Monday, December 28, 2015

REI Guru This Week At REI

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Hi Everyone,

ATTENTION: This week we have the big room to the left in Jeresy Lilys. NOT the normal room to the right.

Our special guest speaker will be REI Guru Keith Boley of REI Wealth Academy

Keith comes and visits his Mom every Christmas and speaks with us while he is here. He’s from California and they have a different spin on this stuff than we do here in Virginia so it’s always fun to listen to him. He’s a great source of information.

This weeks topic will be about doing lease options AKA Rent to Own, Lease Purchase, etc, the Keith Boley way.

Come on out. It’s going to be a great meeting!

Monday, December 7, 2015

Rehabbing Houses From Beginning To End This Week At REI

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The next couple of weeks we’re going to spend some time focusing on turning ugly houses into pots of gold. It is true that you make your money when you buy a property. It’s not money that will fill your pockets if you’re buying and holding as a landlord does. It’s what they call unrealized income. It shows up on paper but it’s not anything you can spend until years down the road when you are ready to retire or start selling them off a few at a time.

The road to real wealth is by using a buy and hold strategy in real estate. Flippers and wholesalers end up working their tails off on each and every deal they get. They also pay the government very well with their short term capital gains. And when they stop hustling their income stops. This is why you don’t see many flippers and wholesalers that are extremely wealthy. There are a few here and there but there are WAY more landlords that have made it in the multimillion dollar range. And with much less effort.

Landlords get the benefits of buying property, keeping it and having their tenants pay off the mortgage, insurance, maintenance, taxes, etc. They also have the added benefit of depreciating the property over 27.5 years, mortgage interest deductions and many other benefits to buying and holding property. Such as extra pocket cash from each rental every month if done correctly. And unlike flippers and wholesalers, they can completely stop working for years but their income will keep rolling in. Landlording is the true definition of farming your mailbox. 

One very important step to successfully landlording property requires finding properties that need a substantial rehab.  Buying properties in rough shape and doing a major rehab is the secret to obtaining 100% financing. And it helps tremendously with the growth of your company if you can get all of your money back out and put it into a new investment. So you’ve got to get something that you can put some sweat equity into to dramatically increase it’s value. Done correctly you will easily be able to get all of your money back out and reinvested.

The next couple of weeks we are going to listen to some Guru CD’s about rehabbing houses. They aren’t very long so we will have plenty of time to have a group discussion about rehabbing for both flip and landlord purposes. We will discuss the full spectrum of how rehabs should be managed so you have a firm understanding of what you do and don’t do for a flip and rental.

Come on down to our weekly shindig and spend some time with some educated like minded people. Attending REI once a week will keep your eye on the prize at the end of the path. It’s easy to get off track and real important to maintain focus if you have plans on retiring with more money than you know what to do with.

We’ll see ya there!

Tuesday, December 1, 2015

What Do You Tell Your Tenants That Give You A Hard Luck Story?

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Tenants are constantly trying to slip out of paying rent right around Christmas. I get several every year. They blame it on all kinds of things. Some say their car broke down. Others say they got a massive utility bill. And then there are the ones that will blatantly tell you that they want to get Christmas presents instead of paying rent. And they want you to essentially finance their Christmas to them at 0 percent interest with payments of X dollars per month until they are caught back up. LOL

What’s going through my mind at that point? I have a Christmas present for you.… And I’ll even pay someone to serve it on your door. EVICTION COMING SOON!!!

Obviously you can’t tell them that. There will be no benefit to you for doing so. There unfortunately is a game that you have to play from time to time with your tenants. Even if you don’t feel like playing you have to always do what’s in your businesses best interest.

I’ve found something that works very well as a reply. It typically shuts them right up and makes them realize that they better consider another bill to blow off. The rent isn’t going to be the bill that they can do that with. And if they do, you will be forced to evict them.

So here’s a version of what I write to them throughout the year when tenants give me their hard luck story or blatantly tell me they don’t want to pay their rent right now and want to make up for it later. It’s nice and makes them understand that your bill is important.

When I tell the bank, insurance company and city that I won’t be sending their payments on time they don’t care. They give me a fine anyway. And the bank will foreclose anyway. That’s exactly what they will do to me. I don’t own a single house that I have. The banks own all of them. I haven’t been doing this for long enough to have a bunch of paid off mortgages. And I’m not rich so I don’t have the ability to make all of these payments I have to make without rent. And that’s the reason there are late fees with most landlords. Ones who have been doing it for a long time a late fee is extra pocket money. Ones like me that haven’t it ends up paying my late fees and city fines I got for not paying on time. The only reason I’m telling you my personal business is I think you need to to fully understand my situation so you will know that I have to do whatever I need to do to survive by keeping regular on time paying tenants.

Most often that one long text response ends it right away. They will reply saying they will try to borrow money from a friend or relative, get a title loan, or skip some of their least important bills like the cable bill or phone bill. Even the electric bill falls below rent when you think about it. You can easily but uncomfortably live without power. But you’ve got to have shelter.

Now if they really are in a nasty situation then this opened the door for your next conversation with them when they don’t pay which will be telling them something like this.

I am going to have to file an unlawful detainer in court. Tomorrow is the day the court gave me to file my UD’s on anyone who hasn’t paid. As you guys know I like you and I want you to stay. I was hoping you guys would stay with me as your landlord for years to come. I will do everything in my power to get a continuance from the judge if you show you that you guys are serious and want to get caught back up but didn’t have it all by the first court date. But as I’ve told you before, I’m not rich. Ive got an unbelievable amount of bills to pay and I have to have consistently paying residents. That’s the only option I have.

That statement does several things. One thing is it keeps the communication positive and doesn’t get them mad at you. You don’t want your tenants mad at you as some of them will tear your house up on the way out. It’s not in your businesses best interest to end the relationship on a negative note. As I said before. There is a game you have to play. If you play it right things will be relatively easy. If you play it wrong you will have a continuous battle and you will hate being a landlord. Even if you do play it right you still from time to time will get some real bad ones. You will minimize that to a great degree though if you make the right moves.

Note that I also told them that the court gives me a date to file my UD’s. I say that because it prevents them from trying to get me to give them more time. I like to go to court the least amount of times possible. So I prefer filing all my UD’s at once. And if they think that the court gave me a date and I only get one date it’s unreasonable for them to ask me to wait another month to file.

Do yourself and all other landlords a favor and tell your tenants the order of priorities when they move in. Food is first for survival. Shelter is second. Everything else is beyond that. Don’t be an idiot and pay them in the wrong order.

Hmm, Christmas Presents For Favorite Tenants!

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Christmas time is coming up and it’s about time to start thinking about your companies yearly plan to hang on to your good tenants. Do you have a “good tenant" retention plan in place? If not, should you consider one?

Over the years I have heard many landlords tell me about their retention plans that they feel work. First things first you need to define a good tenant. For my retention plan a good tenant is a tenant that has paid their rent on time each month for the past 12 months. After the first year of on time payments they get 10% off a month of rent. 2nd year they get 25% off and the 3rd year they get 1 entire month of rent for FREE. I don’t want to keep track of it because it would be a pain for the amount of tenants I have. But if they notify me I will check the records and give it to them.

Other landlord buddies of mine will give their tenant a Christmas present. I have heard these presents being all over the board in cost. I would suggest giving them something inexpensive like a gift card for a couple movie tickets. They will value you being their landlord just as much with a couple movie tickets as they will from you buying them a new TV which to me is insane and unnecessary. They aren’t your children.

The other retention plans that I have heard of which are good consist of giving your tenant, after a year of on time payments, a choice of 1 out of 3 possible apartment or house upgrades. This tenant retention method gets your house fixed up with nice things and makes them feel like they are living in a fixed up unit rather than a dump that you never put any money into. Those gifts could be things like pick any 1 room to be painted, an upgraded nice kitchen or bathroom faucet, or a new ceiling fan, etc.

Even though I can think of several of my tenants that would like it, you may want to skip on the travel size Tranny Love Doll.

Simplified Bookkeeping for Investors

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I sure would like to see the IRS tapered down in size by implementing some modified version of the fair tax or flat tax. Abolishing taxes all together for businesses is an even better idea. Crackpot idea? No… Its a good idea.

A great deal of people are actually out there with the misdirected preconceived notion that businesses pay taxes. Think about it for a minute. All costs of doing business, it doesn’t matter what it is, gets built into the cost of the product or service a business sells.

An educated business owner is not going to continue to take hits to their personal finances due to any increased cost of doing business. They will either streamline their business in one way or another, make employees be more productive and work harder, or raise the cost of the product or service. There aren’t many other options.

As of now the US tax code is 74,608 pages long. And it’s getting much larger every year that goes by. But as of now, we have to continue to deal with it.

Meetings where members are teaching us their tricks of the have always been popular. And this week that’s what we’re doing.

Our President, Andy Stowasser, will be teaching us the simplified bookkeeping techniques he uses for his company. As you can see, bookkeeping  taxes, etc are by far my least favorite topic.

However they are currently necessary and if there is absolutely anything that anyone can teach me to make it faster and easier I’m all ears.

Come on out and see if you can learn a few tips that will make your life easier and save you some money.

And bring a friend with you. Guests are always welcome.
 

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