Here in Arkansas there aren't any liens, you win at auction and you get the tax deed. The former owner has 30 days to claim the property and then it's yours.

For what states are tax deed or lien:
http://www.nuwireinvestor.com/articl...eds-51022.aspx

Also, to your point 5, has anyone ever tried to sell a property via this route? From my research it looks really hard to find a way to get "clear" title through auctions, making selling difficult.

Obv - I've never done it. From law school (which was a long time ago), I remember learning that you could generally find a title company to provide title insurance after you did a quiet title action following a tax deed or adverse possession. But I've never had occassion to have any experience with that.

This is interesting http://www.taxtitleservices.com/

In Illinois, the statute provides that a tax deed conveys "merchantable title". One court described merchantable title in the following way:

Now whether that means you can or cannot get title insurance, I really don't know.

Anyway, since I mentioned law school, I'll give my standard caveat - I'm a lawyer, but I'm not your lawyer. The information above for general informational purposes only, and is not intended as (and should not be construed as) legal advice with respect to any particular situation.

I guess that there might be some weird situations where the operating costs aren't that high. But I've never seen it. Check out this link to the the National Apartment Associaton reports on expense ratios. Granted these are apartment complexes. But with as with anything in scale, apartment complexes should show LOWER operating costs per unit than smaller buildings.

http://www.naahq.org/resources/data/...s/default.aspx

FWIW, my properties roughly mirror these date OVER TIME. For example, I might go 10 years without spending anything on an SFH roof, then in the 10th year I spend all the free cash flow on replacing the roof.

Thats why I was wondering about your holding period. If you plan to resell the property in a relatively short period of time (like <3 years) you can be more liberal with your expense estimates. But BE SURE to hold SOME money in reserve to handle routine unexpected expenses like replacing a water heater, etc.

Depends on if you're selling the land & mobile, or just the mobile. If you're selling the mobile, the process should be roughly similar to a regular eviction. Prob a few extra hoops to jump through to exercise the lien.

If you're selling the land, I'd assume you're going contract for deed. On that, I'm no expert. Its really a lawyer question b/c all states are going to vary a lot on how they handle such things.

Don't matter. You have to save cash each month to replace siding, roofs, fix pavement, paint, etc. It doesn't matter how long its been since you did it last. Well, that only matters when you first buy b/c you have to figure out how much to put into reserve up front. But in the course of normal operations, you just pay into reserve each month no matter when the last time you renovated.

Yeah, I have a rooming house that I rent out month-to-month. Plus, its typical in my state for leases to continue on a mtm basis after the first year. So yes, I've had and have lots of mtm tenants. Its no big deal.

Its funny that you ask me this question, b/c I recently read a book - the only one I'm aware of - on operating rooming houses. I noticed it in my REI club's library and grabbed it. I thought it was a pretty solid book overall. In fact, it was useful enough that I bought a copy, and I'm sure I'll incorporate some of the ideas into both my rooming house and my larger REI business.

The SRO System by Ryan Beckland. I googled it for you. www.srosystem.com

It sounds to me like the numbers above work really well though.

I think its pretty feasible. In his book, Beckland has a whole system worked out for this using resident managers and technology to aid in management. I have a kind of a resident manager at my rooming house, but he doesn't do that much. I admit that I'm behind the times WRT using technology. Which is pretty dumb I guess.

IN any case, my wife has nothing whatsoever do to w/ my rental business. She has probably met less than 10 of my tenants ever. So I know for a fact that its not particularly hard to keep your family life seperated from your rental business.

This post hits home for me a little bit b/c I've been meaning to expand my rooming house business for a while, and haven't made much progress. In my area the rooming houses are occupied mostly by the menally handicapped, and I like the service aspect of the business. The cash flow is good too.

This scenario is sort of common in the mobile home park business. Lots of older parks have deferred maintenance issues that make them essentially unsaleable, but the owners can't or won't spend the cash and time on improvements. Budding entrepreneurs go in, take over operations, make improvments, and turn the propety around for resale.

So to answer your question, yes, I've heard of this.

This is so key.


I call it capital expenditures aside from routine maintenance / repairs.


Major capital expenditures can commonly be expected every 5 years.


Every 5 years, you'll either: fix the roof / heating system / rebrick the apartment / change the windows / change electrical system / do foundation work.

Rinse and repeat over and over and over.


Pay now in your calculations when you buy, or pay later, but you'll end up paying it regardless.

Brand spanking new apartment buildings can run at about 30% expense because you won't have to do any capital expenditures to make for another 10-15 years.


But 20+ year old buildings will inevitably fall into the 40-45~% expense ratio.

Yeh good pt about the holding period.

Thanks spex, as awlays you are a gentleman and a scholar (I think I'm on my third complete readthrough of this thread!). Rooming houses around here are really booming ever since Quebec decided to drastically cut back on admissions in facilities for the mentally handicapped. There as an hospital that housed about 150 of them that closed less than ten years ago in the region, so a lot of them are now renting.

I have lived in a rooming house for a few months when working abroad and one the guys suffered from mild ******ation. He was probably the best roomate I have ever had. Sleeping by 8PM, not noisy in the slightest, very polite, altough he could be clingy at times (and he also went to the toilet with the door open, but that's another story).

So I have a question about hiring an independent property manager.

I have acquired about 13 units in Las Vegas in the last year, mostly single family residences but also two 4-plexes.

I use the guy who rehabbed them for me as a property manager. He bundled one year of management into his rehab fee on each property.

The first of our contracts ends in this month. We haven't yet discussed terms but for a couple of reasons I am not particularly inclined to use this guy, and my guess is he will want to charge approximately market rates.

So the obvious spex-style play here is to hire someone on an hourly basis for a flat rate. Depending on the rate and the how efficient they are it should be cheaper, and possibly way cheaper, than a property management firm.

Also I'm in LV which has one of the highest unemployment rates in the country, so my chances of finding qualified individuals would seem to be very good.



There is one problem though - unlike spex I don't have the knowledge necessary to teach someone to be a property manager. For example I don't know how to do section 8 paperwork, I don't have any contacts for maintenance issues (though I can come up with some easily), I don't have any experience advertising units for rent, etc.

I'm sure this stuff is not that hard, but the fact remains I'm not comfortable hiring someone who's green.

So I'm thinking of just advertising for an experienced property manager. The only problem there is I assume I would have to pay such a person significantly more than I would have to pay some broke recent UNLV grad who is putting in resumes at Starbucks. And it's possible such a person is just not out there at this time.

One more thing - my time has a high opportunity cost so the idea of me spending a month managing my own properties does not really work for me.


tl;dr: any tips for finding a good independent property manager who already knows the business?

If you hire cheap people, you get cheap service.


It's always going to cost more for professionals to step in.


http://www.irem.org


If you do hire a management company. Find someone with credentials from irem.org

Doesn't spex pay his guys like $10/hr?

It is because he knows how to manage them and train them properly. If you take some totally green dude with zero skills except his ability to learn quickly, than yes you can pay him cheap.


Don't think you are going to find some trained management guy that is actually good at his job that will accept 10$ / hr type work. ALL TRAINED management people take jobs on a per building revenue % or per door. It depends.



BTW. Don't EVER hire a repair man to do management work. Totally different skill sets. RARELY would I trust a repair man to do management work, EVER.

And don't ever pay a management fee 1 year in advance EVER. You need to adopt the mentality that when YOU get PAID, THEY get PAID.

Don't even mix it up with his repair fee. If you have to do it, seperate the two completely.

BTW this is just my own advice and take it as you will.


If you got the money. Go buy large apartment houses. 30+ units.


They have enough income to justify a management person, and you won't be paying outrageous fees to have them managed.

So general question, looking at this apartment tomorrow that sold for 135 two years ago freshly renovated.... Now after the market crash (not horrible in my area... But still definate crash) the guy is selling with a 150 asking price

he doesn't have an agent and his emails seemed really unprofessional

what's my game plan when talking to him tomorrow... The place is prolly worth about 120 to me, maybe 110 market value and would be a Great deal at 100 ...

Any general advice would be great

wrt to the property management:

Managing property is not complicated. You don't need a "trained and licensed professional" to field some phone calls, run a background check, call some employers up, whatever. You could take a guy fresh off the street and explain what to do for an hour and hand him a piece of paper with all the numbers to call when something breaks or something happens and he'd do just fine.

But, you don't have to. I have a couple friends who worked as "leasing consultants" for big apartment complexes and they made in the neighborhood of $10/hr, and they have all the skills and are out of work. I'm sure they are not alone.

RANDOM WORDS BOLDED FOR EMPHASIS HERE

Buy Landlording by Leigh Robinson & How to Manage Residential Property for Max Cash Flow and Resale by John Reed. Read them closely. copy relevant chapters and make an instruction book for your staff to follow. Add to the manual as situations arise and you figure out how to handle them.

That is pretty much what I did. Honestly, green or not, you're going to likely have to do some amount of training. The best people usually end up being retired. You want someone that has another source of income b/c 13 properties are definitely part time work.

Get a retired individual (or couple) and find someone else to do the handyman work. I'd probably advertise in the community areas of Sun City and the other retirement areas. Surely you'll find someone whose retirement income needs some supplement since the financial crisis.

If I'm being honest, I'll say that I have had great luck w/ my management team. They've all been with me a long time. So I haven't had to hire anyone for a while.

spex,

What does your management team do exactly? I mean I know the obvious tasks tongni mentioned like taking phone calls and screening tenants, but that doesn't seem like it'd keep them busy unless they were managing a couple hundred units minimum. IIRC you said you do the books yourself and hire lawn care/cleaning companies, so what is left for them to do?

And if you don't mind, can you give an update on what you own now?

The first part of REI is math. Buy at the right price and you can do everything wrong and not get hurt too badly. Buy at the wrong price and you can do everything right and still get creamed.

The second part is something spex x has emphasized. I had a fantastic meeting last week with a group that owns/manages about 500 single-family homes. Check out these numbers:

• Average vacancy rate: 3% since 2006
• Average time from move-out to move-in: 23 days
• Average years of tenancy: 4.8
• Waiting list: 4 months

How do they do it? With fantastic property management. Nobody mails their checks because their property manager collects it in person each month. How does the property manager get to know them without frequent visits?

They celebrate birthdays with their clients. If the client is late with the rent, they want to know why. Lost your job? OK, what's the plan? Have you filed for unemployment? No? OK, here's how you do it. Do we need to move you into an apartment to reduce your rent?

They screen their tenants really hard. Stable job situation, credit check, criminal background check, references, etc.

Their properties are great. A typical deal for them is $50K purchase price and $50K in improvements. They have their own landscaping crew who keeps the outside looking nice.

In short, they find good tenants, then treat them very well.

Their model obviously works, as the tenant stability flows right to their bottom line.

The takeaway is "Don't be a slumlord." If you view tenants as just a source of income, please invest in something else--stocks, bonds, commodities, whatever.

Tenants are a source of revenue, but more importantly, they're people. Treat 'em like you would a member of your family and you'll be successful

This is important to success but it is much more tricky than it sounds.

Often people who rent are not the most successful people in life. Many have learned to lie, manipulate, steal, etc as a matter of course in daily life.

We try to be up front, honest and considerate of our tenants. On the other hand, they generally cannot be trusted. It is a fine line and takes some practice. The one rule we have is that they CANNOT get behind on rent. We'll work with them on anything else, but as soon as they get behind it is a big problem. Most just don't have the means to ever catch up. We also don't let anyone move in without the full deposit and full first months rent up front. It is your safety net.

We are very responsive to repair requests or any other issues that arise. Renters respect you for caring about their comfort and living conditions.

fun160,

You have to walk the line though. As spex says you must be diligent about treating everyone the same. Rent is late on the same day for everyone, evictions are filed on the same day for everyone. In this litigious society, it's tough to cut people breaks.

No question about it. I didn't mean to imply they let people slide on rent. They are fair, but firm. They don't believe they're doing their clients a favor if they're not holding them responsible for the lease they signed.

I know that you know. I was just pointing it out for the benefit of anyone reading this that is considering entering into this business. Your original post could be misread that if you work with people and give them the benefit of the doubt everything will be perfect. Potential landlords need to know that dealing with tenants is difficult and takes some practice to get it right. A moments weakness can cost you a ton of money and cause more trouble than you were trying to solve!