re: Information for my fellow Real Estate Investors

stevengtiger and others....

How much time do you spend managing the property once you have a tenant? Not talking about cutting grass or regular maintenance that you can do on your own schedule. I mean getting calls to fix things, dealing with problems, etc...

If the house is in good condition I rarely get any phone calls. I have in my rental agreements that any maintenance under $50 they are responsible for.

I will not tolerate calls for putting in a new light bulb or the toilet keeps running, etc.

quote:

---

Over the past decade many investors either won big or they lost big because of the Great Recession.

The losers included rehabbers who got stuck with properties for which they paid too much and then could not sell. Buy-and-hold investors saw their tenants move out to share housing with friends or family members. That forced them to lower rent prices to attract new tenants, which, in turn, cut into their cash flow.

Yet there were many investors who survived and even thrived in the past decade. This large disparity between successes and failures is the very reason I spent the last 10 years identifying what these seasoned investors do differently. There are a number of differences, but today I can sum it up pretty simply. The single most identifiable difference that I noticed between average and seasoned investors is the seasoned investors “See it Big, Keep It Simple.”

---

seasoned investors see it big, keep it simple

Question about Tax ID number. We have our LLC set up and I asked my contact at the bank we plan on using what information we needed to bring her to open a business checking account. She said we need to bring her our LLC documentation and our Tax ID number. How do we go about getting that?

quote:

---

So that's two flips and four rentals for you now, correct?

---

Correct. Currently own three rentals with tenants and have one under contract closing 2/15. One flip completed and offer in on the second (fingers crossed cause it could be a good one).

quote:

---

Great job, btw

---

Thank you sir!

quote:

---

Still looking for our first one to get us started then for the dominos to start falling.

---

After the first one, you won't want to stop.

ETA: I pressed submit and phone started ringing. It was my dad who just made an offer on another flip type property he was looking at with our retailer. His obsession has grown to dangerous levels.

(Regarding the BR area) I'm going to be looking for new housing in August most likely. I will (hopefully...likely) have a job by that point. I have been considering buying a condo/house. A 1br to rent after I move out eventually or a 2br with a roomate in the meantime. I haven't been able to find any good or even decent deals in BR as far as RE investing goes. It this just a bad area/time?

I'm working on a growth model based on ILB's spreadsheet and I’m looking for a sanity check on a few percentage assumptions/increases.

The model is built to buy one house, 0% down (private lender), $5000 into the "Building" account at time of purchase. Closing costs and repairs are would be in addition to this but for the model assume we are going into it fully ready to rent. The Building account is built up to $10,000 + 1 year worth of carrying costs (mortgage + insurance + taxes). Once that account is built up, all additional cash flow would be paid to the mortgage to pay it off early. Any big costs would pull from the Building account and repaid from the positive cash flow. All management is handled in-house through year 15 then 10% to a property management firm thereafter. Also I built in lawn maintenance starting at year 15 as well (handled in house before).

Let me know how realistic these percentages and assumptions are or if I should increase/decrease:

• First Year Rental Rate: 1% of purchase price (We’ve been analyzing a lot of properties and this number seems to be our sweet spot. I would say it’s decent for single family properties fairly conservative for multi-family.)
• Rental Increase: 5% yearly (I thought this was high but when I look at it, that means rents double every 15 years. I think that’s a reasonable expectation.)
• Vacancy Rate: 8%
• Usage of vacancy account: 50% yearly (Basically saying we’re going to have 4% vacancy or 1 month per 2 years. I think it’s low BUT will have built in protection with the initial $5,000 and with the rental increases over time, the value of the 4% will increase while the mortgage won’t so we would be better over a longer time period as well.)

• Insurance increase - 5% yearly

• Maintenance allowance - 8.33% of yearly revenue
• Maintenance cost increase - 5% yearly
• Usage of maintenance allowance yearly - 25% (This is for standard maintenance, not replacing an AC or roof. Big costs would be pulled from the Building account. Basically, if we set aside $1000 yearly, we’re going to actually use $250 in maintenance and put $750 in in the Building account.)

• Real Estate Cost (what I buy today's house for next year) - 5% yearly

This is a lot of info so if you read this far, thanks!

I know no plan is perfect and there are peaks and valleys but I feel like this provides a fairly conservative picture of what it will take and where we will end up in 10-15-20 years…

Based on $75000/unit, $700 rent in year 1 (so a little low in year 1 for rent).

Thibodaux. $700 is below market currently per my research for a 2br.

Note: I also ran an ultra conservative model with 10% vacancy, 2.5% rent increase, the same increases in expenses and the numbers still work out, just take longer to get there.