If you’re a regular user, you probably know we self manage all of properties.  When getting started I wanted the ability to accept ACH payments so our tenants could pay electronically.  After much research I decided to go with Buildium.

First of all the Landlord edition is cheap, it’s only $9.99/mo for the first 10 units and $29.99/mo for 50.

There are not a lot of good reviews online from real landlords, so I figured I might as well write one.

Pros:

• Buildium allows you to accept ACH payments..
• It provides a login interface for your tenants to make maintenance requests and make payments.
• It does a fine job of tracking went the rent was received, when leases are going to expire, and tenant contact information.
• They seem to provide quite a few tutorials on how to use the system.

Cons

• Clearly, this software was not built for the single family residence landlord.  It seems to be focused on apartments, full-time property managers and Home Owner Associations.
• It has a bit of feature overload.  Full bank account tracking, etc.
• The reports do not seem to be very flexible: for example I would like to be able to print a tenant list, which it allows me to do, but I would like whatever I input in the notes field on that list somehow.
• Not everything works as it should in my mind.  For example, the name of my property management company has a logo.  It shows all stretched on the admin interface, but it displays fine on the tenant interface?  Weird…
• They also force you to click extra buttons to get reports on all your properties, I think this is an effort to make it easier for the multi-unit property managers.

Conclusion & Summary

It is kind of a love-hate relationship and at times I ever debate if I should completely turn it off.  The system is not really made for small property managers, so if you are under 10 units it’d probably not worth the extra work involved to set stuff up.

As you can tell this is a little bit of a mixed message review.  Hopefully, they will make some minor improvements along the way that will make things quicker and me much happier.

Our last two rental properties have been working like clockwork.  Before we started renting anything I was scared of it, how do I find a tenant?  How do I do all the paperwork correctly?  Now we are ten deep and have figured out how to get the properties full.

House #28

We closed our purchase escrow on 12/23/2009.  I still don’t have the numbers back, but I think we did about a $15,000 remodel on the property.  On 1/29/2010 we did the most form of rental property advertising, two signs in the yard and one in the front window.  And last Friday 2/5/2010 I moved highly qualified family in. That is a 44 day turn-around, from purchase to becoming tenant occupied, with a pretty big sized remodel!

House #31

We ended up rushing the repair of this one because we had someone we thought would want to move in real quick.  We closed escrow 1/12/2010, did a quick $12,000 remodel.  Signs went up the same time as House #28 on 1/29.  The original person I thought would move-in ended up passing, but we got tons of phone calls, we even took the signs down early.  We took the most qualified applicant and we signed lease paperwork yesterday.  Since we still have punch list of about 10 items left to finish, I started the lease on the 9th, but let them move-in yesterday.  This one is a 28 day turn-around!

Since I am a young self proclaimed “internet guru” I thought I would have a leg up on other landlords because I can post houses for sale and rent on CraigsList faster than most.  Six months later, all it takes is doing things the good old fashioned way, three signs per house: one in the front window and two on the yard.

We put signs up on two properties this weekend and this is what I have waiting for me tomorrow. People have weird habits when calling signs.  It seems like two out of five leave messages and some people have a habit of calling three to five times in a row (if you do not pick up).  I guess that is called persistence?

Here is a list of the voice mails I have waiting for me, for tomorrow morning:

Lastly, I am willing to admit how wrong I am.  In reading The Millionaire Real Estate Agent, by Keller he said for every For Sale sign you put on a property you typically generate one buyer (not necessarily for that house, but a buyer that will buy another house).  I just can’t believe how well old fashion marketing works!

I’ve been a landlord for almost 5 months now.  I have learned a lot of different things along the way, but so far it has been easier than I thought it would be.  The main part is, since we have a crew of workers, we can easily get stuff fixed for tenants when it is our responsibility to fix.

Right now we own 9 units, 8 single families and 1 duplex.  Nine of the units are rented and one is under construction.  We bought our first rental in August-09 and placed our first tenant for Sept 1st, so we have done quite a bit in the last 5 months.

Some of the things I have learned:

• Signs pull WAY more phone calls than I ever thought they would.  Being a young guy, I thought property signs are kind of old school, but I would guess 75% of our phone calls come from the signs.  The people who call off of the sign are also usually best qualified (they’re already in the area for some reason anyways.
• Ask a lot of questions.  When a tenant is looking solid, I always schedule a meeting to “show them the property.”  I ask a lot of questions along the way.  How much they pay at their current place, why are they moving, what they like about my property, etc.
• Most renters have really bad credit (this may say something about the type of property I keep), but anything above 600 is a great credit score for one of my renters.
• Trust your gut.  I make exceptions to certain requirements for people I feel comfortable with, but force the tenants I am less comfortable with to meet every step.
• When people try to negotiate your price from day 1, be suspicious.  When we’re asking $1,200/month and before asking any details of the property they offer $1,000/month it’s not worth your time.
• Don’t defend your houses imperfections.  We are used to selling turn-key properties with a full rehab.  At the start tenants would point out flaws (style of faucets, pink tile in the master bath) and I’d defend it or offer to fix it. Now I just acknowledge that it exists.
• Becoming a landlord is not the quick path to wealth.  We have positive cash-flow on every property, but the numbers are definitely not even close to exciting.  The tax benefits on the other hand, are a whole different conversation.
• Be prepared to meet tenants on evenings and weekends.

That summarizes my experience so far.  I am happy that we decided to self manage our properties, it is a lot of work, but I feel confident with the people we are picking.

This is the last house we closed escrow on.  It has decent curb appeal, not my favorite colors, but it gets the job done.  My favorite parts of this property is it had a 14,000 sq ft lot and we already have a tenant ready to move in.

Our heating and air conditioner contractor went to prepare a quote on this property and he said he wanted to rent it.  That works for us.  He wants to import equipment from China and store in the back extra lot (which is fine with us as well).

We made a budget on the property today and it is a little bit more than I was hoping, but it’s still a great deal and truly one of those worst properties in good neighborhood which is just what we want.

I have been handling calls to rent House #19, tons of calls a couple showings tomorrow. I am trying to be really picky and rent to the right person.  Wish me luck!

Not really much else to report today.  Working on closing what we have in escrow and trying to find a couple more.

We are finished House #19, in great timing, we closed escrow about 30 days ago and now we’re finished!  The house is fixed up really nice and we should really flip it, but because 2/5 of our profits would go to taxes we aren’t in a rush to get rid of it.

One of our workers family members is very interested in renting it and we are going working on running his credit and application through the system.

That being said, let’s get to the before and after pictures!

Front of the House

Before

After

Kitchen

Before

After

Fireplace

Before

After

Main Bathroom

Before

After

Master Bedroom

Before

After

Master Bathroom

Before

After

Soon to Be Kitchen

House #19 is going to be our second rental property.  Remodeling should be complete in 2 weeks or so.  The picture to the left is what is going to be the kitchen.

The layout of this house was really bad, it had numerous code violations and the asset manager was seriously debating demolishing it until we came along.  We had our designer do a drawing of the property so we could plan a better layout.  The previous owners added a bad addition behind the kitchen and they added two bedrooms and a bathroom to the garage.

Click for a full screen of the layout:

Click to Enlarge

We are completely removing the additions in the garage and the ATF Living Area behind the kitchen.  This will get code enforcement to take the lien off of the property.  Layout wise, everything else is staying pretty similar.  We are expanding Bathroom 2 a little bit, but it still is really small.

Not much else to say about this property.  We don’t have a renter lined up for this one, so we will see how it goes once it is finished, but I am hoping to have a tenant in it before October is over.

On Aug 5 we closed on House #14 and our renter started to move in yesterday (Aug 23).  The rehab turned out to be a little bit more extensive then originally expected, it turned out be pretty much as nice of a job as the flips.

After reviewing all the paper work and laws I decided to go with a month-to-month lease agreement from the California Association of Realtor’s (CAR). The paperwork seems to be very good and specific to California, CAR has a form adviser which tells me which forms are needed for each transaction.

I have been reviewing tons of information on renting properties I want to start trying month-to-month leases, if the tenant decides to move out and break a lease I’m responsible to re-rent it anyways and they only have to pay the difference (if I can collect it).

The Front

Before

After

The Kitchen

Before

After

Living Room / Addition

Before

After

Hallway

Before

After

Master Bedroom

Before

After

The Pool

Before

After

The remodel on our first rental is coming along excellent.  Our contractor is very motivated to move-in so he is rushing everyone along.  The kitchen cabinets went in today, the granite will go in tomorrow.

I am still at a pretty big loss on all the paperwork required to “do it right”.  I have almost finished reviewing the course we got and will start doing some research.  The goal is to have all the rental docs, the deposit in and the paperwork signed early next week.  Rental agreements, amendments, all that fun stuff need to be figured out.  I trust the tenant a lot, but I want to separate the relationships between our work and renting the house to them.

Not much else to post about right now, we are working on closing our purchase escrow on a bunch of properties and selling a bunch of properties.

House #13 got a review appraisal on Tuesday.  My partner met the appraiser out there and she told him “not to worry,” but I am worrying a little bit, based on the comps she could easily come in 20,000 low.  I printed a stack of comps (two of them where our previous sales) and we will see if she ends up using them.

House #4 the appraisal came in at the purchase price and they are working with Bank of America for the loan.  Bank of America is really slow.  The 17 day full contingency removal comes up tomorrow, I sent them the form today and we will see if they send it back signed tomorrow.

House #12 is set to fund Monday, and record Tuesday next week.  If everything goes as planned I will be really happy as that is by far our best deal yet!  The buyer has put all the money they need to escrow (almost 50,000 down on an FHA transaction).  I guess that is what happened when they pay over appraised value.

That’s all for now.

House #14 is finally going to close escrow tomorrow (Aug 5).  We have a renter that will move in on Sept 1 or sooner.  Our main contractor is going to rent it and we said he can move in rent free if he can finish the remodel earlier.

I have an insurance policy that will start tomorrow and I need to get the pool working and full of water before the insurance inspector gets out there, as that is a big require of a property being insured.

One of my tasks this week is to get some information on all the forms required to get this process started.  We bought a course and tapes from Mike Cantu, who is one of the experts on owning and renting property in Southern California.  I am excited to see what kind of data it has in it.

On other fronts, we have been making a lot of offers and connections with new agents.  The market is still very hot out here and tomorrow an REO agent thinks the bank will accept our offer (on a second rental home).  It is a little bit far from our place (about 30 mins south east), but it is a smoking deal.  We are buying it at 10% of what it sold for in 2006, if we get it!

There are two properties we would flip that we are getting close on, one has gone to highest best twice and the top bidder has backed out both times.  We just leave our offer at the same number everytime and we are hoping the bank will give us a chance to close escrow at our number.  We will!

Not much else to report.  I spoke with my accountant today and I am working on some tax planning, if I learn anything that I think is unique or valuable I will be sure to post it.