Overcoming Mistakes Advice

[Charles G.]

As a beginner, when purchasing several out of state rentals I was only viewing ROI during acquisition calculations. What's the saying...you can't eat equity. COC returns are decent on the 30-year mortgaged properties (10-12% range), but 15 and 20 year properties are close to 0% COC. Looking for some input from more experienced folks who have made similar mistake.

Options as I see them are: sell at an appreciated price and re-deploy cash with a more balanced return view (transaction costs will eat into returns); re-finance with 30 year money (also could be costly); or learn from mistakes and let these COC dogs continue to amortize more quickly?

[Zachary Curry]

Evaluate your costs. Are they being diminished due to vacancies? Home maintenance costs? Property management fees?

You might like the COC dogs but lets turn your others into Cash Cows.

Most often current rental rates are the market values for the home based from a three year market value. Meaning if you bought the home in three years what would your monthly payment be based from market value per month.

So knowing this you are able to provide the home as a rent to own (Must keep option separate from rent due to Dodd Frank). So the new tenants would have a long term lease (three years) and would be responsible to maintain the property in full. They will also be agreeing to buy today paying what the home is worth in three years. This eliminates the vacancies, maintenance, etc and provides a valid exit strategy. Also if they choose not to buy the home you still keep the fee for the option.

This might be confusing you can email me for clarification.