want that AFTER picture to be BIG.  This is a VISUAL TOOL....Your saying something with a PICTURE.  You don't need a lot of WORDS....Just a phone number, and "AVAILABLE"  written on it.

The POLISHING PHASE is important......REMEMBER THAT, it'll find you that tenant.
Title: Re: My rentals are making me crazy
Post by: John_in_NC on March 20, 2010, 03:36:53 pm
Hey pete,

Can you go over the basics of the lease you use for repair shops like this? I know you said 5 years with yearly increases. But what about maintenance? I know the tenants do much more of their own but what is industry standard? What about security deposits? Just one months rent like my residentials?? Any chance you could share one of your leases with me?

Thanks

John
Title: Re: My rentals are making me crazy
Post by: fdjake on March 21, 2010, 06:18:00 am
John,

Basically, this is what I do for a Service Garage lease.

The TENANT is responsible for anything INSIDE the building....I maintain the outside.  With a few exceptions like.....

ALL Over Head Door maintenance is the TENANTS responsibility....These doors get a LOT of use....YOU aren't the one using them everyday so your tenant pays for repairs on anything door related.

ALL lifts are maintained by the tenant...Again YOU aren't using them everyday...THEY ARE....Both these items...The Doors and Lifts will get MUCH BETTER CARE if the tenant has to pay to fix them.

I maintain the OUTSIDE of my buildings...The TENANT is responsible for anything INSIDE.....The outside of that building is my BUSINESS CARD.  I want complete control over how that is presented to the public.  Including SIGNAGE.  Make sure YOU have final approval over any SIGNAGE installed on that property in the lease.

I use a annual % increase rider built into my commercial leases....The amount is usually 4 to 5%.....The tenant must notify my in WRITING 30 days BEFORE the anniversary date of the lease that they are moving out....If they don't....The lease increases by 4 to 5% that year. (some of my properties are 4%, some are 5% it's all negotiable)
This clause might be hard to get in this economic enviroment, but ALL leases are negotiable....TRY IT.  It takes the haggling out of the process.  I send them a copy of the lease agreement AFTER the anniversary date has passed with the NEW lease amount in it.  If the location is working for them.....They just pay.

I treat my tenants FAIRLY and I keep my buildings in tip top shape.  If I had purchased YOUR building.....I would do the following before my new tenant moved in...

1) Have the heating/cooling system checked and fully serviced.
2) Replace all garage door springs and have every door serviced by pro's.
3) Have a service company that specializes in auto lifts, service the ones in that garage.
4) Save all the receipts (obviously) and show the tenant what's been done....At that point HE is responsible for any future maintenance on these items.  the day he moves in everything is fully serviced and operable...He just has to maintain it. 

As far a security deposits......I use 1 month, but everything is negotiable.

Leases are very REGIONAL.....What is COMMON in one part of the country may NOT BE in others....Check with some local commercial property owners in your State.  A good Commercial Realtor MIGHT provide some valuable insight...But take everything with a grain of salt. In my experience, my 10 year old SON knows more about Real estate than 90% of the realtors out there.  But you might find some very valuable ADD ONS that are very common in your area that aren't up here.

The OTHER way to do this....Is even better!!

Go look at a few comparable buildings that are for LEASE...(Even if you have to travel to find some)  Then ASK for a lease agreement.  This would give you great insight into what your COMPETITION is doing and what is common in that market.   That's EXACTLY how I built my lease agreements!
Title: Re: My rentals are making me crazy
Post by: John_in_NC on March 22, 2010, 11:30:13 am
Awesome info! Thanks!!
Title: Re: My rentals are making me crazy
Post by: fdjake on June 28, 2010, 08:54:07 pm
Just thought I'd BUMP this thread up so you can all SEE what a REAL INVESTOR does when he realizes he HATES his residential rental business...

HE DOES SOMETHING ABOUT IT!!!!

Read the entire thread...It's ALL in here...From IDEA to EXECUTION!!!

John....My hats off to you man....

IMAGINE....an INVESTOR that actually FOLLOWS ADVICE!!!!

SUPER JOB!!!!!!!!!!!!!!!!!!!!! :beer :beer :beer
Title: Re: My rentals are making me crazy
Post by: Hoosier4life2005 on June 28, 2010, 10:27:38 pm
Yes, great job John.  I hopefully can do the same.

Would be nice if some people (FDJAKE) would still give me some individualized advice (for somebody who cant paint/due manual labor very well) when the time comes (like somebody said they would), but were still playing little kid games around here I can see :)

Guess im gonna have to WORK and try and dig up old advice from previous threads.

Sigh...  I sure do miss the good ole days of this board :(

Jake.. do I need to make another dance video or something for you?  What the heck mate?


(Tear running down my cheek Jake, tear running down my cheek)
Title: Re: My rentals are making me crazy
Post by: thughes22 on June 28, 2010, 10:35:59 pm
I think FDJake gives good advice from what i have read and i am thinking about going into investing with Josh Azbel (Hoosier4Life2005) . I would like some advice from FDJake about getting into investing.
Title: Re: My rentals are making me crazy
Post by: Hoosier4life2005 on June 28, 2010, 10:39:14 pm
I think FDJake gives good advice from what i have read and i am thinking about going into investing with Josh Azbel (Hoosier4Life2005) . I would like some advice from FDJake about getting into investing.

Lol...  Tyler.  Good first post.

This is my friend from real life Tyler. Hes 18.  I told him about this site and hes gonna start posting.  I told him about Jakes good advice and he said he wanted to post from now on.  Hes got ALOT to learn (as do I).  But yeah, hes gonna be floating around posting from here on.  I realyl wish he would have CREATED A NEW POST like I told him, but apparently he feels the need to hijack this thread.

Partnerships in investing = no no.  Stick around and learn about how to MAKE MONEY YOURSELF tyler. Alot of good investors on here and hopeuflly (some have left) you can get some good help. 

Good job tyler... good job.
Title: Re: My rentals are making me crazy
Post by: fdjake on June 29, 2010, 05:47:35 am
Hoosier.....

I've been givng people advice here for the last 4 YEARS....YOU'RE RIGHT...Just R E-R E A D my past posts.....EVERYTHING you need is in there.

What are you waiting for....Someone to hold your hand???

Do you have your $30K yet???

I'll be glad to help you kid....But don't waste my time....get off your @SS and get going.

How many people in your AREA know you want to BUY PROPERTY???
My guess is NOT MANY....and the ones that do know, WON'T BE BRINGING you anything.

SO CHANGE THAT...... and Start TODAY!!

GET your MESSAGE ON FACEBOOK or any other social net working site you use.....You want everyone you know..... and ESPECIALLY people you DON'T....calling you with LEADS

THINK HOOSIER...THINK....WHO comes into contact with OLD PEOPLE on a daily basis???? 

You want houses that need work and have a TON of equity in them.....30 to 40 year olds DO NOT have homes like that.....50 to 70+ year olds DO!!!

So use that little gerbil brain of yours to THINK of ways to let these old farts know you want to BUY THEIR RUN DOWN HOUSES!!!

Get some business cards with this on them in BIG LETTERS...

PLAIN white cards...Nothing fancy...The MESSAGE is what's important.



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             ONE phone call to 555-555-5555 could put THOUSAND$
                        in your pocket!  CALL TODAY!!!!




Looks simple right???  Couldn't work....TOO EASY...Sort of like JOHNinNC making $200,000 on a building HE PAINTED!!!!!

Why didn't anyone ELSE paint that building and fix it up like JOHN if it was that easy????

BECAUSE 90% of people are complete MORONS when it comes to INVESTING.  They TALK themselves out of it before they ever START!!

Hoosier.....One more thing....

Want to LOSE me FAST????

Keep YAPPIN about how HELPLESS you are...

"CAN'T PAINT or do MANUAL LABOR very well."

Well guess what???

YOUR GONNA LEARN!!!!!

How are you going to learn these "TECHNICAL SKILLS?"

By taking your $30,000 that your broke your [email protected] to earn.....and PLACING IT in the hand of some old fart who's house you just purchased!!!

Want to CLEAR YOUR MIND FAST HOOSIER?????

Take every PENNY you have and buy a house with it.....

You'll be painting your @ss off because you're gonna LOSE your @ss if you don't!!!!

It's ALL about MOTIVATION Hoosier....

And you MOTIVATED???

             



Title: Re: My rentals are making me crazy
Post by: allagash on June 29, 2010, 06:20:14 am
Quote
"CAN'T PAINT or do MANUAL LABOR very well."

Well guess what???

YOUR GONNA LEARN!!!!!

rotflmfao....

-Mike
http://www.youtube.com/watch?v=wUlgVqSeLRk
Title: Re: My rentals are making me crazy
Post by: Hoosier4life2005 on June 29, 2010, 09:32:03 am
Pointless letting people know im going to buy when i got no cash and im moving.  Jake, my post was somewhat sarcastic, but somewhat not.  Im not so wah wah as I appeared, but yes, I will be working on this 30K as soon as I graduate (1 more month). But yes im motivated.

Im sensing the need for a dance video to lighten the mood around here.. just like old times.
Title: Re: My rentals are making me crazy
Post by: allagash on June 29, 2010, 09:50:23 am
Quote
$2000 CASH REWARD PAID for DUMPY HOUSES!
                         

                  I specialize in buying OLD, OUTDATED homes.
                 Do you know someone with a home like that??
             ONE phone call to 555-555-5555 could put THOUSAND$
                        in your pocket!  CALL TODAY!!!!



great verbage!

-Mike
Title: Re: My rentals are making me crazy
Post by: Hoosier4life2005 on June 29, 2010, 09:55:53 am
Quote
"CAN'T PAINT or do MANUAL LABOR very well."

Well guess what???

YOUR GONNA LEARN!!!!!

rotflmfao....

-Mike
http://www.youtube.com/watch?v=wUlgVqSeLRk

That video does capture the mood around here.  Good one.  :beer
Title: Re: My rentals are making me crazy
Post by: fdjake on June 29, 2010, 11:51:43 am
"Pointless letting people know I want to buy when I got no cash and I'm moving."

Then WHY are you asking for ADVICE????

Hoosier......It's MY WAY or the HIGHWAY for NEW GUYS like you....I don't have the patience or the desire to change DIAPERS anymore.

Figure it out yourself when you MOVE, SAVE, GRADUATE, GET A JOB, and on and on........

Way to THROW IN THE TOWEL.....Don't take that MONTH you have to get a few things rolling and make a few mistakes....NAAA...that's too much like MANUAL LABOR!!!

You don't need $30K to invest in real estate IF you can find DEALS.  The $30K just shows me you have DESCIPLINE and keeps me from completely wasting my time.

I just did a simple ASSIGNMENT on a DUMP house that I really didn't want to mess with....I used a $500 deposit to lock up the house in a sales agreement and then ASSIGNED that agreement to an INVESTOR....I not only got my $500 back at closing but an ADDITIONAL $9000....All for pushing a pile of PAPER across a LAWYERS DESK!!!

But hey...You can't do that....It's MANUAL LABOR!! :beer

I'm breakin your beans here a little Hoosier....But remember...I NEVER waste my time with LOSERS.....
N E V E R.....So if you want some help, you better start SHOWING me your worth the effort.  "I can't paint, I can't do manual labor."  Just post a thread with the title....... I'M A BIG *****!!!

EXCUSE after EXCUSE is the fastest way for me to COMPLETELY LOSE INTEREST......GUARANTEED!!!
Title: Re: My rentals are making me crazy
Post by: FULLHOUSE on June 29, 2010, 05:17:28 pm
Hoosier.....



               $2000 CASH REWARD PAID for DUMPY HOUSES!
                         

                  I specialize in buying OLD, OUTDATED homes.
                 Do you know someone with a home like that??
             ONE phone call to 555-555-5555 could put THOUSAND$
                        in your pocket!  CALL TODAY!!!!







Jake would this message work any better printed on the dollar bill biz cards?

FULLHOUSE
Title: Re: My rentals are making me crazy
Post by: John_in_NC on June 29, 2010, 09:15:48 pm
Ha, I just re-read this whole thread, and your right Jake, I do want to sell my other rentals. I've got a deadbeat who paid most of her rent this month, but mentioned the house wasn't big enough. Now she is MIA, i'm assuming another eviction. Typical deadbeat move before moving.

Well You called it man. These rental houses are a complete waste of my time. It's a good thing I bought them right, I can unload them easily for what I have in them, and I might just do that to get rid of the hassle.
Title: Re: My rentals are making me crazy
Post by: fdjake on July 04, 2010, 08:09:00 am
John......How's it FEEL to KNOW you're gonna be a MILLIONAIRE???

I'm dead serious here......You just scored a commercial building and made $200K on it in 3 months....DO THE MATH MAN!!!!  You've got other prospects in the pipeline and you've now got what you NEED to do this again and again.....

C O N F I D E N C E!!!!!!

You've FOUND your path my friend.....and it AIN'T RENTING HOUSES to sh*theads!!!!!

The BEST PART????

You didn't buy into the BS that you can't do this, or that the ECONOMY is about to CRASH, or any of the OTHER multitude of "reasons" people bury their heads in the SAND during BLOW OUT SALES like this!!
Title: Re: My rentals are making me crazy
Post by: Tien on July 04, 2010, 11:52:37 pm
John I have a question.


What kind of residential rentals did you own?


Low income kind? Is this what gave you the most troubles?

Title: Re: My rentals are making me crazy
Post by: John_in_NC on July 05, 2010, 09:45:44 pm
Low income

Not because I wanted to deal with the worst deadbeats, but because around here that is about the only thing that cash flowed well back when I bought them.