All Forum Posts by: Amit Kal

Is the tenant rent regulated or free market? If the tenant is in a 2-3 or 4 family home, then the tenant is likely not rent regulated so you can increase the rent at lease renewal time as much as you want, just make sure the rent is in the lease renewal.  

8-10k a month EBITDA. With the wife continuing to work as a teacher with benefits.

Here's a six family that sold recently in a pretty good neighborhood in Queens

http://www.welcomehomerealestate.biz/index.cfm?pag...

As I understand it, this property closed for $1.55M. While the overall annual rent roll right now is low $58k, I would imagine you could easily increase NOI by 50% or more over a period of 3-5 years if you were diligent about turning over the units. Getting tenants out in NYC is NO SMALL task, since the building is rent regulated. BUT, making deals with tenants to turnover units is the REAL sweat equity here in NYC. The purchase strategy would need to include those costs (i.e. $50k per unit to buy-out and rehab each unit).

In 2011 I purchased a 6 family building in a slightly better location for $850k, the annual rent roll was $82k. Now, the annual rent roll is $108k, a 30% increase and one of the units is occupied by my mom who pays NO rent.

NYC is a long game.  

Basic FI (i.e. can cover property taxes, upkeep of home and very basic living expenses) = YES

FAT FI (i.e. can cover all of my current expenses living in a HCOL with two kids) = 5/8ths of the way there. Another 3-4 years of working and the market not dropping substantially, I can leave my W-2. I wouldn't RE (retire early) totally; rather I would probably just keep BRRRR'ing along 4-6 units a year.

For a buy-and-hold rental in Nashville (one year leases), here is a recent deal I did with $70k to play with. 

Purchased a duplex for $155k in the 37218 zip code. Required 30% down using a local lender (Franklin Synergy) for 30 year fixed rate loan @ 4.5%. Spent $15k to fix up the place and now collect $1745 a month in rent, total from both units ($895 and $850). Each unit is a 2/1, about 850 sq ft.

Expenses are right around the 50% mark (property mgr @ 8%, taxes, insurance, capex and opex @ 10% each, lawn, water, accounting/admin, etc.).  After factoring in 5% vacancy, that leaves about $2300/yr in free cash flow, for a 4% cash on cash return. Appreciation is about 6-8% a year, so overall return will be okay in the short-term, and even in the longer term, when appreciation slows down, I should still be at about a 8-10% overall return not including principal pay down and the tax benefits.

All this to say, as an out of state investor, it will be challenging to find deals in Nashville that return much better than this.  You could try to go the short-term rental route, but AirBnB is a challenging business if you are not physically hands on and more importantly, pending legislation could derail your investment (i.e. I would never by an investment property that I couldn't afford to keep if I had to use it as a normal, non-short term rental).

legislation around AirBnb is still very much in Flux

Also, with $2300/yr in cash flow, replacing income would require quite a bit of capital and scale. In Nashville, you'd $750k and need to do 10 of these to get close to $30k/year! Other markets could probably return much better, but at what expense/risk?

Fellow Sunnysider/Woodsider here, welcome to BP @E.J. McLeavey-Fisher. Lots going on tax policy wise which could affect the economics of living/investing in areas with high property taxes, like NJ. 

I've been keeping abreast on that via this thread: https://www.biggerpockets.com/forums/51/topics/518087-trump-tax-impact-on-investors-why-arent-we-talking-more-about-it?page=4

This is a great site and lots of information being shared. Any questions, feel free to reach out.

If you have a day job and don’t need that money, then the strategy I’ve used is to keep the money in an account and combine those “retained earnings” with savings from my day job to more quickly pick up the next property. Then once you have enough, you will really start to see the “snowball effect” and might even be able to pick up a property with just those retained earnings and nothing out of pocket from your day job earnings. Stay disciplined!

Originally posted by @Kyle Fraser:

Originally posted by @Amit Kal:

I’m closing a loan now with JP Morgan Chase.
70% LTV, 30-year fixed @ 4.875%. Very low fees since I'm private client and it's a typical Fannie Mae backed loan. Lots of paperwork and will have taken almost three months so be prepared for that.

That is the same rate I'm at on my rental.  Not bad but always could be better! Any yeah lots of paperwork for sure.. I think hard money lenders are the way to go! 

You really can't compare a 30-year fixed with a HML. Each has benefits and drawbacks and of of course you must know when to use one versus the other as they mostly serve entirely altogether different purposes.

Opinions are like a*holes and Landlords are genetically predisposed to have several.

You are crazy to consider leaving your well paying day job with benefits imo. I’m roughly the same age as you and started buy-hold out of state investing 3.5 years ago and although it’s slow money, things are starting to snowball now that I’ve gotten into double digit units. My day job allows me to get 30 year fixed rate loans from any bank (although my DTI just hit 43% but that’s another matter). Because I am making positive cash-flow from RE and I keep my expenses fairly reasonable, I can now max out every single tax advantaged vehicle available to me at work. My suggestion is to grind it out for 4-5 years more but make sure you are investing at least 50k-80k a year for down payments on good RE deals that will cash flow and hopefully appreciate.