My future just fell into my lap!!

[Saxxon Rybski]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $150,000
Cash invested: $15,000

Property valued at $265,000 with $150,00 still owed on it. I put $15,000 into it and $3,000 in holding it while fixing it up. so all in I had $18,000 out of pocket. Now the ARV is $297.500 so I put $14,500 equity into the house. It currently rents for $1850 a month with a 7.5% management fee plus $60 a month for pool service. The property monthly cash flow is $521.25.

What made you interested in investing in this type of deal?

I've always had an interest in real estate but I've was always had more excuses and reasons why I couldn't do it so I scared myself away from it. Then I inherited a home, I had no experience in real estate just a little in construction ( I had no clue what I was doing). Since then I've committed all of my free time into educating myself in real estate investing.

How did you find this deal and how did you negotiate it?

my Neighbor got cancer and had no family to help her so I and my girlfriend became her primary caregiver providing hourly medication and care until she passed. She had decided to trust the property to my girlfriend and me.

How did you finance this deal?

Inherited home and refinanced the $150,000 still owed into a 30-year mortgage.

How did you add value to the deal?

I remodeled both bathrooms, new flooring in kitchen and both bathrooms, new kitchen countertops, repainted and light landscaping

What was the outcome?

We hired a Property management company name "new concepts property management" they Got in rented in one day on the market for $1,850 a month at 7.5 %. My mortgage is $1,130 a month plus we pay $60 a month for pool cleaning. So my monthly expenses on the property are $1,328.75. So after all expenses, the property cash flows $521.25 a month.
Not too bad for not knowing what I was doing.

Lessons learned? Challenges?

To do my due diligence in planning. so I can stick to the schedule and not have to change my plans mid-project. I originally planned to Airbnb the property then I was less than a week away from completing and listing on Airbnb; When I found out that my HOA has a 30-day rental policy so I frantically reviewed my options to sell with my realtor vs going with our property management. After interviewing 4 management companies and speaking to my realtor I decided to rent it out.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

The only party I worked with on the whole project was my property managers at New Concepts Property management and I would definitely recommend them I interviewed 4 different management companies and they were by far the most prepared and thought as well as they offered a 30-day guarantee to rent the property after signing or the first month is free

[Account Closed]

I would like to see all the numbers. I would like to crunch all the numbers to see how you really came out with this deal. I cannot understand what you actually paid for the house. Did you purchase the house for $150,000? You said your mortgage is $1,130 per month. Does this include the property taxes and insurance?

$1850 - (7% x $1850 = $129.50) - ($1130) - ($60) = $531.00 cash flow, but what about HOA fees, trash removal, sewer fees, vacancy percent, 8% to 10% for maintenance for a hew water heater, AC, furnace roof, painting, plumbing, drain & sewer repairs, cleaning & repairs when tenant moves. additional costs on top of the 7% management fees for showing the unit when it is vacant, advertising to rent, signing and re-signing leases and many more fees that management companies charge. Then, you can run into a tenant who does not pay, thrashes the unit and you have to pay court costs and attorney fees. If you are running your real estate investing as a business you may have some corporation fees and accountant fees. What about yard maintenance. Almost every yard needs some type of work i.e. removing or trimming overgrown trees and shrubs, keeping weeds at bay and power washing oil from the driveways.

Don't get me wrong. I am not a negative person. I am a realist and we don't live in an ideal world. In some states the landlords have to pay utility bills when the tenants don't pay their utility bills. It is very uncommon for landlords to make tenants pay for rubbish removal and sewer use fees when the sewer use charges are not included in the water bills. The HOA's often fine the landlords for violations and the tenants often have excuses and reasons why they are not obligated to pay.

Does your mortgage include property taxes and property insurance? Post every expense, number and I would like to analyze this property for you to see what your ROI is over a period of 1, 2, 5, 10 and 20 years. You may be surprised to find that you are only earning 8% to 10% on your money, but it you got the property for $150,000 then you made out like a bandit for the short term of 1 to 5 years. After 5 years the average ROI decreases to around 10% and it is time to figure out whether you want to continue to earn 10% on this property, or do you want to sell it and earn 50% to 100% on your money for the next few years by using the equity you have to purchase multi-units that can earn you 50% to 100% to 100% on your money.

You don't get rich by buying single-family properties and living of the small cash flow. You get filthy rich by using a business model where you earn 50% to 100% on your money every year. It is just as critical to continue to crunch numbers after you purchase properties to figure out your next move like a Chess game.

Post all the numbers and let use see how this looks for now and in the future. The big money is not in single-family properties. It is in multi-units and you can often get into multi-unit properties for 30% to 40% less than single-family properties and you can easily make a 100% ROI in the first two years. This is why you have to continue to analyze your investments after you purchase them.