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SHOW NOTES FOR EPISODE 444: MY WEEK IN INDY – THE GOOD, THE BAD AND THE UGLY!
Passive investing can be fun but some C properties can yield a level of fun that might shock even the most veteran real estate investor. In this no-holds-barred podcast episode, Bill shares the unexpected good, bad and ugly adventures he experienced in a long-overdue week-long visit to his 22-unit apartments in Indianapolis.
Tip of the Week
- Finding out-market properties is not easy, especially in today’s market. Fortunately, there are some sources that can provide consistent and a regular flow of off-market properties if you know how to work those sources.
- Top 10 Off-Market Deal Sources
- Direct Mail
- Internet
- Housing Court
- Management Companies
- Driving for Dollars
- Classified ads (Craig’sList)
- Board of Health Violators
- Condemned Property Lists
- Out of State Owners/Lists
My Week in Indy – The Good, the Bad and the UGLY!
- I just got back from a trip to visit my properties in Indianapolis
- If you own properties out of state, you need to visit them on a regular basis to:
- Touch base with your local team (property managers, attorney, broker/agents, contractors, etc.
- I also recommend not letting them know you’re there until you’ve had a chance to see the property
- This trip they knew because I needed them to have certain information ready for me
- So, of course, the properties looked great (lawns cut, bushes trimmed, etc.)
- Inspect the property
- Connect with tenants
- Touch base with your local team (property managers, attorney, broker/agents, contractors, etc.
- I recommend you visit at least once a quarter/month – in the beginning (depending on how close you live to the properties) and, depending on the property and the competency of your local team, that could be reduced down to twice a year or, sometimes, even once a year
- You don’t always have to have an agenda, but it helps
My Agenda
- My House Mom
- Is no longer active – sadly
- Looking for replacement people
- Coordinating with local handyman
- Covid-19 eviction moratorium was over
- I have 3 tenants that need to leave
- One has emotional issues, maybe a substance abuse problem, screaming in the middle of the night
- Another is definitely dealing drugs, have had heroine overdoses at least twice
- A third is a swatter that got a key from a former tenant and has taken over a unit and is also a very active prostitute in the area
- I needed to coordinate strategies with my attorney and property manager on the best way to handle each situation
- For example, one is a section 8 client and if we file for eviction, he will lose his Section 8 status forever. So, we’re leveraging that fact to get him out sooner. By letting him know that we plan to evict him in advance, that will motivate him to leave early so that we don’t have to deal with the large backlog of eviction cases currently in the courts and the legal expenses.
- AirBNB
- Our AirBNBs have proven to be very lucrative and have been a great source of additional revenue
- Recently, however, we were hit with some bad reviews
- Doing repairs
- Meeting with cleaning team
- Trying to beef-up operations
- The stayed in the one where that had the most bad reviews:
- Mostly visual things
- Redid bathroom tile
- New curtains, blinds
- Repaired furniture
- The neighborhood
- I can’t change the neighborhood (at least overnight) but I can make their AirBNB room into a little oasis that helps them forget there’s a junkie laying on the sidewalk out front at two hookers working the corner
- Bugs
- There is a popular scam where AirBNB people even bring in their own dead cockroach or bed bug to get a free room for a week
- Odor killers from smokers
- Mostly visual things
- Added amenities
- Nice welcome gift basket
- Full length mirrors
- Better pots and pans
- Nicer bedding and decorative pillows
- Meetings
- Attorney
- Broker/agent
- Police
- Security
- Rehab of two units
- Meeting with contractors
- I have 3 tenants that need to leave
- Is no longer active – sadly
I was going to do a video for my YouTube channel (but didn’t) entitled “Welcome to the world of passive rental income.” Showing me at 6am pushing a shopping cart around Home Depot or WalMart. Or scaping bathroom tile or cleaning out sewer pipes.
Most of my properties are boring… but my 22-unit never ceases to entertain and educate me!
Summary
- My Mistakes
- What do you do when the path of progress takes a turn for the worst?
- Difficult finding property managers that can handle the local challenges
- Didn’t anticipate the amount of money needed to get it up to par
- Bad loan
- My Successes
- Converted electric system
- Nice rehab
- Increased rents significantly
- Partly because rents were under market when I purchased
- Partly because we linked with area agencies that pay above market rent amounts (Covid/recession proof)
- AirBNB is pulling in double and even triple the regular rent
- Update
- My House Mom took ill and could no longer assist
- So since then…
- Neighborhood took a change for the worse
- Covid prisoners released
- Holding sites for substance abusers closed due to covid
- I can’t change the neighborhood but I can make my place better
- Persistence will win out
DISCLAIMER: Many of the above strategies take knowledge and have a higher degree of risk. You need to do your research and/or work with someone who is experienced to reduce your risk.
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