Brandon Turner
I had been raised in a “go to school, get a great job with a great company, and be responsible” household. I can’t fault my parents for this mentality — after all, this was how they themselves had been raised. My parents are incredible people who simply wanted the best for me, but I needed to do things differently.The path I had in mind was neither better nor worse — just different. My entrepreneurial itch led me to the fascinating world of real estate investing, and specifically to rental properties. The idea of using my creativity in place of cash to build passive income exhilarated me. (Location 202)
Those four sources are appreciation, cash flow, tax savings, and loan paydown. (Location 374)
If you want to read more of what I know about investing with creativity, check out my previous book, The Book on Investing in Real Estate with No (and Low) Money Down: Real Life Strategies for Investing in Real Estate Using Other People’s Money, which is available from Amazon.com and at BiggerPockets.com/nomoney. (Location 533)
As entrepreneur Jim Rohn said, “You are the average of the five people you spend the most time with.” Think about the five people with whom you occupy your day—you are likely very similar. Why is this? One big word: homeostasis. (Location 900)
Your social life is a homeostatic entity that desires to keep everyone on the same level, usually subconsciously. As you start to grow your wealth or your level of success, your friends will naturally feel the pull of homeostasis and, with no maliciousness intended, attempt to pull you back to their level. They won’t understand your newfound passion. However, if you instead hang around with five people far more successful than you, their homeostatic tendencies will kick in, and they’ll naturally want to help you rise to their level of success. (Location 906)
I’ll simply invite you to go to BiggerPockets.com/BestBooks to find my list of my 21 favorite real estate books, (Location 975)
The idea is simple: buy incredible rental properties, save the cash flow, and reinvest that cash flow into even more properties. This is not a get-rich-quick plan. It plays out over seven to ten years—maybe more, maybe less. (Location 1258)
The following is an example of such standards: Multifamily property (In this plan, we’ll be buying fourplexes and 24-unit apartments.) Cash flows of $200 per unit, per month after all expenses have been paid, including vacancy, maintenance, utilities, management, capital expenditures, taxes, and insurance, plus any other expenses the property may have. Property must be purchasable for a discount because you are great at finding great deals in the market. For this sample plan, we’ll be buying each property at 80% of what it’s normally worth. For example, while the average buyer would pay $100,000, we’ll pay $80,000. Property’s value must be capable of being improved by 10% during the first year through “forced appreciation” (such as a paint job and landscaping) Property must appreciate at 3% per year after year one (Location 1278)
Buying Your First Property (Location 1295)
At the end of year four/the beginning of year five, we will make our first “trade-up.” (Location 1343)
In this example, however, we will trade our three fourplexes for one apartment building. As you saw at the end of year four, we have accumulated approximately $203,500 in equity, but we can’t use all of this cash; the trade-up has certain costs associated with it (such as agent fees and closing costs) that need to be covered. (Location 1345)
After some careful searching, we find an apartment building worth $1,000,000, but we are able to buy it for $800,000. Our 20% down payment ($160,000) makes the loan amount $640,000 and leaves us with approximately $13,000 for closing costs, reserves, and some repairs. (Location 1359)
Perhaps you want to simply live off the cash flow from this point on. This scenario is generating a respectable $57,000 in passive income each year, which is approximately what the average American household earns. However, the total net worth is only three-quarters of a million dollars. One final trade-up would be needed to reach that final million-dollar figure. (Location 1386)
Our final purchase will be a 75-unit apartment community listed for sale at $3,400,000, but we are able to purchase it for just $2,750,000 (20% off because the same rules apply!). We’ll use the down payment of $650,000 (making the seller pay closing costs) for a total mortgage amount of $2,100,000. (Location 1394)
In this chapter, I’ll focus on how you can find a great rental property with which to start building your future wealth. I’ll talk about eight different ways you can find investment properties, starting with the most common: (Location 3918)
typically “look” at several dozen properties per week on the computer screen, but I only actually physically look at maybe one in a 100. There are simply too many bad deals on the MLS! (Location 3943)
While driving in the neighborhoods where you want to buy, you’ll likely encounter dozens of potential properties. Write down the address of each one, including notes about its condition, and snap a photo as well. When you get home, do some digging into the public records to see who owns the property. Many times you can even do a reverse phone number search to get the owner’s number. Or perhaps you just want to write a letter offering to buy the property and mail it to the owner’s address listed in the tax records. (Location 4062)
For more on driving for dollars, I encourage you to check out Chris Feltus’s posts, “Driving for Dollars Bible[vi]” and “Driving for Dollars Bible 2[vii].” (Location 4069)
That’s right, evictions are part of the public record in most counties of America. In other words, you can take a trip to your local county administration office and ask to see a list of the current evictions. (Location 4083)
To find wholesalers, I recommend the following: Call the numbers you see on those ugly “bandit signs” on the side of the road. Go to every real estate club in your area. Create a Marketplace posting on BiggerPockets. Train your own wholesaler on how to find you deals! (Location 4140)
But one mistake that can be fatal to your real estate business is choosing the wrong property. Picking the wrong property is a lot like picking the wrong spouse. It can be incredibly stressful, expensive to get out of, and detrimental to your well being! But how do you know what the right property is? After all, there are a lot of properties out there. (Location 4183)
Therefore, in my experience, three- or four-bedroom houses tend to make the best rentals because they attract long-term tenants, which cuts down your vacancy expenses. Furthermore, three-bedroom houses are generally the best kind of property to sell, which can be great when that time comes. If you are looking for a multifamily property, two-bedroom apartments are usually acceptable, and incredibly common. Single-bedroom and studio apartments are also common, but they tend to attract a more transient tenant, so expect more turnover in that style. (Location 4194)
Utilities - Some properties, especially older ones, have all the utilities paid by the owner, which is not ideal. Buy these kind of properties only if the numbers truly make sense, because having so little control over this major expense will give you a major headache. When tenants don’t need to pay for their own heat, they tend to leave windows open in the winter or the air conditioner running 24/7 in the summer. If they don’t need to pay for water, they’ll never let you know about the constant drip in the bathroom, thereby costing you hundreds of dollars a year. (Location 4217)
When shopping for multifamily, at least look for ones where heat and electricity can be paid by the tenant, and if you can find properties that can be converted to a “master metered” system to allow tenants to pay for their own water, you’ve potentially struck gold! (Location 4224)
Although there are exceptions to every rule, I look for properties that have smaller yards to keep the yard work for the tenant at a minimum. That said, recreational space is very important in attracting a stable long-term tenant, so make sure there is somewhere the tenant (and/or their kids) can run around and have fun. (Location 4228)
Eight Problems I Look for When Shopping for Rental Properties (Location 4245)
Whether you are using a spreadsheet you created or the amazing BiggerPockets Rental Property Calculator, just be sure to include an accurate amount to cover each problem. If you are unsure how to properly estimate repair costs, I recommend picking up a copy of J Scott’s excellent book The Book on Estimating Rehab Costs: The Investor’s Guide to Defining Your Renovation Plan, Building Your Budget, and Knowing Exactly How Much It All Costs, which you can find on Amazon or at BiggerPockets.com/flippingbook. With that, let’s get to the eight problems. 1. The Bigfoot Smell (Location 4257)
smells are one of the easiest problems to fix in a property but one of the things that drives away 99% of the competition. Bad smells are generally caused by one or more of a few things, none of which are difficult to solve: (Location 4265)
2. The Hidden Third Bedroom I mentioned earlier that I don’t like two-bedroom homes for a rental property. However, there is one case where I get very excited about buying a two-bedroom home: when there is a hidden third bedroom. (Location 4312)
In many cases, the difference in house value between a two bedroom and a three bedroom can be significantly higher than the cost of converting a “hidden bedroom” into a functional, legal bedroom. This helps build some immediate equity in the property, since you’re paying for a two bedroom but will own a three bedroom. In case you are wondering, the jump from three bedrooms to four bedrooms is likely not the same as from two to three, so I usually stick to the latter. (Location 4322)
3. Ugly Countertops and Cabinets – You’ve likely heard the phrase “kitchens and baths sell houses,” and it’s not an exaggeration! People spend a large amount of time in the kitchen, and nothing says “1979” like bright orange countertops or ugly cabinets. Most people simply avoid houses with these problems. Those people don’t realize how easy it can be to transform an ugly kitchen into a modern, beautiful one with just some new counters and a fresh coat of paint on the cabinets. (Location 4329)
4. The Bad Roof This one might come as a bit of a shock to people, because a leaking roof seems like it would be a pretty major problem. (Location 4344)
Yes, it can be fairly expensive, but I can usually get the current roof removed and a new one put on for less than $6,000, and it’s completed in just one or two days. Now I don’t need to worry about the roof leaking on my rental property for many, many years, and I can factor that into my budget. (Location 4346)
5. M...M... Mold?! Uh oh, did I just say the M word? Yep! And yes, mold is one of best problems I look for when buying a property. (Location 4356)
The only mold I would really worry about is mold in basement walls, because it indicates water seeping in through the foundation—and that begins to scare me. (Location 4373)
6. Compartmentalized Configuration I think this might be the longest word in this entire book, but the concept is not hard to understand. Compartmentalization is the characteristic found in many homes, especially older properties, where the rooms were designed to be separate from each other. (Location 4376)
7. Jungle Landscaping (Location 4387)
8. Junk, Junk, and More Junk (Location 4394)
Three Problems I Avoid When Shopping for a Rental (Location 4409)
1. Neighborhood You cannot easily fix a neighborhood. (Location 4413)
2. Foundation Issues Foundation issues scare me because they can be a money pit to fix, and the cost of a solution can sometimes eclipse six figures. (Location 4419)
3. Shared Driveways (Location 4424)
In addition to these three, there are other location-specific problems, such as being directly below a flight path or next door to loud/angry dogs. (Location 4432)
Offering on a Property on the MLS When you want to offer on a property currently listed on the MLS, you need to go through a real estate agent. (Location 4493)
Offering on a Property Not Listed on the MLS If you are buying a property that is not listed on the MLS, you will probably not be using a real estate agent. (Location 4508)
When I am trying to buy a home from a private seller, I like to start by asking the seller how much they would like to get. Then, after some negotiation (which I’ll cover later in this chapter), you’ll come to an agreement on price. At that point, you can pull out your official purchase and sale document and sign in all the necessary places to make it official. Another casual way to make an offer without being too official is by using a letter of intent. A letter of intent is a simple document that lists the conditions of the purchase and sale, (Location 4514)
But let me share the two most common contingencies you’ll likely encounter: 1. Inspection - You can only learn so much about a property by walking through it on a quick tour. (Location 4592)
Other investors, including me, often designate much shorter inspection periods (often as brief as three days), knowing that this will still allow time to get in and get the property looked at in detail, but it will look better than those who need ten days. (Location 4601)
2. Financing - What would happen if you tried to buy a property but at the last minute, you found out that your financing had fallen through? (Location 4605)
How Much Should You Offer? Now for the difficult question: how much should you offer? (Location 4642)
Some investors choose to submit a lot of lowball offers, hoping something, somewhere pans out. Others choose to give their highest and best offer up front. Still others find room in the middle. (Location 4647)
For example, if the home has been sitting on the market for a long time, and you have a good indication that the seller is eager to sell, there is no real danger in submitting a lowball offer to see what happens. However, if you are in a competitive market and a new listing hits the MLS at a great price and you know that it’s going to sell quickly, you may want to cut out the chase and simply offer your highest amount, right then and there. Sometimes, you may even need to offer more than the asking price. (Location 4649)
I would never pay more than asking price just to win a bid if the numbers didn’t pencil out, and you shouldn’t either, unless you have some dramatic future reason for doing so. (Location 4661)
16 Tips for Getting Your Offer Accepted (Location 4675)
This doesn’t have to be anything formal, just a quick message letting the seller know who you are and what you plan to do with the house. I use this strategy almost every time I submit and offer, and I can promise you, it works! (Location 4689)
I walked through a house with someone who called me after finding my “I buy houses” website. (Location 4699)
5. Feel Uncomfortable - A real estate agent friend of mine once told me, “If I submit an offer, and it doesn’t make me blush, I offered too much!” (Location 4703)
8. Waive the Inspection Contingency - Most sellers know that their property needs a lot of work. Therefore, sellers get nervous when people want to do an inspection of the property. They fear that they will accept an offer, and then a week later, the buyer will back out because they discovered how bad the property really is. Therefore, if you want to dramatically increase your chance of getting an offer accepted, don’t include an inspection contingency. Again, this will increase your risk, because if you learn something about the condition that you did not expect, you can’t back out without losing your earnest money deposit. However, removing the inspection contingency can be a powerful way to make your offer stand out. (Location 4713)
Instead, consider submitting two offers on a property, so the seller compares the two offers, rather than the asking price and your offer. Perhaps one offer could be for $150,000 cash, and the other for $165,000 with financing and will take 60 days to close. The seller is now trying to decide which offer is better—and ignoring their asking price. (Location 4726)
13. Include an Escalation Clause - An escalation clause can be included in an offer and is used when a property might have multiple bidders. (Location 4739)
“In business as in life, you don’t get what you deserve, you get what you negotiate.” (Location 4766)
In most of the deals I’ve offered on, the original offer has not been accepted; the same will likely be true for you. And that’s not a bad thing! I argue that if your initial offer is accepted, you probably offered too much! (Location 4804)
Appealing to the math is a great strategy when negotiating, because it’s hard to argue with. “Mr. Seller,” you’ll say, “at $100,000, my expenses with taxes, insurance, vacancy, maintenance, and management will be almost $900 per month, and I can only rent the property out for $1,000 per month, which would only give me a 5% return on investment. This doesn’t work for me, but at $90,000, it would push my return up to 9%, which does work for me.” It’s hard to argue with that. (Location 4923)
and got some great concessions out of you. Let them see you bleed a little bit! For example, if your maximum allowable offer on a deal is $67,000, make $62,000 your known “max offer” and let them push you a bit higher if needed. They’ll feel good that they pushed you higher than you wanted, but you’ll still get exactly what you wanted—they just don’t know that! (Location 4947)
Start with the bank that you already have your primary checking account with. Schedule an appointment with the loan officer, and actually sit down with them. Ask them what kind of loan programs they have for rental property loans. Ask them the rental property loan amounts they typically lend on, the current interest rates, the term, and any other information. Have the same conversation with three or four other lenders in your area, and be sure to mix it up between banks, credit unions, and mortgage companies. (Location 5127)
good enough condition for them to loan on). A typical single-family house appraisal will cost approximately $400, while a small multifamily appraisal might cost up to $1,000. If you are buying a commercial property, expect to be in for at least $4,000. (Location 5149)
but real estate investors are capped on the number of conventional loans they can have. The current limit has been raised to ten loans, though many investors are not even able to get to that limit because of the rise in their debt-to-income (DTI) ratios. In other words, for every loan you obtain (debt), the percentage of your debt to your W-2 income rises, until you are pushed out of the “acceptable” range defined by the conventional lender. (Location 5181)
Because these portfolio lenders keep some of their loans “on their own books” (in their own portfolio of loans), they don’t have to fit into the same government-prescribed box. Instead, because they are lending their own money, they can be a lot more creative. The maximum rule of four or ten properties? Not with a portfolio lender! (Location 5212)
How to Find a Portfolio Lender Before the real estate crash of 2007 and 2008, there were many more portfolio lenders operating in the United States. Today, you will have to search a little harder. None of the “big banks” (the national ones with television commercials) will do portfolio lending. Instead, you’ll want to focus your search on small, local community banks. Look for banks that have a maximum of 20 different branches. Credit unions might also be a good source of portfolio lending. (Location 5221)
If you follow this strategy, just be sure to do the following: Ask to speak with the loan officer, because the teller will likely have no idea how to help you. Even the loan officer might not be familiar with the term “portfolio lender,” so you may need to explain exactly what you mean and what you are seeking. (Location 5230)
Private Lenders What is private lending? Private lending is exactly what it sounds like: borrowing money from private individuals rather than from institutional lenders. (Location 5245)
They’ll lend the purchase price and maybe even the repair money, and I’ll get into the house for little out-of-pocket money. Then, each month, rather than paying a bank the mortgage payment, I’ll pay this individual the mortgage payment. In a year or so, after a period of “seasoning,” I’ll go to a bank and get a traditional 30-year mortgage on the property; then, I’ll pay off the private lender, drop my interest rate, and increase my cash flow. Typically, a private money lender is looking for a fairly short-term loan, but this is not always the case. (Location 5260)
Private lenders lend money because they want a good ROI. Perhaps they believe they can get a higher return by investing with you than by putting the money in the stock market or somewhere else. Although private lending rates are not standard and are, essentially, whatever is negotiated, these rates are usually higher than a borrower would get from a bank or mortgage company. The most common private money rates I see fall between 6% and 12%, depending on the relationship. (Location 5269)
First, you must go to where private lenders might be. This means getting out there and networking. Attend your local real estate club. Hang out in the BiggerPockets Forums. Attend civic events in your area. Next, talk about what you do. Don’t brag, but simply let your passion for real estate shine through. And third, don’t be afraid to ask people if they would consider private lending. This is the most crucial part of the entire process, so let’s focus on “the ask.” (Location 5317)
“When talking with people about your business, it’s a good idea to say something like, ‘So, if you know anyone who’s interested in lending on deals like this and working with me, definitely give them my number.’ (Location 5322)
Partnerships Partnerships have been one of my favorite creative methods of investing in real estate over the past decade, because even though I’m good at a lot of real estate things, I have a lot of shortcomings as well. Partnerships can be valuable tools when investing in rental properties, because two people can work together to cover for each other’s shortcomings and do some amazing things. (Location 5411)
The title is transferred into your name, but the previous owner holds a lien on the property (a mortgage) so that if you don’t pay, they can foreclose, just as a bank would. Once the loan is paid off (usually though a refinance or when the property is sold), the lien is released, and the two parties go their separate ways. (Location 5429)
I purchased my 24-unit apartment complex just after I turned 25 using seller financing. I put down a $15,000 down payment and the sellers financed the $550,000 purchase. A few years later, the property appraised for $900,000, and I was able to get a new loan for $650,000 through a local bank, keeping the $100,000 difference. This has helped me get into even more properties while still owning the 24-unit one. And it was made possible through seller financing! (Location 5435)
BRRRR Investing The final financing option I want to discuss here is not a type of loan but rather a strategy that combines several of the methods already mentioned into one. I call it BRRRR (short for Buy, Rehab, Rent, Refinance, Repeat) real estate investing, but it has also been called a “fix and rent” or “fix and hold” strategy. (Location 5481)
In BRRRR real estate investing, the property is treated like a flip, using short-term financing such as private money, hard money, a home equity loan, or cash to acquire and rehab. Then, after the property has been finished, it is rented out to a tenant. The owner then obtains a refinance on the property to pay off the short-term loan and turn the property into a stable, long-term, cash flow positive property. (Location 5487)
Of course, as with all investments, the math has to work for the strategy to work. When a person goes to refinance such a property, a bank will typically only refinance up to 75% of the new value. Therefore, for you to get enough to refinance the entire short-term loan and to possibly get back your rehab money, the property needs to be worth significantly more than what you paid for it. For example, let’s say you bought a property for $100,000. The property needs a $25,000 rehab to be rent ready, for a total cost of $125,000. You could use a short-term loan to buy the property (like hard money) and your own cash to rehab the place. Then, you’d refinance the property with a new loan from a lender. If the new lender’s appraisal came in at $160,000, they might give you 75% of that amount in a new loan, which is $120,000. This would pay back your entire short-term loan, get you most of your rehab budget back, and give you a stable, long-term rental property with $40,000 of equity at the start. (Location 5490)
Potential No Money Down – BRRRR investing is one of my favorite strategies for investing without needing a lot of cash. (Location 5504)
Seasoning - The refinancing bank will likely require you to wait six months or maybe even 12 months after the original purchase before they will refinance the property. This period of time is known as “seasoning,” and most conventional and portfolio lenders require it. (Location 5522)
In summary, BRRRR real estate investing can be a powerful way to build wealth through real estate and one of my all-time-favorite strategies. Being able to capitalize on the forced appreciation the way a house flipper would while acquiring a great rental property that will provide years of cash flow is truly getting the best of both worlds. However, the strategy is not a simple undertaking, it requires exquisite math, planning, and the ability to find a great deal. But for those willing to take on the challenge, BRRRR real estate investing can supercharge your business and set you on a path to greatness. (Location 5532)
No One Cares Like You Care- The fact is this: no one will care as much about your property as you do. (Location 6420)
Therefore, if you end up hiring a property manager, understand that your job is not 100% passive. You will still need to manage the manager and stay on top of them to make sure they are doing what they are supposed to do. Don’t assume that property management means you can forget about the property and just collect checks. (Location 6432)
Therefore, if you are going to use a property manager, just remember this: most of them suck. You need to find the one that doesn’t. A property manger will be one of the most important members of your team, so it’s imperative you invest the time up front to find the right one. (Location 6438)
Property Manager Interview Questions When you sit down with your potential property manager, I recommend starting with the following questions: (Location 6442)
also recommend setting up a Google Voice phone number at this time. Google Voice is a completely free service that gives you a second phone number that can be forwarded to your cell phone, landline, or both. You can even set it up to ring one phone during part of the day and another phone at another time. Or when you go on vacation, you can easily switch the phone to call your maintenance guy or someone else you designate. (Location 6562)
Five Ways to Find Great Tenants (Location 6567)
I recommend using the free website Postlets.com to create your ad, because this will help you format your ad so it looks amazing and will give you some basic HTML code you can simply copy and paste into the Craigslist ad to stand out. (Location 6599)
PayNearMe.com or PayLease.com - These similar services allow tenants without bank accounts to pay at local businesses like Wal-Mart or 7-11. Currently, the tenant must pay a small fee ($4) for this service, but it is generally free (or low cost) to the landlord. Dwolla- Similar to PayPal, tenants can use Dwolla to pay rent directly from their checking account for free. (Location 6854)
Rental Property Software- A third option used by landlords to track their income and expenses is online rental property software such as VerticalRent, Buildium, or Appfolio. (Location 6919)
The Ten Most Common Repairs You’ll Encounter The most common repair requests we get from tenants are the following: (Location 6976)
I recommend giving the following list to your handyman once a year for each unit you own. Keep in mind, this list is just a sample of some of the ongoing property maintenance you may need to do. Not all will apply to your property, and your property may have additional concerns. But this is a good place to start. (Location 7066)
Late rent is not okay. You cannot allow a tenant to pay rent late on a consistent basis. I don’t say this just for your benefit, but also for your tenant’s. If you let them pay late, you are training them that this is okay. They will pay later and later, until pretty soon, they are three months behind and you have a completely untrainable tenant. When you allow late rent, you just make the problem worse for everyone. You might think you are being a jerk by enforcing on-time payments, but trust me, you are doing your tenant a favor. (Location 7159)
It’s just business, and paying the tenant to leave may be a cheaper option. An eviction can cost between $1,000 and $3,000 just for the attorney, and depending on your state, it could take several months of lost rent to get them out. (Location 7190)
Instead, why not offer the tenant a few hundred bucks to walk away quickly, saving their record from having an eviction on it? Of course, if you offer them money, do so on the contingency that they leave quickly (within a day or two) and that the property be “move-in ready” for the next tenant. Then, don’t hand over the cash until they have vacated, given you the keys, and signed a release letting you know they have moved out, and you have inspected the unit to make sure it wasn’t trashed. (Location 7193)
I absolutely love my two dogs and my two cats. I’m a total “animal person” and couldn’t imagine life without them. However, although pets can be man’s best friend, they definitely are not always a landlord’s best friend. Pets cause additional wear and tear on a building, make noises that irritate the neighbors, and can bite people, which can trigger a lawsuit. If not taken care of properly, pets can also cause a property to smell pretty bad and can chew up pieces of building material not meant for consumption. So should you accept pets? For me, the answer is generally no. (Location 7250)
I never allow pets in a multifamily property, period. Although I might like tenant A and could allow them to get a cat, which likely wouldn’t be a problem, tenant B will see that I allow pets and move in a big, angry German Shepherd. Then I’d have to be the jerk who makes them get rid of their dog and must try to explain why I allowed the other tenant to have a pet but not them. (Location 7262)
I usually set a 20-pound limit for dogs, to keep out the big, dangerous breeds. (Location 7270)
I always charge a nonrefundable pet fee when the tenant moves in. Right now, that fee is $300 per pet. This may seem steep, but trust me, “animal people” will pay it. I might give a slight discount if it’s two cats or a small dog and a small cat (like $300 total), but I always charge a fee. (Location 7277)
The pet must be licensed with the city and current on all its shots, and the tenant must sign my “pet addendum.” (Location 7281)
Problems cause stress, stress causes chaos, and chaos causes unhappiness. I don’t want to be unhappy, and I’m sure you don’t, either. So, I want to explain something that will revolutionize your life: If you are unhappy, your system is broken. In other words, if something in your business is causing you stress, most likely, you either don’t have a system for that issue, or you are not following your system. Either way, it’s broken. I don’t get stressed out anymore when tenants pay rent late, because I have a system. (Location 7321)
In July of 2013, Jason Mak purchased an 81-unit apartment building in Riverside, California. Paying $3.1 million for the property, he immediately set out to improve the property. He evicted bad tenants and improved management efficiencies, while also enhancing the physical condition of the property, adding a new roof, painting, landscaping, installing an elevator, and performing other valuable refinements. After increasing occupancy from 60% to 95% and stabilizing the entire operation, Jason sold the property for $5.5 million in the spring of 2015. Overall, he netted a final profit of $2 million on the two-year apartment turnaround! (Location 7460)
2. Increase Income As you move through your investment life, one of your tasks will be to increase the income your rental properties generate. (Location 7711)
First, you need to ensure that your property is always being rented at the market rate, not below. Maybe you think that by offering below-market rent, you’ll deal with less drama, which may be true. But how much are you sacrificing? (Location 7714)
3. Decrease Expenses Another task you’ll need to continually stay on top of is decreasing expenses. (Location 7723)
Transferring the responsibility of certain utility payments (water, garbage, electricity, etc.) to the tenant. (Location 7728)
Switching to energy efficient appliances when you are responsible for paying for the electricity Switching to low-flow toilets and implementing other water-saving techniques to keep the water bill down if you are responsible for paying it Shopping around for better insurance rates Challenging your property tax bill if you feel it is too high (Location 7735)