Julia M. Spencer

Courses by Julia M. Spencer

Make Money with Tax Sale Investing

Includes: Tax Sale Foreclosure Basics, Researching Properties, Special Stipulations, Tax Sale Preparation, At Tax Sale, Post Tax Sale, Overage Investing, Front Running Investing, Including Georgia, South Carolina, and Florida Tax Sale Investing

Essential Landlord Guide

Includes: Ideal Landlord Candidate, Leases A-Z, Specialty Leases, Property Managers and Agreements, Evictions and Wage Garnishments, Dealing with Tenants, and Trashed Property.

Remodeling/Construction for Property Investors

Includes: Finding & Keeping Good Contractors, Being a good Construction Project Client, Old House Nightmares, and Various Construction Steps such as: Land Finding/ Financing, Breaking Ground/ Framing, Electricity, Plumbing, Roof, HV&AC, Finishing, Walls, Ceilings, Painting & Flooring, all from the perspective of a Real Estate Investor!

U.S. Real Estate Investing For Foreigners

Includes: Green Card through Real Estate Investing, Buying a Property for Pennies on the Dollar, Money Lending Options for Foreign Real Estate Investors, Online Auctions, Real Estate Investing in Nevada, General Q&A’s about Tax Foreclosures & Real Estate Tax Sale Investing in California!

Flipping Houses Know-How

Includes: Advertising for Deals, Property Cards, Beware Flipping Beginners, Beware Real Estate Investor Beginners, Private Money Lenders & How to Value Real Estate!

Posts by Julia M. Spencer

Shocking Real Estate Purchase Surprise!

As probably many Real Estate Investors, I have seen my share of ‘problem’ houses to put it mildly. New Investors always ask me if I can tell them the most horrifying stories and examples so they can brace themselves for the worst. In my opinion, I believe a thought process like this, however, is very destructive and resembles watching mainstream news, which just serves to scare you and make you anxious.

I purchased a very large old commercial property located in the heart of the city of Macon, GA. The property was previously used as a groceries/ convenience store and had been boarded up for years when I purchased it. My thinking at the time was to make it a small coffee house style business; the location of the property was ideal, within yards of a very much upscale private University in town and skip, hop, and jump from higher learning facilities.

When I finally brought one of my contractors down to break open the boarded up front door so we may have a look inside I was dismayed. The building, although still standing, was literally just a brick shell. The roof was non-existent in a few places; the stairs to the upstairs questionable, and the ceiling/ floor on the first floor was not fit to be walked on. Doves had nested themselves into the upstairs and there was a stanch of bird droppings everywhere and everything was soiled. Moreover there was debris and evidence of squatters living there as well as non-existent doors or windows.

The building was literally just worth the brick it was built with, there wasn’t really anything to remodel. Moreover, as soon as the city got wind of the fact that I had bought this nightmare, they proceeded informing me of something I already knew: that the building was a hazard and needed to be torn down immediately. My nightmare was expanding!

At the time I purchased this property, I paid a little over $4,000 for it, which, at the time, was more than what I usually would spent at tax sales for any one property, but this one had caught my eye and had oh so much potential. After a few easy calculations in my head and the fact that would have cost me close to $30k to tear the building down even with re-selling the brick, I decided to cut my losses at the $4k and run. I found a real easy way to get rid of this property and I encourage you to do the same whenever you are faced with a hopeless situation like this one. Check out my video on YouTube to see a picture of this property and more behind this story: https://youtu.be/KOXn6elcgh0

Until next time: Happy Investing,

Julia M(oney) Spencer, Real Estate Advisor, Investor, and Enthusiast

 

Top 10 Pitfalls When Buying your First Investment Property

Where do I start, which 10 to pick? Run a simple search online, or ask anyone- it seems like everyone has at least 10 pitfalls they can talk about, and the worst is each person’s 10 are different…so which ones actually matter, which ones do you actually pay attention to?

So I decided to talk about the ones that will simply have the hardest impact on your survival as a Real Estate Investor, and, unfortunately, the ones that I most struggled with when I started.

1.) Inaccurate $ Estimation

There are a lot of intangibles associated with estimation and it takes a good lot of intuition and experience to estimate properly. Keep it simple and calculate what makes sense, use your own experience, gut feeling, and ask other ‘greybeard’ investors in your area who are doing the same thing (and have been doing it longer than you).

2.) Lack of a Reserve

Don’t fall prey to not keeping any Cash Reserves on hand after the purchase of a property. Don’t become a new Investor if you have to eat Ramen Noodles or run up debt to afford the remodeling necessary to make the property profitable, plan ahead and keep Reserves.

3.) Calculation Paralysis

It is very easy to get caught up in fancy ROI calculators, tax numbers, and projections from so-called ‘experts’ living far away from your target area.

Keep the calculations simple to start with: Income-Expense=Profit. Continue adjusting Income and Expenses over the life of the project, and use that information for all future projects using actuals and percentages.

4.) Investing too far away

Be weary of online and ‘too-good-to-be-true’ deals. If you don’t know the area, and can’t check it out easily within a one day drive, pass, no matter how great the deal is. When you are starting off you need all the ‘hands-on’ experience you can get- that means physically inspecting as many properties as possible before buying until you can get a ‘feel’ for what is actually a good deal.

5.) Investing in the wrong area

Don’t buy in a bad area. Location is really really really EVERYTHING. Your fancy house in a mediocre or low value area isn’t going to return you the big bucks. Investigate where the desirable areas are thoroughly. Rule of thumb: If you wouldn’t rent there, don’t buy there.

6.) Picking projects that are too large

Don’t make the first deal your career breaker. Do not put all your eggs in that one first basket. If you buy a project house to flip in 6-9 months, and your invest 90%-100% of your capital in this one project, or loan against it, and the deal goes bad, it will be hard to recover financially; furthermore, you will kill your enthusiasm and confidence. Buy several smaller ‘practice’ projects or ones with little remodeling necessary. Don’t use ‘wholesaling’ as your exit strategy, practice that and other strategies when you don’t have to.

7.) Cutting timelines too short

Don’t cut your timeline too close from project Beginning to End. Buffer your timeline with plenty of extra weeks to account for any eventualities. Almost all construction projects I have ever been on, experienced delays, challenges, and problems. Don’t fret over them, factor them in from the beginning and count on them.

8.) Forgetting the ‘Human Factor’

Account for the ‘Human Factor’ in each project. If you are working with a new set of employees/ contractors/ partners/ banks, account for the fact that it takes time to ‘get to know’ each other, and get into a working groove which is productive.

9.) Buying ‘Restrictive’ Properties

Condo associations, historic district restrictions, and prohibitive covenants are often overlooked by new investors and can lead to big losses. For your first investment property always review any covenants and invest in a property that doesn’t restrict your plans.

10.) Freaking out over every Detail

I love to speak about this last pitfall. When I first became and investor and landlord I was freaking out every time a toilet leaked or my tenants were 2 days late with rent payments. My existence was full of horrific anxiety over things that I could not control at the time, and I only laugh about now. Yet if you are not having fun with the experience you are not likely to continue, and continuing in Volumes is the only way to make any worries worthwhile. So don’t fret the small stuff, get expert advice, and go with the flow.

Until next time: Happy Investing,

Julia M(oney) Spencer, Real Estate Advisor, Investor, and Enthusiast

 

How To Keep Happy Tenants!

So how do you actually keep your tenants happy and how do you enable them to keep YOU, the landlord happy?

There are a number of ways to make the tenant/ landlord relationship a productive one for both parties. This is in the best interest of you, the landlord, as low tenant turnover translates into cost and time savings. It also helps you, as a landlord, to maintain your property better and minimize repairs as ‘well maintained’ tenants maintain properties better.

Here is a list of things that I have done to keep my tenants happy and around (and kept them want to keep me happy in return):

1.)  Signed a Lease-Purchase Option with my tenants. A Lease-Purchase Option is a document that gives the tenant first dips at purchasing their rented property within a specified amount of time for a surcharge at a pre-determined price. Tenants who want to be homeowners absolutely love this, as it gets them closer to own their home. As a landlord you will likely have more responsible tenants who take ‘ownership’ pride in your property in terms of repairs, maintenance, and upkeep.

2.)  Agreed to lower the rent with successful on-time payment over several months. Again tenants love this option as they feel that punctuality is financially rewarded. For you as the landlord it guarantees on-time payments.

3.)  Agreed to a ‘maintenance option’ in my Lease. In this, and in exchange for reduced rent or other incentives, the tenant is obligated to fix any problems promptly (under $100) him or herself, increasing, again, the feeling of ‘ownership’ and reducing landlord expenses in $ and time. Make sure you inspect any repairs.

4.)  This sounds kind of cheesy, but I have made it a point to send Birthday and Anniversary cards to my tenants in good standing, sometimes attaching a $50 Gift Certificate to a Home Improvement Store. This raises the goodwill tenants have for you, as the landlord, AND hopefully they will make a home improvement purchase that will benefit your, the landlord’s, property.

5.)  Speak to your tenants often, preferably in person if possible. Don’t bother them of course, if they are busy people, but make it a point to periodically call them or ask your property manager to call, to see how things are, if anything needs to be looked at/ taken care of, or to just get a general feel for the tenants and their current state (as a landlord this is a way to find out if there is a move-out plan and when).

6.)  Incentivize your tenants for timely rent payments. In addition, or instead of lowering rent, you can also give a one-time bonus for timely rent payments. Give them bonuses for rent paid on time or early.

7.)  Give your tenants one month off rent for each year a lease is signed.

8.)  This is important: Fix anything that is broken promptly and address any other maintenance immediately. Do not let issues linger longer than usual but fix plumbing issues, maintain any landscaping, or address appliance problems.

9.)  Improve the property throughout the tenant’s stay. Upgrade carpets, kitchens, washer & dryer (if supplied) promptly, if in the budget.

10.) Be reasonable. Don’t threaten or loose your cool with the tenants, when the rent is late, discuss before sending letters. However, stay firm and say what you will do- then do what you say. Be respectful but firm, and always stay professional.

If you are a landlord remember: it is your goal to ensure that it would be painful for your tenant to leave- and I mean ‘painful’ in the best way, i.e. that he/she knows that they already have the best deal around and it can’t get any better. Once you have achieved that, you will rest assured that your tenants stick around for a long time and take care of your property as if it was their own.

Until next time: Happy Investing,

Julia M(oney) Spencer, Real Estate Advisor, Investor, and Enthusiast

 

My Real Estate Investing Nightmare

A lot of my followers love to hear some of my nightmare stories, and I love to tell them as I feel they definitely can teach which mistakes not to make.

So here is one of those stories:

When I first started investing, I did not have very much capital so my first investment properties were Tax Lien Foreclosures purchased in Bibb County, Georgia, in the City of Macon. At the time, I did not really know how to research Tax Lien Foreclosures properly and had literally no idea what I was buying and how to go about finding out. I figured once I buy it, I will figure out where it is, who owns it, and what kind of property it even is and what I can do with it. In any case I would learn the process. It was my ‘learn-by-doing’ approach.

Don’t do what I did!

Although I do advocate that approach for many learning tasks, it did cost too much in this case.
One of the properties I bought was a commercial building located just across an ‘imaginary’ street line, which divided the ‘good’ part of town and the ‘bad’ part. Up until I looked at the property right AFTER my purchase, I did not know this imaginary line existed, and that it was actually quite un-imaginary, but very real. My property was on the wrong side, about 100 yards. I never drove out to check it before I purchased it, nor did I think 100 yards is a big deal and it still can be considered a ‘good’ area, right? Wrong.

I had very big dreams for this property: In any other town, or other part of THIS town, this building was ideal for a 2 story coffee house, with a library corner, couches, and even several loft-style living quarters on the second floor. I paid roughly $4,000 for this property, it was a 2-story brick building from the 50’s, formerly a convenience store and now boarded up and mostly inhabited by bird nests on the second floor. ‘But it has so much potential,’ so I thought.

Soon after purchasing this property’s tax lien, I started receiving notices from the city that it was ‘uninhabitable’ and a risk for passers-by who could be hit by ‘falling rocks.’ Obviously the city officials were just waiting for a new ‘owner’ who would be scared enough by the notices to remove the property/ tear it down, so they wouldn’t have to do it. I didn’t want to, nor did I have the $30K to tear it down. So henceforth a paper battle started in which I stated my reasons to keep the building alive until I could afford to remodel it, and the city emphasized that it is an eyesore, and dangerous and needs to come down immediately. This went on for quite some time.

After a few months of back and forth, and even ‘breaking’ through one of the boarded up windows to look inside (it was in a horrible state, to the point that I almost cried), I had to come up with a solution for this building because the new tax bills were now becoming due, in my name. I guess the city wanted to collect their taxes if they couldn’t tear the place down forcefully.

In this case I had to just cut my losses and I signed a Quit Claim Deed to the original owners and filed it at the courthouse registering the new owners as the old ones. In the process I lost my entire investment ($4K, postage and mailing fees with the city, and a lot of aggravation). However, this was the only way to get rid of a dumpy property in a bad area and no longer be responsible for the taxes.

Don’t do this! Research Tax Lien Foreclosures you are looking to buy, drive to the courthouse and look at the records, drive to the property, talk to people, investigate the neighborhood, and talk to anyone and everyone from the county/ city where you are looking to buy BEFORE you buy. Don’t do what I did!

Until next time: Happy Investing,

Julia M(oney) Spencer, Real Estate Advisor, Investor, and Enthusiast