Time to Buy
Entrepreneurs by Janet Leiser | Senior Editor
One real estate trainer advises clients to buy while others are selling. He expects prices to go up and insurance costs to tumble.
Entrepreneur Bryan Chavis bucks the norm as he advises a room full of Realtors to go against the trend: It's a great time to become a landlord as flippers flee the residential market, selling for less than appraised value.
But don't have any misconceptions that it's a foolproof way to make money, Chavis tells those at the recent Landlording 101 class at the Pinellas Association of Realtors.
"It's done with homework, research and skill," says Chavis, 33, founder of the Tampa-based Landlord Academy and author of "Landlording 101."
To show why an investor shouldn't rely on happenstance, Chavis explains how an investment opportunity became a nightmare. He tells of an investor who bought a converted apartment at a fair price and quickly found a tenant.
Problems arose after all units in the complex were sold and the homeowners' association took over management. The association ruled no commercial vehicles could be parked at the complex.
The investor's tenant drove a commercial vehicle, which was listed on his lease. The tenant rightly contended he was in compliance with the lease; and he wasn't moving his vehicle.
So the homeowners' association sued the owner and fined him $1,500 monthly. The investor told the tenant to leave. Then the tenant sued the landlord.
The investor lost both lawsuits, the condominium, his credit and more - all because he didn't have a clause in the lease that said the tenant must comply with the association's rules.
Chavis then shows the clause added to his form lease after he heard of that man's problems. (It was reviewed by a tenant/landlord attorney).
About four years ago, Chavis wrote "Landlording 101" in an easy-to-read style after he realized how uninformed people were about how they could make money in the rental market. After he used his own money to publish that book, he signed a three-book deal with a New York agency.
Chavis, who grew up in Lakeland, started out leasing apartments, became a property manager, then an investor. "There's nothing I haven't done, including the maintenance," Chavis says. "And there's nothing I haven't seen."
He and his wife, Laney, started the Landlord Academy online about two to three years ago to help those interested in buying and renting investment property. The company, with five full-time employees, should hit $1 million in annual revenue in February, he says.
The couple initially taught students at the Kinkos at Dale Mabry Highway and Kennedy Boulevard. Now they have an office at 4805 W. Laurel St. in the West Shore area of Tampa.
Chavis, who has put on seminars all over Florida, is targeting Realtors since the residential market has slowed and many agents are looking for a new way to make money. Statewide, home sales are down about 33% from a year ago.
In fact, last week Chavis signed a deal with Ed Klopfler Schools of Real Estate, which has 15 locations from Venice to the Panhandle, to offer his classes through that company.
The classes, he says, are not "get rich quick" seminars that focus on boosting one's spirits with hype. Instead, his classes focus on the ins and outs of buying property, renting it and managing it - all for profit.
The notebook he gives to students includes form leases and credit applications, all reviewed by a local lawyer. He says property management can be systemized just like a fast-food restaurant's operations. Someone who has access to the manuals and training material can be successful.
He's also having his Web site, www.landlording101.com revamped by the Florentine Design Group of Seattle. Within six months, the site should bring in substantial revenue through all the items (including software) related to property management that will be sold on it, he says.
Chavis is also partnering with other companies, such as Largo-based Foreclosures Daily, and Tampa-based The Loan Corporation, to provide discounts to its students.
His advice to students to buy, he says, is based on Florida's growing economy, its tight labor market, a lull in property value hikes and the expectation that insurance rates will decline after a couple years without a hurricane.
He says insurers have short memories.
There'll always be a market for affordable rental housing, he says. According to his definition, those units are targeted for households that make $40,000 or less annually. And he doesn't buy a property if he doesn't expect the rental income to cover the payments.
Even if values decline temporarily, he says, he doesn't worry about it. Eventually, there'll be more people moving to Florida who'll need a place to live. He cites three key indicators: employment rates (very low), modest interest rates and continued population growth.