People from near and far contact me regarding buying flips, or buy and holds here in Indianapolis. Having been in the rental business for over 25 years now, I’ve had experience in both worlds.
I started with the idea of buy and hold, for income and long term investment. That strategy has been really good to me. At one point, I owned and managed 29 units near downtown Indianapolis. They were a mix of single- and multi-family homes. Even throughout the housing collapse and beyond, my rental properties stayed full. I also obtained my realtor certification, so that I could help other investors (and non-investors) find and buy properties. Because my real estate brokerage has gotten busier, I’ve sold a few of my personal rental properties, but I still own and manage most of them.
I’ve also gone the route of flipping a few times. Here’s what I see as the challenge of being a flipper:
- First and foremost, those HGTV shows aren’t realistic! Somehow, they manage to make really good money on every purchase/flip. That just doesn’t happen very often in the real world, regardless of where you live.
- Secondly, people tend to believe the rehab is going to take “X” number of days and cost “X” number of dollars. Beyond that, they also believe they’ll get it on the market and sell very quickly. (After all, that’s how it happens on TV.) Well, it RARELY happens that way. During the rehab, additional issues are often uncovered, which means more money and time spent. And when done, what if the house sits? Two months, three months, six months? All of those “carrying costs” fall on the owner — utilities, taxes, insurance, etc. And sadly, they watch that big profit they planned on disappear.
- Lastly, in this market today, there’s not much “room” for profit between the purchase and rehab costs, vs. the ARV (after repair value) and actual profit made after paying a realtor or giving someone a finder fee for locating a buyer.
If you’re planning on being a flipper, go into it aware of these downsides. With either option, educate yourself thoroughly before jumping in … you’ll be glad you did!
Onward and upward … 😊
The first contact with your tenant actually sets the tone for your entire relationship. It occurs when you show them the house … they loved the ad they saw on Zillow or elsewhere, loved the pictures, and the price fit their parameters. When I meet with potential renters, I let all of them know what’s expected of our tenants, mainly:
- We expect you to pay rent in a timely manner
- We strictly enforce late fees and file eviction for lease violations
- We expect you to treat this home with loving care
With those things in mind, if someone moves in and is late with rent, they know we aren’t going to let that slide. Early on, I tended to let things go, and accept late rent with no late fee attached. Tenants caught on to this quickly, of course! Why the urgency to pay on time if there’s no penalty for paying late? I learned the hard way, of course ….
Now, I stick by my lease, which demands a 10% fee if I don’t have the rent by the 6th day of the month. If someone has to pay that late fee one time, they make sure it doesn’t happen again. Those fees can be hefty, especially on higher end rentals.
Moral of the story? Be kind, but be firm and stick to your lease terms. At the end of the day, it’ll create a calmer environment for you AND your tenants!
When I purchase rental properties, I make a point of meeting neighbors, giving them my business card, and letting them know I’m a good landlord. I care about my tenants, my homes and the community as well. The neighbors see that in action as I work to renovate and improve my properties.
All is well and good, until a less than stellar tenant enters the scene. Rick and Tammy (names changed to protect the guilty) moved into the house in April. They checked out well — but unfortunately, good jobs and salaries don’t tell the whole story.
The first police visit was within a couple months. The couple was fighting and Tammy called 911. I was unaware of this, and also didn’t know about the second incident, a couple months later. But when the third altercation happened, one of the neighbors texted me to inform me what had happened. I spoke with Rick and told him if the police were called again, eviction would be filed. (He down-played the situation, of course.)
So when I got a text in mid-December, from the same neighbor, saying there were five policemen in the front yard, along with my tenants, I filed eviction immediately.
We landlords can’t be at our rentals 24/7, so relying on neighbors to keep us informed is a valuable tool. And I also learned, through this situation, that when there’s violence or drugs involved at a rental, you can file for an emergency eviction and the tenants can be evicted within a few days instead of waiting the usual two-week period for a court date. (Good info, but hope I won’t need to use it!)
Onward and upward ……. 😌
I came across this Zillow article today and was pleasantly surprised. Yes, we know our rental market is strong and will continue to flourish. But for many would-be homeowner/investors who’d like to rent their homes, they find the costs associated with owning that house aren’t covered by the rental income they receive. This is especially true on the east and west coasts, and in many larger cities. But not so with Indy! Here’s the article:
Return on Rent: In Most Major Markets, Most Homes Can Be Rented Out For A Profit – Zillow Research
As this article shows, more than 98% of homes here can be rented out for more than their monthly expenses, i.e. mortgage payment, insurance, taxes, maintenance, major improvements, etc. So, more and more homeowners are considering jumping into the world of real estate investing. And, what better time than NOW?
Onward and upward …… 🙂
I’ve tried them all … from Kilz to Zinsser. Most of them are too thin, even the oil-based ones. I stumbled upon the best one ever, made by PPG. I have an account there, and I love their Hi-Hide brand of interior paint. I had a major “issue” to take care of at one of my rentals, as seen here: my tenants decided to have a painting extravaganza (unbeknownst to me), with these horrifying results.
(Don’t ask me what that red thing in the corner is — I have no idea.) Anyway, the PPG rep suggested I try their Seal Grip Universal Primer/Sealer. They even tinted it to match the color I was going to use in the rooms. It’s water base and doesn’t have that annoying toxic smell that some do, so I was happy to give it a try. I’M SOLD. It’s nice and thick and only required one coat before moving on to my normal paint color. Here’s what it looks like:
The house is back on track and ready to rent, and I’ve discovered another great product to add to my long list of “faves” I share with my readers!
😎 Onward and upward ….
I do my best on the screening side with my tenants. For my low-income demographic, I don’t run credit checks; many of them either have no credit, or poor credit. But this doesn’t necessarily disqualify them. If someone has a solid job history, a good recommendation from their prior landlord, I generally give them a chance. And I, of course, do apartment checks, to ensure they’re taking care of the place.
But things don’t always work out. I did my first walk through on these people about three weeks after they moved in, and I was NOT pleased. I warned them, in writing, that the situation needed to improve fast, but — fortunately — they neglected to pay rent the following pay period, so I immediately filed eviction. (Here in Indianapolis, the court date is two weeks after filing, and the judge orders them out five days after the court date.)
So, in that three week period, things deteriorated further and the video above shows what I faced after they moved out. Luckily, this doesn’t happen very often! But when it does, I get to work right away … no tenant = no income. This place was up and running within a week, and my new tenant has been delightful.
Onward and upward! 🙂
When people ask me about owning and managing my Indianapolis rental properties, I get the same questions/comments again and again. Here are the most frequent myths I respond to:
- “I’ll bet you’re always getting calls in the middle of the night!” No, in my 21+ years of doing this, it’s rarely happened. Yes, I’ve received calls on the weekend and/or in the evening, if someone has an emergency, like if a furnace goes out. But fortunately, I have my trusted contractors to call, and they can take it from there. I’m not making trips to my rentals on those calls. And if it’s something minor (which it sometimes is) I have them wait until the next working day.
- “Don’t you get tired of your tenants totally trashing the places?” Well, I’ve had tenants leave trash behind after a move-out, for sure. When I’ve evicted a person, sometimes they take what they need, and leave the rest. This happens more often in the lower economic demographic. But as far as vandalizing/destroying the apartment, out of anger or resentment, no. If you treat your tenants with respect, this doesn’t occur.
- “I’ll bet you’re making a ton of money!” Uh, no … When you buy rental properties, you’re buying for income, yes, but also for long-term investment. It’s not a “get rich quick” proposition. If you’re buying with a loan, you want to make sure your rent will cover more than your loan payment and other expenses (i.e. taxes, insurance, utilities, etc.). You can make a “ton of money” if you buy a ton of rentals, for sure. But the commercials you see on TV are totally exaggerated! Don’t buy into that crap!
- “You’re a slave to those properties…you don’t have a life of your own!” That depends on a couple things: if you fix them up well in the first place, you shouldn’t have many major repair issues going forward. And also, you have the option of hiring out the management if you don’t have the desire, personality or time to do it yourself. The cost per month is usually 8-10%/monthly rent, plus a percent of the first month’s rent. But beware — good, honest property management is hard to find.
So there you have the comments/questions I get most often — all myths. This business is intricate, demanding, frustrating, and very rewarding. I don’t regret beginning my journey all those years ago, and I do my best to educate others before they jump in. It isn’t for everyone, but for many, it can be part of a smart, long-term investment strategy.
Onward and upward! :-))
It’s a competitive market out there. How do you attract and — more importantly — keep great tenants? For me, there’s a simple answer: show them you care about them and the home they’re renting. Here are some things I try to do on a regular basis:
- Make sure every unit is clean and in great, working condition before showing to prospective tenants. I always supply shower curtains, toilet paper, and entry rugs for “starters.”
- Maintain the exterior of the home. Trim bushes, pull weeds, paint when necessary. When your tenants see you taking care of the outside, they’ll be more likely to take care of the inside!
- Tell your new tenants about the positive points of the neighborhood — locations of parks, schools, grocery stores, etc.
- Review all points in the lease and make sure they understand and agree with how you run your business.
- Be available to the tenants. I respond quickly to every call and text during my waking hours. This sets me apart from other landlords or management companies who are lax about returning calls.
- Take care of repair issues promptly. Again, I try to get someone on the repair the same day if at all possible, which shows my tenants I care about them.
- Let them know you appreciate them! Every year at Christmas, I deliver a small (food) treat to each of my tenants, and wish them a wonderful holiday season.
Some of my tenants have been with me for years, and I love it when my good tenants refer other good tenants to me. When you treat people fairly and with kindness (not leniency — there’s a difference!) they often return that favor. The Golden Rule lives on ……
With 22 rental units in Indianapolis, there’s a lot to take care of, including exterior trimming and cutting. I have my tenants take care of the grass cutting, but two or three times a year, I go down there and cut back tree limbs, shrubs and weeds that have gotten out of control . It’s not a job I enjoy, but it needs to be done.
In a couple weeks, I’m having a tree guy go to six properties and do some major trimming. I have limbs overhanging roofs and gutters, etc. He’s also going to cut down several mulberry bushes that are growing in fence lines at a few of my properties. Annoying! Mulberries are nuisance bushes that grow like crazy, and the berries attract flies…more annoying!
So when I was talking to him about the mulberries and how to kill them, he suggested I buy a product called Tordon. The nice thing about it is that you squirt it on. I’ve used Fertilome Stump Killer in the past, and I applied it to the exposed cut surface with a sponge brush, kind of labor intensive.
So after he does his “cut down” and I do mine, I’ll apply Tordon. I bought several quarts of it from http://www.treestuff.com. It’s also effective on poison ivy, and I have a couple of big vines that I’ll attack with it.
Buy some, and say bye bye to those nuisance trees and bushes!
I’m always looking for durable flooring to put in kitchens at my Indianapolis rentals — something easy to clean, easy on the feet, and a surface that won’t show dirt or scuff marks. I came across Amorim Sports Floors at Lowe’s and thought I’d try it in one of my smaller kitchens. (It’s not cheap, at around $100 for a 4×10′ roll.)
As you can see in the picture, it’s black with a little fleck in it, which makes it great for basements, playrooms, workshops, pet or utility rooms, and in my case, a kitchen! This floor comes with a five year warranty, and is easy to clean and install, with a utility knife and a straight edge.
You can lay it and secure it with double-sided tape, to keep it from moving around. I had my handyman do it for me, and he removed the quarter round, laid the floor and reinstalled the quarter round over it.
The floor’s been down for over a year now and still looks new. I’m done with sheet vinyl … it’s just not durable. I do have ceramic in a couple of places, but in homes that are sometimes 100+ years old, you often have to install a new subfloor before laying the tile, and it can be a very costly project. With this type of floor, it doesn’t matter if the floor isn’t perfect in every area. And it’s so easy on the feet!
I’m going to give it more time before giving it a 4-star rating, but it may be a great option for future kitchen, bath and laundry areas. Amorim may be the answer!