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Landlords in Homeowners Associations

police-man-306848_1280-PDLandlords in Homeowners Associations are a joy to some, and a pariah to others.  I own multiple properties in a Homeowners Association (HOA).  People love HOAs, or hate them.  Often, it is real estate investors that hate the HOAs.

If an investor buys property in a homeowner association, they have effectively signed a contract with the HOA.  They have agreed to abide buy the Declarations, bylaws, rules and regulations.  If they do not like the contract, they can attempt to change it.  Once thing they cannot do, is violate it.

As president of my HOA, I have had some challenges with investors.  For some reason, after they have purchased property in our HOA, they think they know more than the HOA Board does.  They very well might, but there are still rules to follow.

I am always intrigued by these investors who buy a property in a HOA. They buy a property because it was priced right, looked to be in a great area, and had the potential for profit. Unfortunately, some of the investors I have come across did not understand HOAs, did not read the rules, or did not think the HOA would enforce the rules. They were interested in their own profit, at the expense of the other investors.

I am sure that they have a few HOA horror stories of their own, after they violated our rules.

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Financial Independence With Rental Real Estate

beach-641548_1280-PDFinancial Independence with Rental Real Estate.  I often get asked by my co-workers at my ‘regular’ job, the ones who know I am a landlord, why I keep going in. Why not just retire now?  Why do I put up with the mega-corp meetings, frustrations and red tape just to bring in a few dollars.

I put in a lot of hours, and a lot of investment capital to get this far, what does it takes to be financially independent?

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Apartment Turnover and Other Maintenance

Apartment TurnMy final apartment turnover for March is complete.  I am all set until the end of April now.  I had the new tenant sign a lease and pay the rent for the remaining March rent, and all of April, on 3/24.  I prorated the rent for March, and she also paid all of April.

These tenants have a solid credit score, and solid income, so they should be a great tenants.  It is only one person for now, and another that moves in in August.  Both have been screened and accepted.

That is the way to do it, declare and screen everyone who will be moving into the apartment right up front.  No one wants to be told their significant other can’t move in a month down the road.

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Landlord Retirement Thoughts

surf-fisherman-1404140686CZL-PDAs I go through my financial plan, there are always some reservations about leaving a steady job with 4 weeks of vacation and a nice tech salary.  I have checked my landlord retirement plan several times, like Santa checks his list, but a lot more often.

While I will not be without income, as I have my rentals, it certainly will be a life changing event.  I will have an additional 40+ hours a week thrown into my lap.  Here are some thoughts that run through my head as I begin the countdown to retirement…

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Hidden Rental Expenses That Might Cause Problems

enter-the-catacombs-PDIf you are like most investors in real estate, you want to make money.  Unfortunately, Murphy has a way to continually take away your profits at the earliest moment.  Even though you have accounted for all of the known events, and even all of the unseen events, the ‘other’ events happen.  These hidden rental expenses are real, and they add up.

Some expenses are a part of running a business, and really have no bearing on the rental property you are purchasing.  But you would not have the expense if you did not have the rental.  So it impacts your cash flow and profitability.  Some expenses are very small, but they indeed add up.

Some expenses are obvious, but who would ever think to include that in the cash flow analysis of a rental property.

Were you aware that driving to and from the rental will cost you something?  Of course, did you account for it in your analysis?  It could add up to be several hundred dollars a year.

Were you aware that sending letter(s) to a tenant would cost you something?  Did you account for it?  It may only be a couple of dollars, but it adds up.

You may want to get a business business liability policy.  How does that affect the cash flow of the rental?

Tenant gifts?  Even $50 adds up fast.  Bad tenants?  Those are the worst.  Evictions?  Bed Bugs?  rental licenses?  Rental inspections?  Tax preparers?  Incorporating?  Time and effort?  YIKES!!

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What expenses in your own life have popped up, some that may have been expected but were unplanned?  Or even totally unexpected?

 

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The Tale of a Problem Tenant?

criminal-portrait-PDNo matter how good of a landlord you are, or how great your system is, you will sometimes have issues with a problem tenant.  It is up to you to mitigate the issues and make for the best.  You must have the ability to recognize the problem, have a solid way to handle it, and have a back up plan it that first plan fails.  And you have to be ready, able and willing to execute the plan.

I came across a potential problem on my recent tenant.  Here is the scenario.

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The True Cost of a Bad Tenant: Why You CAN’T Afford Not to Screen

Bad tenantAre you capitalized enough to be a landlord? Can you really afford the true cost of a bad tenant?

Far too many ‘investors’ neglect one of the main things that will put them out of business.  Their customers.  Like it or not, no matter how genuine a tenant sounds in the showing, when they are behind on their rent, they can be as mean as a snake.

I see it all the time: A prospective landlord looks at the numbers and says, “Rent will be $1,000 a month. My payments will only be $800; I can pocket the rest.”

If you are any type of investor, at least one who reads here, you know that this is a losing proposition. There is $200 worth of cash flow — before expenses. After expenses of 50%, there is a negative cash flow of $300.  And they are even managing the property for free.

bad tenant 2But to the naïve investor, on the surface it looks OK: $200 a month in your pocket. And that is if you get a renter, if you get a renter who pays, if you get a renter who doesn’t damage the place, and if you do not have any vacancy.

The Start of Trouble and The Cost of a Bad Tenant

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February – March 2015 Rental Cash Flow

packs-163497_1280-PDHopefully everyone’s rental cash flow and rent collections are going well.

All 25 of 25 rents were collected and deposited mostly on-time.  I was able to place at least four renters so far this year, with one vacancy coming up for May 1.  Rents have been bumped up just a bit for 2015 on the turnovers, so my monthly gross income, before expenses, should be up quite a bit over last year.  I was able to raise rents just a bit in 2014 too.  And I have bumped up the rent on one renter for April 2015.

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Are You Too Lazy to be a Real Estate Investor?

lazy-lion-PDI get emails and calls all the time about people wanting advice on how to invest in real estate. People want to be a Real Estate Investor, and do not know where to begin.

It is sort of flattering, like I have some sort of insider knowledge of the markets or what property or type of asset is the best investment today. But I am always willing to share my knowledge. Even more interesting are the investors who say something like, “If you find a property that I can make a quick $50K on, call me. I have the money to invest.”

If I see a property with a $50K potential, it’s mine — and no one else’s if I can help it.

I get people who contact me with things like this. “I have a goal to have 100 rental properties within 10 years. I have $10K to invest now. How should I start?” I admire the goal setting, and I appreciate the fact that someone can think big. Unfortunately, if that is your way to riches in real estate, your bubble will soon be popped.

Do You Have What it Takes?

There are many different ways to invest in real estate. I personally do rentals and have done a flip. I have also sold real estate. All my rentals had to be 100% remodeled after I purchased them, so I know a lot about rehabbing. If you are thinking about any self-managed real estate, you also need to know a bit about rehabbing. Once you can rehab a property, the world of real estate can get very interesting and more financially rewarding.

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Filling Rental Vacancies – How to get a tenant in the Winter

for-rent-148891_1280-PDI have had to fill several vacancies already this year.  If you have ever had the opportunity to experience filling rental vacancies, you know it can be challenging.  Especially in the Winter.

When you have 25 tenants that you manage, like i do, you will have tenants move out. And some move out in the Winter.  When the tenants  move out, you need to get a new tenant as soon as possible.  Vacancy is your number one avoidable expense as a landlord.

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