My newest piece for BiggerPockets: "Real Estate Due Diligence: 2 Critical Steps You Can’t Afford to Screw Up"
One bad deal can set you way, way back. A friend of mine once put it like this: 'One bad deal prevents you from doing the next 10.
And the No. 1 lesson to learn when it comes to all of our worst deals? In order to avoid such bad deals, you must do due diligence thoroughly and correctly.
My latest article for BiggerPockets on collections and delinquency. Something you need to figure out to be a successful property manager or buy and hold investor.
Collections, delinquency, and, in some cases, evictions, are the worst part of property management. But they are, unfortunately, part of it. You can’t escape them completely, so you need to figure out how to manage the process.
The first key things to do are to build systems and make policies."
So I've been on a bit of a writing tear of late. Here's my new BiggerPockets article, "A First-Time Landlord’s Guide to Setting Rent on a Property"
Remember, properties with a mortgage rarely have a large amount of cash flow. Oftentimes, it will be something close to $100/month. If you set your rent $100 too low, then your cash flow goes to zero. If you set it $100 to high, it might sit vacant for an extra month. In which case, if the property rents for $1,200/month, again, your cash flow for the year goes to zero.
So, how should a new landlord or property manager go about setting rents? Well, I'm glad you asked.
Due diligence is perhaps the most unfairly (and unwisely) ignored topics for real estate investors. Due diligence is when you verify what you think is true while a property is under contract. It includes third party inspections, examining the lease, rent roll, operating statements, etc. With apartments and office buildings, it's even more complicated. But it's something that you absolutely do not want to shortchange.
In this video, we give a brief primer on how to do it right.
Check it out!
My newest piece for BiggerPockets asks if we are in a recession and probably a bad one, why are real estate prices still rising?
The early data that came out right as the pandemic was starting to hit the United States were also misleading. Properties are usually under contract for at least 30 days before closing. Thus, the sales data from March came from properties with contracts signed in February, when COVID-19’s impact on the U.S. was minimal and many doubted it would become a serious problem.
But more importantly, there are two major reasons that real estate prices continue to rise:
[Unfortunately it probably won't last] ...it takes a long time for a default to become a foreclosure and for those foreclosures to begin dragging down the housing market. By some early (and in my opinion, overly pessimistic) predictions, mortgage holders are bracing for up to 15 million defaults.
While the number likely won’t be that high, it will still be high. Yes, inventory will remain low, but as people go into default or simply need to move, large numbers of properties will eventually hit the market. With reduced demand, this will put downward pressure on housing prices.
We're obviously in crazy times and definitely in a recession. Real estate prices haven't fallen yet, but they are almost bound to. So should new investors jump in, particularly with the BRRRR model? That's what my latest article covers.
My answer is: Wait a few months before starting to see how things go.
The big thing is to be more careful and demand better deals right now as we wade our way through this recession and all the economic uncertainty that surrounds us. You want to avoid risk in a volatile and likely falling market. And experience reduces risk. Unfortunately, experience is also something that new investors don’t have.
We are in the middle of a pandemic, or at least the tale end of one. That being said, we are also in the middle of a replication crisis in science. Furthermore, we seem to be in the middle of one social media/mainstream media-driven moral panic after another. One of those seems to be the collective overreaction to Covid-19.
And it appears these things are all related.
You can find the link to Retraction Watch's list of retracted Coronavirus papers here.
Of course, you would expect there to be some, but 15 is a lot. And that doesn't even include flawed or misleading papers, just retracted ones. It would appear the rush to publish during a quick-moving, panic-inducing event like a global pandemic made scientific standards much worse (and they're struggling already). Add in a hysterical mainstream press and an even more hysterical groups of social justice-minded social media users and you have the recipe for really, really bad public policy.
Which just so happens to be what we got.
So given how insane 2020 has been so far, it's nice to get some good news from ABC News,
ABC News looked at data from the following states: South Carolina, Montana, Georgia, Mississippi, South Dakota, Arkansas, Colorado, Idaho, Iowa, North Dakota, Oklahoma, Tennessee, Texas, Utah, Wyoming, Kansas, Florida, Indiana, Missouri, Nebraska, Ohio.
Nice. That being said, this doesn't sound like what would happen in a massive, super-deadly pandemic.
Yeah, I think it's pretty damn obvious we waaaaaaaaaaaaaaaaaaaayyyyyyyyyy overreacted to this.
This is probably the most depressing topic regarding property management there is. No one wants to do collections and no one ever wants to evict someone, although it is. That being said, collections are still part of the job. On this video, my brother Phillip and I discuss how to systematize it so you are not treating people unfairly (and possibly illegally) while collecting what's owed to you and staying sane in the process to boot.
Check it out!
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