As I mentioned in my previous blog entry, I just finished closing on a portfolio of properties in Akron, Ohio. As a matter of follow-up I go online to the County Records site and have a look at the tax records for the parcels we just purchased to see if they were registered correctly, and you'll never guess what I found. Yes, you guess it, a mistake! Was that too dramatic?
It was nothing major, just the mailing address for one of the properties was still listed as the previous owner. No big deal, and it will be a simple fix for the title company. Then the tax bill arrives in the mail for a property we didn't buy! I figured 'Cool!, freebie!", but on further inspection it was still registered in the real owners name; just the mailing address had been updated with my address. Oops! Must have caught the County Clerk heading out for smoke break after getting half of one record entered and completing the other. The current owner will be sad to know that I won't be paying their outstanding $1000 tax bill. The title company can fix that one too. :)
Back to the subject of today's blog, what the heck is with some people? I had an eviction move-out on Oct 15th and the court approved movers showed up with the Bailiff to evict the tenant. Pretty normal situation, but what happened next has got me pretty fired up. Have a watch of this video on YouTube and you'll see what I mean.
It starts off pretty slow, but gets worse the further along you go. Needless to say these bozos are no longer permitted on any of my properties, and my property managers are also banning them. What's with some people that they think this type of behavior is OK?
If you think that's good, wait until my next blog entry. I have to wait until a certain property is sold and I no longer have to deal with a particular City ever again, but I won my lawsuit against the City and once I tell my story, I believe you'll agree with me that what's going on in the Building Department is not all above board.
So until next time. happy investing!
I just got back from another successful trip to Ohio and closed on a small portfolio of properties there. It gave me the opportunity to explore another market and see what it has to offer. Akron is only 45 minutes South of Cleveland, so it's an easy run between the two.Akron, Ohio, used to be the rubber capital of the world with companies such as
General Tire, Goodrich, Firestone, and Goodyear all having manufactured tires and other goods there at some point. Only Goodyear remains today. Now home to employers such as Summa, GOJO Industries, FirstMerit Bank, and FirstEnergy, it is listed by Newsweek as one of ten Information Age high tech havens. Awarded by the National Civic League and National Arbor Day Foundation, it was named one of the world's most livable cities. Are you interested yet? I am!
I'm already working on some really cool opportunities to increase our Akron portfolio, so keep an eye on this blog as the details emerge.The main point of this blog entry
was actually to plug a fantastic book I am reading by Julie Broad called More Than Cashflow
. Julie is not afraid to tell it like it is, and pokes holes in a lot of the B.S. being spewed by the so-called experts out there on the seminar circuit. If you plan on investing in real estate, be it in Canada or the USA, read this book first. She provides valuable insight into the world of cash-flow properties, and other investment strategies you need to consider to really break away from your J.O.B. and take on real estate investing full time! Once I finish reading it, I will pass it along to my JV partners and make sure they too read it.So until next time, happy investing!
I was reading through an article in the Financial Post a couple of days ago that was discussing the near 25% drop in gold prices in 2013, as well as a 14+% drop in hedge funds since Spring 2011. All this makes me very happy to be investing in real estate and working with properties that will return me a healthy 8 to 12% or more very year. And since I am investing in a market that is recovering from what I believe has hit bottom, I will have the added bonus of some appreciation on my assets.I have friends who have played the stock and commodity markets for years, and all of them have been complaining about the returns.
Yes, they have made some dividends, but certainly no appreciation over all. Bring on the real estate!Financial Post Article - Why there’s no such thing as a safe haven.
It seems the supply of great multifamily investment opportunities in Cleveland has dried up a bit over the last several months. I guess ell the smart investors have found Cleveland and are snapping up the great buys as they hit the market. I have found some great properties recently, but they have been over priced. It seems the sellers think they are in Houston or somewhere sexy like that and can demand a 8 or 9 CAP in their pricing. Good luck to them if the get it!
In the wake of decreasing supply, and after discussions with some local investors I know who are very much into the single family market, we will be looking for JV partners to fund some distressed SFH purchases in the Cleveland area. These will all be in good areas with great comps, so no 'D class neighborhoods. I figured with the awesome team I have in place in Cleveland, and with it being listed as a great market in several different reports I've seen lately, it's time to diversify the investment strategy a bit. We will buy, rehab, rent out, and sell at wholesale rates to other investors as cash-flowing properties.
I really like this model as it will allow my Canadian investors to get into the market without the need for US entities or any of the other cross-border issues they are wary of with purchasing properties on their own. We have the infrastructure in place to deal with all of the tax issues, and cross border finances and accounting. The JV partner provides a mortgage on the property that covers purchase and rehab, and is registered against title. After the property is sold, the title company repays the JV partner their initial investment, and we split the profits with the JV partner.
We're currently evaluating several home for purchase, and if you'd like to get in on this opportunity, drop me a line and we'll talk.
As an investor, you always need to be looking for ways to maximize the return on your investment. When I analyze the financials of a prospective property, I am always looking to see where money can be saved, and where additional revenue can be gained. Areas like laundry, storage, and parking can all be sources of additional revenue that a previous owner may not have taken into consideration, or not utilized to their maximum potential.
A classic example that I run into in so many multifamily investment properties is laundry equipment contracted out to third parties who supply and maintain the equipment, and the return is almost comical it's so low. I have found that by purchasing my own equipment, and financing it over several years, I can make more money than if I had someone else managing the equipment. I find this only works if you are using the current generation of smart-card based machines, as opposed to coin operated. No more coins to collect, sort, roll, and deposit; just bills! The machines are also less likely to be vandalized if there is no money in them.
Another more lucrative method of making more money is to resell all of the utilities and telecommunications services that your tenants use. What if you could earn money off of your tenant's telephone, Internet connection, cable or satellite TV, and gas bills? Did you even know that was possible? You can even make money off your friends and family, and get a rebate on your own telecommunications and utility bills. And the best part is, their bills may even end up lower than they are now.
I am offering gift card incentives for my tenants to sign up for all their services through me. For every service the sign up for, I give them a $5 gift card. The best part is I make residual income off of their telecommunications and utility bills for as long as they remain on those services. How sweet is that!
If you're interested to find out how you can cash in on this alternative revenue stream on all of your investment properties, drop me a line and I'll tell you how to do it.
My primary investment focus over the last year and a bit has been multifamily in the Cleveland, Ohio market. Cleveland has a very diverse market with 'D' class neighborhoods right along side 'A' and 'B' class neighborhoods. East Cleveland is one of those 'D' class neighborhoods that many of you wouldn't want to walk around in at night, or even in the daytime in some areas. For investors comfortable with that market, it can be a great investment opportunity as long as you understand that market and are prepared to work in it.
East Cleveland has a problem with derelict and unsafe buildings scattered throughout the city, and it is very evident anywhere you go. With a recent federal grant all that should start to change. As a recent article in The Neighborhood Voice
outlines, the City is now able to tear down many of these derelict buildings and prepare the sites for new development, or public green space. There is a feeling that with derelict buildings gone, and space made available for new development, some new investment will come East Cleveland's way, and with it some new found prosperity.So why does this interest myself and you, fellow investor? The multifamily market in Cleveland has dried up over the last several months, and the
number of good turn-key and value-add investment opportunities are getting harder to find. There are lots of properties avaiable at 10 caps and below, but the plethora of 15+ Cap opportunities have almost disappeared. East Cleveland was a great source for value-add properties and some of those are now facing the wrecking ball.What this also means is that for those of us who are in, or getting into the market now, there is renewed hope for some appreciation on our assets on top of the great returns these buildings offer. The hope of asset appreciation in the East Cleveland market
was not generally expected from most investors, but that may change now.If you are interested in this market, and want to get in now on one of these rare opportunities, contact us now
as we have a great asset available in East Cleveland for a cash investor. Total commitment is under $450,000 including rehab for an estimate 18 Cap property.
After a couple of years finding great investments for the students of some of the top real estate seminar companies, Investor Mentor Group is teaching Canadians how to break into the lucrative commercial real estate market in the USA.
Unlike a lot of the other real estate training organizations out there, IMG is actually in the market on a daily basis, finding, acquiring, and managing multi-family investment properties for and with their students. Their students/investors are also at the training sessions to answer questions and offer advice. It's not a bunch of professional seminar people trying to teach you something they may or may not be actively doing themselves. They are focusing on multi-family and other commercial investments, and not single family homes, so the focus is quite different from their competitors.
The first event is mid-March in Montreal, so if you're in the neighborhood check out the free preview events and find out what it's all about. There will be several active student investors at the previews as well as the following training session 2 weeks later. Previews are also scheduled for Toronto and Vancouver, with others in Calgary and Edmonton after that. Prepare for information overload!
I love progress. It's always great to see things moving forward and opportunities expanding. I've got some cool news I'm dying to share with everyone, but I can't just yet. I'll be able to make an official announcement in mid-February so stay tuned!
On the same sort of topic, I just spent a week in the South looking at properties in Atlanta, Memphis, Dallas and Houston. All I have to say is Wow! There are some fabulous opportunities for the savvy investor down there. I really liked what I saw in Houston. It was especially nice to hang out in the sunshine in jeans and a t-shirt in the middle of winter. Very nice. I will be back down there in the next few weeks evaluating some properties and making them available to our investors. Those of you on our email list will get first crack at these deals, so if you haven't asked to be placed on our mailing list yet, do so now. You won't regret it.
Happy New Year everyone! I hope you're as excited about the coming year as I am. We have so much good stuff in the pipeline for this year that I'm almost afraid of it all happening! Even if only 25% of it works out it will still be a banner year.
I tend to spend way to much time on my computer, for a number of reasons, and during one of my resource searches I stumbled on a great real estate investor's forum that's been around since 2004. The forum owner and his sidekicks have done a great job at keeping the sleazeballs and marketers off the forum, and attracted a lot of good, knowledgeable people who re all there to share their knowledge and experience with anyone who cares to listen.The following paragraphs are right off their 'About Us' page and kind of summarizes a lot of what they're about:"Unlike most other real estate investing and "educational" real estate websites, we do not promote "gurus" in an effort just to gain affiliate sales. Our purpose is to help educate our members directly on our site. Through our forums, articles, member blogs, and BiggerPockets Blog, users can get an education that they'd spend thousands of dollars for elsewhere. We believe that there should be an alternative to high-priced, and often outdated guru materials, and BiggerPockets is designed to fill that void.
Our site is here for the consumer. We are not fans of the sleazy sales pitch and that shows if you take a look at our forums and other areas of the site! We kick out spammers and leeches and focus on providing our members with a safe learning, networking, and marketing experience free from pressure and solicitation."Works for me! I have spent way to much time on the site over the last few days, but it's been worth it.
So go ahead and check out BiggerPockets
and see what all the fuss is about! You'll see me lurking around there I'm sure.
The best advice to anyone managing a rehab is 'be there'. That is, be on site and manage the rehab. Keep an eye on the work being done, and ensure everyone is on task, on time, and on budget. Unfortunately for many of us, that's not possible due to the distance between our homes and our investments.
After being burned by a couple of contractors who started off great, then became total nightmares, I've developed a system which is now working really well. The main problem seems to stem from contractors wanting cash up front for work they haven't done yet. If you aren't going to be onsite watching over them, this is a bad idea. It's probably a bad idea even if you're onsite! The system I now operate under is work is invoiced on a weekly basis by the sub-trades, then vetted by the contractor for accuracy. The invoices and photos of the completed work are emailed to me the following week, and I approve them for payment. I have set up a separate bank account for my contractor that has $100 in it, and he has signing authority. As I approve invoices for payment, I transfer the appropriate amount into the contractor account at my bank, and I print the checks to a pdf file, and email it to the contractor. The contractor prints the pdf onto a blank check, signs it, and gives it to the sub-trade for payment. If you use a program like Quickbooks Pro, you can print your checks on a laser printer. The nice feature is that the checks don't have to be in your laser printer; they can be in your contractor's printer. By printing to a pdf file, the contractor simple puts the blank check in his printer, and prints the pdf file, and signs it and he's done.
There are some great advantages to this scenario, and few negatives. My sub-trades always get paid, and on a weekly basis, so they are happy and want to work on my jobs. Most other sites they have to wait for the contractor to get paid, then get around to paying them. That's usually 3 or 4 weeks if they're lucky. I know my sub-trades are getting paid because the checks are being made out to them, and I see a scanned copy of the check online after they cash it, so I know they got the money, and the contractor didn't pocket it. The contractors are happy because it minimizes their paperwork and they don't have to manage any money except their own. I also like it because I pay exactly what the sub-trades charge, without contractor markup.
The only place this doesn't work is with the larger jobs that need to be done, like roofing, new windows, or paving. However, for these types of jobs I know well in advance the work is being done, and those jobs usually require 25% to 33% down, with installments paid as the work is completed. This is easy to manage with a mailed or couriered checks if you don't want your contractor to handle that much money, or you can use the same process as with the sub-trades. As with the sub-trades. installments and final payments are not made without photos of the completed work, and sign-off from my contractor. I also try and make sure I have the chance to inspect the work personally on the larger jobs.
As an owner, you really must make the time to inspect your properties on a regular basis. This is even more important when you have major rehab work under way. I make a point of checking my properties on a monthly basis when work is being done, and every 4 to 6 months if it's operating normally. I know of investors who haven't been to their properties in quite some time and they wonder why things aren't running as smoothly as they expect. Property managers and contractors don't have the same attention to detail that you would with your own property. It just makes good business sense!