All Forum Posts by: JT Spangler

Turnkey is a bit strong, but 2 out of 3 units were already occupied with the 3rd nearly rent-ready. It'll be an interesting property, because it's south of the White River, in a C class neighborhood. But I see a lot of indications that the city is a strong bet going forward. Hopefully I'm right. :)

I posted a thread in mid November 2015 saying that I'd finished a rehab on a duplex and brought my monthly cashflow to $1,000. That was a big moment for me, because I'm frugal. So that 1k/mo actually was enough to cover all my expenses, and I had enough cash on hand to pay off all my (non-mortgage) debt.

Of course, I wasn't getting ready to quit investing, so instead I used part of that cash to acquire a triplex in Muncie, Indiana, which adds another $800/month to my cashflow.

Additionally, I rented my recording studio (built into a detached garage behind my primary residence) to another engineer/producer here in Nashville. So we share the space and he puts another $200/month in my pocket.

Just like that, from $1,000 a month to $2,000 a month.

I think the next big jump will be a while in coming, but I couldn't be more excited at this one. I'm really hoping some of the stuff I have planned for 2016 (out of state investing, wholesaling, doing some JVs with equity partners) will work out like I expect. And I'm moving forward with an asset protection plan laid out by Scott Smith (from BP Podcast 109), so I'll have things squared away on the business and liability end. 

Thanks, BP! Couldn't have done it without you.

Man, good for you for jumping in and trying to find a deal!

That said, you have a LOT to learn (we all do, but I'm pretty concerned with your knowledge level currently). You don't even mention in the original post that this property is essentially going to be an owner-occupied quad with ~3k GRM. That's unbelievably critical information.

You say in the first sentence of the OP that you don't understand the numbers. That's bad. I mean, it's never bad not to know something, but investing where you don't understand is a recipe for disaster. I would work hard on understanding (1) market rents in your area, (2) how different varieties of conventional financing work (and which are available to you), and (3) how to calculate your monthly cashflow. Even if this offer is accepted you'll have 60 days before it closes, so I'd get to reading/listening/asking questions about all of this stuff immediately. Your first deal needs to be a really good one, since you have small reserves, few contacts, and less knowledge than you will for every deal going forward.

This is really a question that should be answered by a paid professional rather than the internet.

I also, and this is just me, think that if a property routinely rents to the first person who views it (and that person is super excited about what a good deal it is) it's underpriced. Since you've just installed your first tenants you don't have enough of a sample size to establish that, in my opinion. But something to keep thinking about.

Single families aren't going to be valued on the NOI, the cap rate, the COC, or the GRM; they're going to be valued by the neighborhood comps. It sounds like you own the nicest house in the neighborhood, which isn't good if you're trying to sell. It also sounds like you've overimproved the property relative to what the standard is in the nearby houses. You're also unlikely to get good returns on that when selling.

The ADU certainly adds value to the house -- how much depends on the market and the buyer.

But unless you're planning to sell it, I'm wondering why you need to know the value. Right now I'm guessing you wouldn't be happy with it if it came from an appraiser. That said, if you got in to a transitioning neighborhood early, in a few years when you're not the nicest house you might have some good comps and get a great valuation.

I've found good deals on the MLS even in Nashville's red hot market because of complications (only wanting to sell to owner-occupants) or mistakes (listed in 37207 when it's really in 37206 -- big difference between those two zips).

In slower markets it seems to be standard for stuff to sit for a month, two, or six.

I don't think he said anywhere that the price wouldn't be exorbitant. Downtown Denver near the light rail in an A class neighborhood, I assumed he'd be looking for an FHA multi and would pay through the nose for it.

I dunno. Selling it and paying off all of your debts seems like a much better path than keeping it. Even after you've paid back the downpayment it's still marginal from a cashflow standard (146k financed and 1400 GRM). Get free of all debts, and buy an investment property for the purpose of renting it out. That's what I'd do.

Middling cashflow and high equity isn't a great path to financial freedom, but balanced against wanting an area and property you're comfortable with it's worth a lot. As you gain experience and confidence as an investor, you might explore ways you can set up a line of credit against the equity in that first property. That'll allow you to buy #2 with no money out of pocket, especially in Michigan.

Congrats!