by JY
for RE investing, general rule of thumb is, 1% for SFH, 2% for MFU or Apartment complex.
while every market is different, but the 1% rule shall give you close to 10% return on your investment after tax, insurance, interest payment, regular maintenance and expected 10% vacancy.
rental is not an easy business, is more like buying yourself a 2nd job, 90% of small landlords will fail within 5 years.
so if you plan to jump the gun, go read every book you can find in your local library that is related to RE, from buying, advertising, leasing, and tax planning, every step will cost you money if you not planning ahead.
there will be phases; in beginning, if you handy you should able handle everything yourself, for like under 10 units. but between 20-30 units, you will have hardest time, this is where you need to decide sacrifice your personal life or hire out for help.
for every 30-40 units, you should able to afford one full time help.
a 80 unit SFH ( or 150 unit MFU) portfolio shall give you net income of 350k a year, hands free and NEAR TAX FREE.
======
while what you said maybe all true but as we all know it, there only 1 califonia out of all 50 states, so markets outside of CA is very different than the over heated CA market.
you may argue if the portfolio is appreciating 15-20% a year now, why should I worry about short term lost? unlike other areas, CA dual income families may bring in 250k-300k a year, thus can sustain some short term negative cash flow, but I have to ask, yes you may able to sustain a 50k lost in one single house a year but can you sustain 10 or 20 or maybe 30 properties with negative income year after year?
Rental for sure is a tough business, and the devil is all in the details. operation is the main key, this is what makes or breaks the bank.
I am in mid west, and base on what I own, I can say a 50% leveraged 8-10 mil portfolio with a 1 mil yearly rent roll should net you replacement income of 300-400k, plus moderate 3-5% or 300-500k appreciations each year will put some additional icing on the cake.
yes it may not make you rich but for sure can offer you a hands free, semi retirement life by working only 3-4 hours a day and still live comfortably, like the most famous WXC TZLC phrase said, sit at the beach and watching the blondes everyday.
============
haha, not any 大牛, you may already know landlords are just losers...
first rental, 1991, 2nd year in college, 14k from an neighborhood auction... but I really didn't have any meaningful accumulation till 2007, at that time I have 38 SFHs.
2007 I bought my first real apartment complex, 40 units with A/A- location. By 2011 I own and manage myself 128 units together with SFH/MFUs, since then , I am pretty much out of SFH market. oh one other thing I may tell you is, retirement life at 40 is no fun at all, boring as hell.
my first apartment complex, I paid market price and assume the loan, out of pocket was 59K (after tax credit from seller for previous year), and its been generating 120k-150k net operating income (profits + principal payments) for me each and every year since day 1.
bro, if you still in search on what is best value in RE, I can tell you it is owning yourself an apartment complex.
Unlike SFHs, where every house is build differently, which also translated into higher maintenance and labor costs. With an apartment, everything is standardized and all within single location, you can stock up and no more paying for traveling between locations, can cut down maintenance cost by as much as 40%.
last two years I been concentrating with MFU between 100-300 units, TZLC investment LLC and TZLC management LLC (originated from WXC forum members) now own 9 group projects (10th one in pipeline) in 4 different states and near 1000 units in total.
the truth is, there ain't any secrets in RE investing, just time, consistency and scale.
===============
haha, in real estate investing, no need to out smart others (藏龙卧虎), but be consistent on what you do and do what you do best at (重剑无锋).
here is a project we closed in March 2014, 210 units, previous sold for 6.1 mil in 2009, B/B- location, we closed escrow at 2.52mil, renovation cost 176k, total out of pocket 2.7mil.
occupancy rate raised from 83% in March 2014 to 96% today, yearly schedule rent 1.1mil, now we in process of refi and it appraised for 4.4mil.
===============
every project bit different than another, so its case by case.
1. deep discounted projects, you going to expect to close with cash, what I mean by deep discount, is like 40-50 cents on a dollar, then you can create value thru renovation, when finish you still only 70 cents on a dollar.
2. stressed properties, current owner can't sell it on market due to condition or location of the property, most time they may consider do seller financing.
3. near marketable or marketable properties, about 80% of commercial apartment loans are non-recourse and underwritten by HUD, and best thing is, its assumable, cost of assuming the loan generally 1% fee of loan value.
1000-2000 units still a very small fish in apartment business world, I have seen few REIT holdings control 10000+ units.
our long term goal is 5000 units in 10 year.
============
the hardest part with any group project is everyone must compromise to achieve a same common goal..lol, not to be bashful but rumors will always be rumors, truth will eventually prevail over time...
============
for this particular complex, I paid retail pricing, 2mil dollars, private seller, assumed mortgage, 5% down, 5 year renewable term on 15 years amortization.
5% of 2 mil, less tax credit and prorated rent and tenant security deposits transferred, out of pocket is 59k, annual scheduled rent is 300k and we collected 305k for year 2014.
deals are everywhere, you just have to look harder, and it doesn't cost anything to ask.
right now we are closing on a 64 units complex (complex under court appointed receivership since April 2014), for 1 mil dollars, B/B- location, annual scheduled rent is 380-400k range, goal is to refi and cash out 1.1-1.2 mil after 12 months of stabilized operation.
Tuesday, June 21, 2016
Deposit Refund and Itemized Lists [Example]
Deposit Refund and Itemized Lists
September 6th, 2011
I. Total amount in the deposit account: $928.76
II. Deductions: -$764
a. Repairs:
i. Broken range control for right rear stove head -$15
ii. Dryer exhaust hose broken -$25
iii. Dining room window screen (2 holes) -$15
iv. 3rd bedroom screen cut open -$20
v. 3rd bedroom detached closet door -$5
vi. Two damaged house siding corners -$25
b. Replacements:
i. 10 missing light bulbs -$50
ii. Range exhaust filter -$20
iii. Missing tower rod under countertop -$25
iv. Dining room entrance sliding door broken -$30
v. One light switch cover broken -$5
vi. Plunger -$5
vii. both bathrooms’ paper rack -$10
viii. Master bedroom blinds broken -$30
ix. Master bedroom screen missing -$30
x. 2nd Bedroom curtain broken -$10
xi. 2nd bedroom wall paper tore; 2 places -$35
xii. 2nd bedroom shelf support missing -$5
xiii. 2nd bedroom missing screen -$30
xiv. 1 House key not returned -$15
xv. 2 lock keys not returned -$4
c. Major Cleaning:
i. Oven cleaning -$25
ii. Walkway wall damaged and stained -$15
iii. Carpet cleaning and shampoo (see lease) -$250
d. Trash Removal:
i. Plastic toy (stored to next year for city dumpsters) -$30
ii. Master bath medicine cabinet -$5
e. Minor Cleaning: -$30
i. Dirty range dripping pans
ii. Kitchen sink drain
iii. Kitchen tiles and bathroom tiles
iv. Fireplace ash
v. Master bath mirror
III. Remaining: $164.76
September 6th, 2011
I. Total amount in the deposit account: $928.76
II. Deductions: -$764
a. Repairs:
i. Broken range control for right rear stove head -$15
ii. Dryer exhaust hose broken -$25
iii. Dining room window screen (2 holes) -$15
iv. 3rd bedroom screen cut open -$20
v. 3rd bedroom detached closet door -$5
vi. Two damaged house siding corners -$25
b. Replacements:
i. 10 missing light bulbs -$50
ii. Range exhaust filter -$20
iii. Missing tower rod under countertop -$25
iv. Dining room entrance sliding door broken -$30
v. One light switch cover broken -$5
vi. Plunger -$5
vii. both bathrooms’ paper rack -$10
viii. Master bedroom blinds broken -$30
ix. Master bedroom screen missing -$30
x. 2nd Bedroom curtain broken -$10
xi. 2nd bedroom wall paper tore; 2 places -$35
xii. 2nd bedroom shelf support missing -$5
xiii. 2nd bedroom missing screen -$30
xiv. 1 House key not returned -$15
xv. 2 lock keys not returned -$4
c. Major Cleaning:
i. Oven cleaning -$25
ii. Walkway wall damaged and stained -$15
iii. Carpet cleaning and shampoo (see lease) -$250
d. Trash Removal:
i. Plastic toy (stored to next year for city dumpsters) -$30
ii. Master bath medicine cabinet -$5
e. Minor Cleaning: -$30
i. Dirty range dripping pans
ii. Kitchen sink drain
iii. Kitchen tiles and bathroom tiles
iv. Fireplace ash
v. Master bath mirror
III. Remaining: $164.76
Inmates as tenant?
From online forum:
brother, my wisest decision is to take on inmates just released.
They are very good tenants. We also explored programs sponsored by government, church. Churches hand out money like crazy. Many tenants learned the programs from their neighbors. The most common question I got these days is "please give me an eviction notice". The tenants take it to bishops, and come back with a check of 2 months' rent the same day. I think most of them faking their difficulties.
brother, my wisest decision is to take on inmates just released.
They are very good tenants. We also explored programs sponsored by government, church. Churches hand out money like crazy. Many tenants learned the programs from their neighbors. The most common question I got these days is "please give me an eviction notice". The tenants take it to bishops, and come back with a check of 2 months' rent the same day. I think most of them faking their difficulties.
Letter to Members [cloud funding example]
Letter to Members
========================================================================
Dear Investors,
Yesterday we went to auction to bid on the properties that we presented to you last week. As you may know, the winning bid for 28 condos and 22-unit (21 rentable) apartment together came very close to $2M. Our research indicated the market value for these 2 properties is in $1.9M-$2.1M range. Therefore the winning bid was paying the market price.
Our strategy is buying distressed property at 50-60cents on the dollar, execute a turnaround plan and making a 50+% capital gain on top of annual operations cash flow of at least 10% on the cash we invest. We believe this strategy can provide us the best possible return and least risk for our investment. We are NOT satisfied in any income generating property with only 6-8% annual return from operations for these reasons (1) there is no room for margin of error (2) it cannot weather storms from economic downturn or demographic change.
Our strategy dictates that we need to be patient, maintain high level of discipline, do not overpay for any property to increase our investment risk and reduce our rate of return.
We followed our plan and maintained discipline yesterday. Although the outcome was disappointing to everybody, we don’t regret for the decision we made. Safeguarding your best interest is a high responsibility and one we approach with greatest seriousness. To be successful investors, it is not what we do; quite often it is what we don’t do. That is to refuse to overpay for an investment.
We thank you so much for the support and trust you have placed in Board of Directors, TZLC Investment Group LLC. Board is working diligently to look for other investment opportunities. Once we identify them, we will let you know as soon as possible. Meanwhile please maintain your patience and focus.
Best Regards,
Board of Directors
xxx Investment LLC
========================================================================
Dear Investors,
Yesterday we went to auction to bid on the properties that we presented to you last week. As you may know, the winning bid for 28 condos and 22-unit (21 rentable) apartment together came very close to $2M. Our research indicated the market value for these 2 properties is in $1.9M-$2.1M range. Therefore the winning bid was paying the market price.
Our strategy is buying distressed property at 50-60cents on the dollar, execute a turnaround plan and making a 50+% capital gain on top of annual operations cash flow of at least 10% on the cash we invest. We believe this strategy can provide us the best possible return and least risk for our investment. We are NOT satisfied in any income generating property with only 6-8% annual return from operations for these reasons (1) there is no room for margin of error (2) it cannot weather storms from economic downturn or demographic change.
Our strategy dictates that we need to be patient, maintain high level of discipline, do not overpay for any property to increase our investment risk and reduce our rate of return.
We followed our plan and maintained discipline yesterday. Although the outcome was disappointing to everybody, we don’t regret for the decision we made. Safeguarding your best interest is a high responsibility and one we approach with greatest seriousness. To be successful investors, it is not what we do; quite often it is what we don’t do. That is to refuse to overpay for an investment.
We thank you so much for the support and trust you have placed in Board of Directors, TZLC Investment Group LLC. Board is working diligently to look for other investment opportunities. Once we identify them, we will let you know as soon as possible. Meanwhile please maintain your patience and focus.
Best Regards,
Board of Directors
xxx Investment LLC
appx 30 units per full time handyman..
by JY
there is no fix formula, its more correlated to your net cash flow.
base on my past experiences, 20 units can be near hands free, meaning your cash flow can afford to hire out, instead of doing all yourself.
right now, I have 3 handymans on 1099, we can fix 98% of all problems, but if it related to structure, or major mechanical problems, I have to use outside help.
base on my past experiences, 20 units can be near hands free, meaning your cash flow can afford to hire out, instead of doing all yourself.
right now, I have 3 handymans on 1099, we can fix 98% of all problems, but if it related to structure, or major mechanical problems, I have to use outside help.
Friday, June 17, 2016
Mark the milestone of 100 eviction cases today.... by JY
By JY 2012-02-21 10:14:41
So you want to be a landlord? eviction counts Feb 2012 update.
haha, today, we mark the milestone of 100 actual eviction cases, I know it is depressing..
the good news is, we collected 41 out of the 100 cases...
currently Under Eviction 1
waiting on judgment on back rent/damage 1
pursuing collection 19
paying or under garnishment 15
civil warrant ( dead beats ) 11
Case pending due to no-serviceable address 3
Case pending due to defendant in jail 3
Case dismissed due to death 2
Case dismissed due to bankruptcy 4
Case paid or settled 41
Eviction count by year
12 01 out of 134 units (so far)
11 31 out of 134 units (26 actual evictions, 5 back rent & damages)
10 11 out of 94 Units
09 9 out of 94 Units
08 8 out of 93 units
07 9 out of 78 units
06 8 out of 72 units
05 3 out of 28 units
04 4 out of 16 units
yes, I have about 75k in judgements in court right now.
generally speaking, we lost about 6 weeks in rent during any eviction process, my average judgement is about $1800 each after deducting the security deposit, which is tagged on with 2 months of late fee (300 each month) plus cleaning/repair cost.
our collection rate is about 30%...
Question:
Have a question for you, how you get the judgments against them
Answer by JY:
your judgement case should follow right after your eviction case, depends on your state, some state sees both process as one, for example, Indiana, one filing taking care of both steps, but I know some state require owner to file separately (additional fee) for final judgement.
I do my own collections thru court system after judgement, some people take easier route by using collection agencies. DIY is not hard, just take lots of time, thats no problem to me, time is all I have left....
some BS I wrote in the past..
JY's bible to eviction............. 2008-07-17 19:09:01
different state has different eviction rules...in Indiana, you can not evict an tenant yourself unless they move out voluntary, by state law, landlord can not just kick them out, or change the lock, or cut off utilities if landlord pays utilities.
here are steps I do.
1. oral notice on due day.
2. written notice after 5days later, demand tenant to move out in 10days, you must give them 10 days under state law.
3. if they refuse to move, file small claims court ASAP, request court order eviction. when you file, request notice to be deliver by sheriff, not certify mail, because tenant can reject certify mail and that will count as no delivery, only when the sheriff can hand them the notice counts.
4. soon as you obtain a court eviction notice, then you have the rigth to thru all your tenant's stuff out on the street( which I love to do, haha), if they refuse to leave, call the sheriff, have the cops come help put their stuff out on the street.
5. drag their ass back to count for damage and back rent, make sure you keep detail record of repair and damage. pictures tells everything, add up all the late charges and early termination penalties, plus the time you spend on it, charge the tenant $50 per hour for the time you make up( the judge may deny this fee, but would not hurt to try).
6. after the damage award, motion for a court ordered garnishment on their wage if they have a job.
7. if they don't have a job, then take their ass to court once a month. unfortunately, you can not put them in jail for owe you money, but if they miss any court date, then motion to cited for Contempt of Court, if they miss the second time, then motion the court issue a body attachment for failure to appear, which is a civil warrant they will spend up to 6 month in jail, and the cash bond goes to pay for the judgment.
8. on December of each year, request the court to garnish their tax return check before the file on January, if they cash their tax check, then you can again request the court for contempt, send their ass to jail for a couple day.
good luck
So you want to be a landlord? eviction counts Feb 2012 update.
haha, today, we mark the milestone of 100 actual eviction cases, I know it is depressing..
the good news is, we collected 41 out of the 100 cases...
currently Under Eviction 1
waiting on judgment on back rent/damage 1
pursuing collection 19
paying or under garnishment 15
civil warrant ( dead beats ) 11
Case pending due to no-serviceable address 3
Case pending due to defendant in jail 3
Case dismissed due to death 2
Case dismissed due to bankruptcy 4
Case paid or settled 41
Eviction count by year
12 01 out of 134 units (so far)
11 31 out of 134 units (26 actual evictions, 5 back rent & damages)
10 11 out of 94 Units
09 9 out of 94 Units
08 8 out of 93 units
07 9 out of 78 units
06 8 out of 72 units
05 3 out of 28 units
04 4 out of 16 units
yes, I have about 75k in judgements in court right now.
generally speaking, we lost about 6 weeks in rent during any eviction process, my average judgement is about $1800 each after deducting the security deposit, which is tagged on with 2 months of late fee (300 each month) plus cleaning/repair cost.
our collection rate is about 30%...
Question:
Have a question for you, how you get the judgments against them
Answer by JY:
your judgement case should follow right after your eviction case, depends on your state, some state sees both process as one, for example, Indiana, one filing taking care of both steps, but I know some state require owner to file separately (additional fee) for final judgement.
I do my own collections thru court system after judgement, some people take easier route by using collection agencies. DIY is not hard, just take lots of time, thats no problem to me, time is all I have left....
some BS I wrote in the past..
JY's bible to eviction............. 2008-07-17 19:09:01
different state has different eviction rules...in Indiana, you can not evict an tenant yourself unless they move out voluntary, by state law, landlord can not just kick them out, or change the lock, or cut off utilities if landlord pays utilities.
here are steps I do.
1. oral notice on due day.
2. written notice after 5days later, demand tenant to move out in 10days, you must give them 10 days under state law.
3. if they refuse to move, file small claims court ASAP, request court order eviction. when you file, request notice to be deliver by sheriff, not certify mail, because tenant can reject certify mail and that will count as no delivery, only when the sheriff can hand them the notice counts.
4. soon as you obtain a court eviction notice, then you have the rigth to thru all your tenant's stuff out on the street( which I love to do, haha), if they refuse to leave, call the sheriff, have the cops come help put their stuff out on the street.
5. drag their ass back to count for damage and back rent, make sure you keep detail record of repair and damage. pictures tells everything, add up all the late charges and early termination penalties, plus the time you spend on it, charge the tenant $50 per hour for the time you make up( the judge may deny this fee, but would not hurt to try).
6. after the damage award, motion for a court ordered garnishment on their wage if they have a job.
7. if they don't have a job, then take their ass to court once a month. unfortunately, you can not put them in jail for owe you money, but if they miss any court date, then motion to cited for Contempt of Court, if they miss the second time, then motion the court issue a body attachment for failure to appear, which is a civil warrant they will spend up to 6 month in jail, and the cash bond goes to pay for the judgment.
8. on December of each year, request the court to garnish their tax return check before the file on January, if they cash their tax check, then you can again request the court for contempt, send their ass to jail for a couple day.
good luck
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