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Author Topic: Proper Dress and Behavoir of a RE Investor  (Read 21447 times)

Offline redefining

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Re: Proper Dress and Behavoir of a RE Investor
« Reply #15 on: August 22, 2007, 12:34:12 pm »
OK, here's another side of this to throw into the mix....

Regardless of what clothes you wear, how you look, etc.  a tenant will still trash your place, leave when you least expect it owing you money, and have a divorce with their wife/husband leaving the other in the lurch for the rent, when they will eventually leave you holding the bag.

That's rental life.  They will also have issues with their neighbors, call you every hour of the day to tell you the plumbing is blocked, the water heater just exploded, and Joe across the street is on drugs and is threatening everyone with his new revolver.

Having said that, does it really matter if you wear a tie or not?

Fact:  Rental tenants are more interested in the cost per month of rent than your attire.  And if you show up in a suit & tie, then expect them to think they can't afford to live in your place.

Fact:  Your relationship, as much as you would like it to go on forever, won't.  They will find a better place, bigger or smaller, move to another city, etc. and you'll never hear from them again.  This is a short term relationship.

Fact:  Regardless of how you dress, you must abide by the residential tenancy statutes of your region, which clearly doesn't say "Landlord must wear a tie in order to rent to a tenant".  As I said to my wife last night, "At the end of the day, I don't have to answer to my tenants.  I have to answer to the judge when I have to evict them".  Its at the time when I go down to the court house that I wear a suit and tie.

Not before.

V

Offline Frank Chin

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Re: Proper Dress and Behavoir of a RE Investor
« Reply #16 on: August 22, 2007, 03:51:56 pm »
OK, here's another side of this to throw into the mix....

Regardless of what clothes you wear, how you look, etc.  a tenant will still trash your place, leave when you least expect it owing you money, and have a divorce with their wife/husband leaving the other in the lurch for the rent, when they will eventually leave you holding the bag.

That's rental life.  They will also have issues with their neighbors, call you every hour of the day to tell you the plumbing is blocked, the water heater just exploded, and Joe across the street is on drugs and is threatening everyone with his new revolver.



Actually, i said I wasn't in the habit of wearing a "tie" when managing rentals, but when looking at properties in higher end areas, doing a driveby, walking down the street, and walking into someome's back yard, yes, I feel I should give the neighborhood the proper respect that it deserves.

In some higher income towns in LI, rentals are few, and homeowenrs are fearful of investors like me renting to riffraff. So here I come in scruffy clothes, and if some nosy neighbor stops to ask what's going on, mention that I'm an investor. The very impression I give off by the way I dress is I will rent to tenants that trashes the place.

I was in business with some guy that installs alarms for homes and small busineses. In this league, it's common for the owner to be in tee shirt and jeans, since it's common for the type of customers he serves, and often, he has to step in and help with the work.

He tried for a while to go upscale, as large companies were opening offices and warehouses, and got nowhere. So a meeting was called, and it was decided if customers come, or if we're on a business call, a shirt and tie is required.

When asked why, said he's been told that he and his staff, gave the image of a small company, not that professional, because the customers correctly surmised that the staff was thin. What was needed is the IMPRESSION that the guy with the shirt and tie is in charge, with adequate staff to handle the problems.

I read an aritcle written by Bill Gates in Fortune magazine about the time he went to meet IBM, a meeting that made history. Gates, with Balmer, now the president of Miccrosoft, and another staff member was shocked that Gates was in the car with them  not wearing a tie, let alone a suit. The meeting was for 10:00am, and these two insisted they stop in a mall to buy him a tie. Gate finally relented.

Unfortunately, they got to the mall at 9:45, and found that the mall didn't open till 10:00. Somehow, they called with an excuse they'll be late. The funny thing was, Gates didn't know how to knot a tie, and Balmer did it.

Even Gates learned that when you go upscale, you're no longer dealing with the little rinky dink customers that he served.

What I'm saying if go to look at upscale neighborhoods, I don't want to look like someone that buys properties, and then rent to riffraff that trashes the place.

But if I invest in areas filled with drug dealers, the reverse is true.


 
     
 
« Last Edit: August 23, 2007, 01:17:42 pm by Frank Chin »

Offline redefining

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Re: Proper Dress and Behavoir of a RE Investor
« Reply #17 on: August 22, 2007, 04:03:36 pm »
Are you making any money investing in high income areas? 

V

Offline buffinvestor

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Re: Proper Dress and Behavoir of a RE Investor
« Reply #18 on: August 22, 2007, 04:25:11 pm »
It's funny....I remember that most of the top professors I had in grad school were the sloppiest dressed!...If you saw them walking down the street you'd figure they had a career working at Wal Mart or something...In reality they're highly paid and top experts in their fields...Other people have told me the same thing about their schools...

Offline Frank Chin

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Re: Proper Dress and Behavoir of a RE Investor
« Reply #19 on: August 22, 2007, 04:39:48 pm »
Are you making any money investing in high income areas? 

V


YES, you'll make a good deal of it from appreciation, if you buy right, at market bottoms.

The last market bottom here is NYC was in 1993. Two family REO's sold for 150K to 220K now sells for 850K. At 220K, such properties cash flow from day one. If you buy it now at 850K, it will not cash flow.






« Last Edit: August 22, 2007, 04:41:21 pm by Frank Chin »

Offline redefining

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Re: Proper Dress and Behavoir of a RE Investor
« Reply #20 on: August 22, 2007, 05:01:01 pm »
I've been investing in real estate now for about 15 yrs.  I don't buy to sell at all.  My goal is to cashflow a property from day one, and constantly raise rents.  An income property building for us generates a few thousand dollars of cashflow per month, and my experience has always been that trying to buy the most expensive building on the block is a hit or miss affair - either it will sell with massive appreciation, but then you have to start the whole process all over again, or you get the lesser value building in the lesser value neighborhood, but ride the cashflow on the building for the next 30 years.  The latter has always been our strategy.

Hence if you approach REI from the point of view of cashflow, the clothes you wear are not relevant when dealing with tenants.  However I would suggest that if you are trying to sell the property, then it might be a different story.  For me, I'd never kill the goose that lays the golden eggs though...

Your mileage may vary.

V

Offline Frank Chin

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Re: Proper Dress and Behavoir of a RE Investor
« Reply #21 on: August 22, 2007, 05:29:16 pm »
I've been investing in real estate now for about 15 yrs.  I don't buy to sell at all.  My goal is to cashflow a property from day one, and constantly raise rents. 

In 1993, I paid 227K for an REO, 22.7K down, with the bank financing 90% at 7%. Cash flow comes to 10K a year the first year, on an 22.7K investment. Rents gone up 50% since '93.

Nothing to sneeze at even without the appreciation.

But I think a 600K gain is a nice icing on the cake. However, it's not a gain that I can make in a bad area. And a lot less work and agggravation.

On the other hand, in a bad area, I can buy stuff year in and year out. In good areas, I have to wait for the right time and opportunity.

If you were me, would you take 600K off the table, pay some capital gains, maybe 1031, instead of making 15K/year??

Rememeber, Hillary Clinton will raise the captial gains from the current lows, to pay for Health care or whatever. But the mortgage market is bad now, which pushes rents UP UP UP..
« Last Edit: August 22, 2007, 05:43:14 pm by Frank Chin »

Offline redefining

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Re: Proper Dress and Behavoir of a RE Investor
« Reply #22 on: August 22, 2007, 06:35:42 pm »
Now we are talking REAL info!!!!   I love to hear real stories of people's gains, etc. as it really helps validate why we are here.

I know its not on topic with "Dress & Behavior", but I'd look at it this way...

50% raise in rents over a 15 yr period of time is a big worry for me, but the equity gain is certainly nice.  The problem though is that if you sell the property now, and cash out, you have this big bundled of cash.  However if you then have to put it back into real estate investments to continue the cashflow, you'll probably have a hard time buying enough properties with the appropriate amount of down payment that will give you the same cashflow that you are currently getting.

If I'm mistaken on that assumption, please prove me wrong.  That's one of the best benefits I see in this forum.  To stomp on assumptions that make no sense or miss out on specific facts. 

But I still stand by our strategy to buy in lower income neighborhoods and get income properties that pay us month after month after month.  Equity is really only good to me when I can use it to buy more properties, and I've always lived by the rule that "You make your money when you buy real estate, not when you sell it".

Thoughts?

V

Offline Frank Chin

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Re: Proper Dress and Behavoir of a RE Investor
« Reply #23 on: August 23, 2007, 05:00:17 am »
Now we are talking REAL info!!!!   I love to hear real stories of people's gains, etc. as it really helps validate why we are here.

50% raise in rents over a 15 yr period of time is a big worry for me, but the equity gain is certainly nice.  The problem though is that if you sell the property now, and cash out, you have this big bundled of cash.  However if you then have to put it back into real estate investments to continue the cashflow, you'll probably have a hard time buying enough properties with the appropriate amount of down payment that will give you the same cashflow that you are currently getting.

Thoughts?

V


I'm glad I'm able to finally have a discussion with a REAL investor.

I was a bad boy this year, filed an extension on my taxes, and just picked up my returns from my CPA last week. We spoke about my RE investments.

I was pleased with my gains in the crazy RE market here, and remarked that in view of the high prices, returns are LOW. How many businesses would tolerate a return of 15K/year on a 850K asset.

My CPA said selling is not a bad option considering market cycles, and I already have gains not due for another ten years RIGHT NOW. I told him that I went thru the last down market, the bottom 1993 (down from the last 1986 peak), it wasn't till 1997 that prices went back up past it's 1986 level, and zoomed from there.

I realize if I took a 600K gain, I'll wind up with roughly 450K after taxes. BUT, just making 15K/year on rent. that'still taking the rental income for the next THIRTY YEARS up front. And not bad if the belief is RE prices have peaked.

It's almost like if you won the lottery, you can take 15K/year for the next 30 years, or a lump sum of 450K right now, invest it, which would you pick??

My dad considers RE speculation, though he owns ONE commercial property, and plows all the rental income into "triple tax free municipals", not more RE, and the last we spoke, it was yielding over 4%. That's 18K/year tax free on 450K, NO WORk, no visits to tenants, no rent checks to chase, no toilets, no vacancies, no drug dealers, no graffitti vandals, no taxes to the federal, state or local authorities, compared to 15K/year with all of the above.

And you have to worry about tenants suing, passersby slipping and falling, suing, and hiring some illegal alien, who has no insurance, injuring himself doing work, suing.

With 450K in municipal bonds, who's going to sue you.

Of course, the counter argument that my wife makes, is in 30 years, the place be paid off, and we'll make the 15K/year, PLUS still have something which by then be worth $1.5 million.

If I paid you what's the equivalent of the next 30 years in rent, TODAY, and you invest the money, MAKE MORE than than what you make in rent, TODAY, pay NO taxes at all to anyone, don't have to run over to chase drug dealers, or yell at tenants trashing your place, would you do it??

The other worry is sometimes good areas may turn bad very quickly. Say someone lets loose a dirty bomb in NYC. What will it do to RE prices, and for how long?? That was one reason why if I diversify myself in RE, I might go "out fo state", to better cash flow areas.

Thoughts???

« Last Edit: August 23, 2007, 05:15:47 am by Frank Chin »

Offline propertymanager

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Re: Proper Dress and Behavoir of a RE Investor
« Reply #24 on: August 23, 2007, 05:42:09 am »
Frank,

If you believe that real estate has peaked in NYC, then it makes sense to sell.  You could then make that $18K per year as the value of real estate in your market declines.  In a couple of years, after a bottom occurs you could buy the property back (or another similar property) and you would not experience the depressed value of your property for the 10 years it takes on average for inflation adjusted prices to return to the previous high after a real estate bust.  My research indicates that it takes about 2 years for prices to hit bottom and then another 10 years for inflation adjusted prices to reach their previous high.  That is apparently similar to your experience from the last downturn.

Assuming that cycle is true, if you sell now (at the top) and the property declines  in value, you wouldn't lose 12 years of appreciation.  You could wait 2 years to the bottom and then buy the property back (or buy a similar property) as prices once again start to appreciate.  That makes more sense to me.

Mike
www.1MinuteToRentalPropertyRichs.com 
This No-Hype, No-Nonsense Book is a step by step course in making money and building wealth with rental properties!  Everything from buying properties at a discount to dealing with terrible tenants.  Now In Paperback!

Offline fadi

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Re: Proper Dress and Behavoir of a RE Investor
« Reply #25 on: August 25, 2007, 06:04:40 pm »
Are you guys going to meet bankers, realtors..etc or are you going to meet MOTIVATED SELLERS?

I have not had a single problem going in Jeans and Pollo shirt. Thats my usual dress code and I am there for them to convince me I should buy their house not impress on them to sell me their house.
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Offline Frank Chin

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Re: Proper Dress and Behavoir of a RE Investor
« Reply #26 on: August 26, 2007, 05:54:54 am »
Are you guys going to meet bankers, realtors..etc or are you going to meet MOTIVATED SELLERS?

I have not had a single problem going in Jeans and Pollo shirt. Thats my usual dress code and I am there for them to convince me I should buy their house not impress on them to sell me their house.

We're all shaped by our life's experiences. I don't work many of the drug infested neighborhoods described in the posts above.

I've been stopped and asked what I'm doing in certain neighborhoods. But when I'm in the "city inspector - agent" disguise, I'm often asked "can we help"??, in a more respectful tone.

This contrasted to an unfortunate workman who had to retreive a tool from the backyard of one of my rentals. Got a call one evening from a excited neighbor, with his body building son, who tackled a "prowler". They called me while holding the guy, and the caller said "we caught a guy claiming to do work for you, and we're going to put him on the phone". I heard a frightened guy pleading for his life, saying he's only retreiving some tools, and please explain it to them.

Later I heard this guy was tackled, thrown to the grown, and they sat on him while the call was made. they told him if he tried to run, they'll knock his lights out.

I had to drive my dad to see his attorney during a weekend in an "Italian" neighborhood in the Bronx, NYC. Parked two blocks away, we were stared at, stopped a few times, and asked "who we're there to see". We politely told them who we're looking for, and on each occasion, they'll say "OK, he's the next block over".

I'm sure if I looked like "John Gotti" in a polo shirt, like you, I woud not have a SINGLE problem. Unfortuntately, I'm a uglier version of "Jackie Chan"..

In my real estate endeavours, I do driveby's, and often walk around properties where I don't have  appointments. What if some neighbors rush out to tackle me, then try to get the owner on the phone"?? Possible. What if the owner said "This guy said what?, I'm a motivated seller?? I don't know what he's talking about. Never heard of him".

Obviously, the workman didn't look like he belonged in the neighborhood. and I certainly didn't look like I belonged in that Italian enclave.

Am I going to shout "This is America, I can walk anywhere I want, and wear anything I like", after I get tackled and my nose broken?? No, I'm only a RE investor, not "Martin Luther King".

OR would it be easier if someone just walk up to me and ask "Is the town checking out somthing else again"??, and me replying "no, my company is looking at some investments in the area".

I'm also saying if I'm a "white guy" walking through a white area belonging there, I won't have a problem. But what busines does a black, Hispanic or Asian guy have in a white neighborhood?? Oh!!, if I have to explain myself to a neighbor, I'm looking for a motivated seller to bring "these people in"?? Good idea or no??

Better to have others assume I'm a city inspector rather than a prowler.

« Last Edit: August 26, 2007, 08:51:01 am by Frank Chin »

Offline fadi

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Re: Proper Dress and Behavoir of a RE Investor
« Reply #27 on: August 26, 2007, 07:02:18 pm »
Dude... you have issues... Either you live in a racist city, or you are racist yourself. Either way I am not going there because it is pointless.

As far as what happen to the worker of yours, **** happens. It doesn't mean it is the norm. If you are so paranoid that something wrong might happen one of these days, then get a desk job.

As far as being stopped, don't go in houses uninvited. Even if it is vacant. Thats trespassing on others property and yes they have the right to stop you. Feel free to look from the outside but don't go into the house or their backyards. If you do, as many do, then you do it on your own risk.

I have no clue what all this has to do with the dress code of the investor.
Location: San Antonio, TX
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Offline jparkx1

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Re: Proper Dress and Behavoir of a RE Investor
« Reply #28 on: August 26, 2007, 09:00:56 pm »
it seemed as though at first it was a reasonable topic of discussion...and it is...to a certain degree...but Frank...i think you might be taking it a little too far...

Offline Frank Chin

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Re: Proper Dress and Behavoir of a RE Investor
« Reply #29 on: August 27, 2007, 12:51:45 am »
it seemed as though at first it was a reasonable topic of discussion...and it is...to a certain degree...but Frank...i think you might be taking it a little too far...

What I'm saying is when I go somewhere, I give folks the respect they're due. That's all.

Nowadays, I think people are sincerely protective of their neighborhoods, not racist. I go to neighborhoods or all types, and better be safe (paranoid) than sorry. And when I look right, and respectful, people are helpful.

And if you don't, what happened to that workman can happen to you.

I apologize if the topic made some people uncomfortable.

 




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