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RE Ohio

Crappy Ways

by David Falter on 06/08/20

I've been really busy so here is a short blog today.

There are those "investors" who are down right slimy and I avoid at all costs for multiple reasons.  Here are my personal things I look for when I talk to a landlord or look at their property.

1.  Do the keep the property up?  This goes along the lines of multiple things for this one.  Do they make sure the yard stays cleaned up and mowed?  Do they care what the tenants are leaving outside?  Is the house falling apart, boats or cars in the yard, overflowing trash cans?  If the answer is yes, then they don't care about the property or the neighbors either because they have to look at the mess.  It also indicates to me that they don't screen their tenants so obviously they just care about money coming in and that's it...screw everything else.

2.  It seems almost always the owners turn a blind eye to maintenance and upkeep.  If they can save $1 they will do it.  They will hire a handyman or do the work themselves.  99% of the time when they say this I know I will have to spend my time, money or someones sweat equity to fix the previous owners work.  

3.  I'm reluctant to put this on here in case someone takes this info and runs with it but this is something else I watch out for.  There is two ways I know of to screw the sytem/man.  One is to buy a property personally to get a better interest rate, have the bills sent there for a month or two, then start renting it out.  A person can save a percentage point roughly on interest by getting the property under a personal loan instead of a business loan.  If the bank asks you just say you moved out.  Do it to many times and the bank will stop being so friendly to you.  Another way to screw the man is to buy a property and just don't pay the taxes on it. Rent it out, do zero work, pay no taxes.  It will take years for the city to find out about it.  And in the case they do do something it will take another few years to do anything legal about it.  

Join a REIA

by David Falter on 05/16/20

I have been having conversations with someone wanting to take the plunge in real estate.  This reminded me of how valuable a Real Estate Investing Association is.  They have helped me tremendously with networking, running a business and coming across new ideas.  I cant stress enough joining one.  Visit a few before you join for they are not the same or I outgrew the group.  See if they will stretch your thinking and mind.  If you join because they just say what you want to hear then it is waste of time and more of a social gathering with people patting themselves on the back.  

Another word of advice is being willing to drive.  Don't go to group just because its close by.  There are associations all over Ohio and the U.S.  Tiffin has one that I'm a member of but just joined because they have a evection list in their newsletter and a small outside chance I could find a deal.  They for the most part are low end landlord and that is what their shtick is.  I was a member of FostoriaREIA for a month or so but they fell apart soon after.  Then there is ToledoREIA.  They are basicly like the Tiffin group but mix in a heavy dose of Gov't over reach talk and biased lead laws.  I left that group after a year and now drive down about once a month if not more to Columbus for a awesome group named COREE.  I highly recommend them for many reasons.  Without these real estate groups I don't know what or where I would be.

Be Like a Tree

by David Falter on 05/11/20

The fewer surprises in business the better.  Volatility, uncertainty and not knowing where and what you want to accomplish aka goals are detrimental to business.  If you, partners and workers don't know what is going on and what the goals are you are going in circles in a big ocean with limited supplies.  Eventually you will get frustrated, run out energy and be adrift like the vast majority of other businesses.  Its not the business is bad or ill conceived it is the lack of focus and lack of goals that kills a business.  That and poor management.  

One of the things that helps me is having a flexible structure.  Don't be so rigid that you can't adapt and change it but also do be so flexible that anything goes.  Maybe a good metaphor is a tree.  It can bend, twist, survive floods and drought ect. but it stands firm.  The more it withstands the stronger the roots and branches become.  
For example when I am working on one of my rehab properties I try to standardize the materials.  I am familiar with them, I know how long I will wait for the material will arrive, me or my guys are familiar with the installation ect.  Wall colors, the brand are almost always the same as well as the trim paint and sheen.  Flooring materials are the same but different colors depending on the house and other floors.  I can go into my stores I use go straight to the owner/manager and say I need 300 sq ft of this floor, pick the color, order it and be out the door in 15 minutes.  There is no guessing or heehaw back and forth.  The main variables that I have if any are bathrooms and kitchens.  If I need to replace the kitchen cabinets I have 2 cabinets makers I use.  If the house has a more modern feel I use a white shaker style.  If the house has a lot of original wood work or trim I will use something else.  But I always use the same maker and the same company to measure and order the cabinets and counter tops.  Developing report and trust can be huge.  I get discounts at times, billing is more flexible, I can go in and talk to them after hours and use their services and I get moved to the top of the list because they know who and what I do.  I keep my word and I'm easy to communicate with and both parties know what is expected of each other.  Being like a tree is a good thing.

Opportunities for All

by David Falter on 04/26/20

If you have time at home due to the Wuhan virus what are you using it on?  I am staying busy myself with renovating a home in Tiffin but when I'm not doing that I am researching stocks, getting on webinars about real estate and finances and reading.  If anything I am busier that I have been.  I missed many opportunities in 2008 because I didn't have enough knowledge.  I did ok but I could have done vastly better if I was prepared.  For those working for someone or company and you have down time I HIGHLY suggest picking up a book, take a class, learn a trade or start thinking about a way to make some money on the side.  In the next few weeks things will start panning out from this virus and be revealed.  Some won't be hired back and some will not start there business again.  I think companies will streamline their work force and let go who they don't need.  Those who can work from home might eventually do that more and more and be common.  With restaurants and stores possibly closing than commercial buildings will have more and more empty buildings.  This is a worst case scenario but it is possible.  My two cents is that residential real estate will have its challenges but people will always need a roof over their head.  Stocks will be sporadic at best.  So what is the safest investment if done correctly that you can actually make money at be less exposed to market volatility?  Residential real estate.  Just my biased opinion though.  And for those that don't know that IRA or 401k that is going up and down more than a yo-yo.  Those can be converted to a self directed IRA and 401k and then you can invest with those funds and buy, hold or sell properties.

Time to choose

by David Falter on 04/18/20

What I'm doing differently the last month or so with economic strains currently.  Not much.  I am trying to be a bit more cautious with expenses and trying to focus on cutting down my debts.  I've been doing this what seems like forever.  When I got into this business or rehabbing I listened to other people and took the easy way out to pay for rehabs.  Put expenses on credit cards, get points/rewards, pay it off.  Wash, rinse and repeat.  Been there, done that.  Not anymore.  When life happens, you have emergencies or short on cash its easy to pull out the credit card.  Mix in budget overages and house upgrades, and finance charges you get where I'm at.  I have to sell a house once a year just to pay credit card debts.  A second one to pay for lifes expenses.  And then I do another one to use to invest or pay down debt.  I'm smarter than this now but I'm still paying for my early mistakes.  Lessons learned. 

People who where hurting before this virus are in trouble and have a hard road to walk in the next few months.  We need to get people working again and now, not later.  All those evil business' that people would complain about are now there life line and telling people that they can delay their payments or they will temporarily freeze them.  Eventually these will have to be paid back and for people not preparing for this it will hurt.  Rent or mortgages will be due as well as back payments.  Most likely they will roll these into multiple payments to ease the burden but they don't have to.  If you are one of the people that could get into financial trouble my best advice that I can think of is get overtime when you can, start a side hustle, read a book or take a class to expand your knowledge and opportunities.  There is a MASSIVE demand in building trades.  If you don't know much in those fields but can learn and show up you can have a bright future.  All you have to do is pickup the phone or ask contractors if they need any help.  If they say no call me!!!
Landlords that are over leveraged and bought incorrectly will be in trouble.  If tenants can't pay rent then they cant pay the mortgage.  Those properties will be for sale in the coming months as well as people with mortgages that are temporarily laid off.  If your an investor please have some class and try not to squeeze every dollar you can out of people.  Everyone is hurting currently someway or another.