Posted by Tom Dunn on September 11, 2006 at 17:50:13:
Jack,
Thanks for asking.
I’m a writer and real estate investor. I remember when I was getting started, I learned a lot from other’s stories, but they lacked detail. I was always left with unanswered questions, “How did they do this? Why did they do it that way?” etc.
I would like to try my hand at interviewing fellow investors and writing their stories, complete with history, personal background, and details of individual deals. I’m not sure yet where I would publish them- maybe a book or website- but either way, the writing comes first.
I’ve already done my own, but now I need a few more willing folks to help me get my feet wet.
Deals you have learned a lot from - Posted by Tom Dunn
Posted by Tom Dunn on September 10, 2006 at 14:36:07:
I’m sure that there are a lot of people reading this forum that have completed deals we all could learn from. I am interested in hearing and possibly compiling a few of your stories.
If you have an interesting deal story to tell, or if you have overcome a lot just to get into real estate investing, email me.
Posted by Jimmy on September 12, 2006 at 08:06:52:
I won’t burden you with the deal details, but here are some lessons that have been burned into my hide. All of these are from the perspective of a landlord.
When buying rental properties, do not pay a premium for properties which are rented “under market rents.” Make an offer based on existing rents. If the seller wants to fetch a price based on potential rents, let the seller up the rents first.
When evaluating rental properties with Section 8 tenants, do not automatically assume the Section 8 rents are the same as market rents. There are many places where the subsidized rents exceed market rents, sometimes substantially. Do your homework, and see if the real market rents are less. If so, use real market rents in the calculation of your offer. [We cannot rely on Section 8 tenants always being available. I used to get >50% of my rent from housing agencies. Now its less than 13%].
Avoid multi-family properties where utilities are not split, particularly electric and gas. Tenants will run their AC and heat 24/7 and kill your bottom line. Similarly, when evaluating a MF property with out utility splits, have an electrician/plumber bid the job of splitting off the utes and installing separate meters. Sucn investments often pay for themselves very quickly.
Before signing uop a new tenant, always check the sex offender registry. this can be done online in many places. these folks can be excluded with impunity, but cannot be evicted without cause (and their status is not cause).
Assume all Tenants are slime. never underestimate the sliminess of tenants. keep them on very short leashes. Do not allow them to pay late. enforce late fees. hand out 3-day notices by the 15th of the month. file by the 20th.
Elderly tenants are the best ones. more dependable. more responsible. less likely to trash a unit. less likely to hang around with druggies. don’t move as often as younger tenants.
Anytime feasible, use 15 year amortizations. You will thank yourself 1000 times in 15 years.
If you’re gonna acquire and hold a number of rentals, find a good commercial banker and stay with him or her. Many investors spend a ton of time and energy chasing down financing. One transactionally sophisticated commercial banker is worht his weight in gold.
Try to develop the ability to rehab properties early in your REI career. Learn some construction skills, or assemble a team of skilled people. Doing so creates some nice benefits. Creating immediate equity is one nice benefit. and you will generate more rent for each 100K of capital this way. it has to do with the pricing on beat up properties. not nearly as many interested buyers keeps demand low, and puts a ton of negotiaing power on the buyer’s side.
A new person to town who knows how to talk the talk sold me an assignment on a nice house in a nice neighborhood. 340K purchase - no work - worth 450K on sale. Great. I pay her for the assignment up front after viewing the house. Oops. She sold the same assignment to another investor earlier. She also conned a dozen people out of 1-3K to live on for a few months before she moved out of town with her “profits.” Cost me 3K but gave me a good education on the “darker” side of real estate.