All Forum Posts by: Alexa K.

I used Foremost for the first 4 years of being a landlord -- it was $510/year for my one SFH. Switched to a business policy with the help of a broker once I had 2+ properties... set me up with American Family, $550/year total for 3 SFHs, and I get even better coverage. I'm never going back. Just my two cents.

Just because you can raise rents doesn't necessarily mean that you should.

I'm actually in favor of some "anti-landlord" changes. Especially after having seen how rents have skyrocketed over the last year or so in areas where there's no real rhyme or reason for it, outside of the fact that out of state investors are simply trying to recoup their investments after paying above-market rates for properties in areas they're unfamiliar with. 

Quote from @Eric Prescott:

Quote from @Alexa K.:

@Shelley Halleman I'm certainly interested as well. Currently working on a rehab project I'm in the process of closing on and looking for a loan for $30-$40k. How are interest rates or what's the term length for private money loans? Never used one, I always just rinse and repeat with my bank lol

1st lien position is typically 12% and a couple points amongst the private money lenders I know and work with. 2nd lien PMLs are generally offered at 15% plus 2-3 points. Depending on your experience, this could be lower, but 2nd position adds more risk, so perhaps not. Let me know via DM if you want me to point you in the right direction for that. 

 Interesting. Could you advise term lengths at all? Are they similar to the 5-7 year loans banks offer, or are they more of a 1-2 year term since the idea is that it'll be paid off sooner?

@Shelley Halleman I'm certainly interested as well. Currently working on a rehab project I'm in the process of closing on and looking for a loan for $30-$40k. How are interest rates or what's the term length for private money loans? Never used one, I always just rinse and repeat with my bank lol

Quote from @George Duchatelier:

Quote from @Alexa K.:

You mentioned you're almost strapped for capital and you've already got two properties under your belt. I'd be cautious about biting off more than you can chew if this is your first year investing in rentals, especially in the Youngstown area if you're not highly familiar with the location. Those unplanned for expenses come quick and hard.

You’re right. I should prepare for unplanned expenses. I see you’re from that area as well. How do you like it out there? What’s the town like? I need to visit one day just to check up on my properties out there. So far I’ve been ahead of any issues that came up so far

I'm a Youngstown native who spent equal time growing up and living between here and the Tampa Bay area, so I'm comfortable and familiar with both markets, though I'll probably never invest in FL outside of my second home. Youngstown is ideal for investors with less capital to work with, but a good deal of out-of-state investors bite off more than they can chew because Youngstown is a very peculiar area -- one street can have nice houses with decent appraisal prices, while the next street over appraisal prices are in the gutter and your likelihood of being shot is considerably heightened. There's been an influx of out-of-state investors purchasing overpriced houses in less desirable parts (or streets), I'm talking purchasing houses for 45k+ that pass hands between locals for 10-15k. Seen quite a few, even from these forums, end up trying to sell their mistakes months later. So I'm cautious on where to invest and only do so in particular neighborhoods, or on particular streets, because two streets can be the difference between an extra $250/mo, or having to lower rent prices below average in order to get the place occupied. It'd be wise to visit Youngstown for an extended visit to see how the area is, pay attention to the local news and see where most of the crime happens, and definitely pad your savings account for rainy days

I personally prefer to purchase distressed properties for 20-30k in decent parts of town, rehab them, and refinance them to pull all, if not most, of my money out. If you do happen to go the JV route, that might be something to look into with another Youngstown native, as it's probably the best bang for your buck but is certainly time consuming.

You mentioned you're almost strapped for capital and you've already got two properties under your belt. I'd be cautious about biting off more than you can chew if this is your first year investing in rentals, especially in the Youngstown area if you're not highly familiar with the location. Those unplanned for expenses come quick and hard.

Quote from @Steve Vaughan:

Is it feasible for you to get a $43k mortgage? 

I doubt those are easy to find or inexpensive if you do. 

I've gotten mortgages as low as $22.4k and have never had any issues doing so. Origination fees and interest rates have also been favorable, so I have no complaints. I use a local/regional bank for the bulk of my investment mortgage & HELOC needs.

Quote from @Joe Villeneuve:

Re[lace the roof & condenser now, financed at purchase and the roof will be free to you.  If you wait until you have to do it, it will come out of pocket as cash, and thus a cost to you.  If you replace it at purchase, financed with the purchase, it will only add $43/month to your mortgage payment, which comes out of the rent, meaning your tenant is paying for it.  So, 60 payments with an added $43/payment < $2500...which is all the roof would reduce your cumulative CF...not $6500 out of pocket.  Big difference, in both dollars and impact.

If you were to sell it in 5 years, and at the time of sale you could say "new roof and condenser within the last 5 years", do you think you could sell the property for more than $2500?  That means it's a free roof.

Good point and something I haven't thought about. I'll definitely look into this.

Quote from @Chris John:

@Alexa K.

"Roof replacement within the next 5 or so years, and a new AC condenser
by Spring 2023. Based on my contractor estimates, I'm roughly looking at
around $6.5k"

"a few years ago these houses sold for $4,000-7,000 each"

I'm from the Central Valley of California and all I can wonder is if this post is from 1973 or something?  Those numbers are CRAZY for me to think about!  haha.

Personally, I think that if your numbers are correct, it sounds like a great return (I have no idea how accurate your numbers are) as a percentage.  If someone is able to invest money at 30-40%, it won't take long at all for them to get wealthy.  Also, you'll go crazy if you compare your deals to other people's deals.  You're always going to find someone that did better, so you can't let that dissuade you from picking up good deals for yourself.

To play devil's advocate:

- If you have a bad tenant that does some real damage, it could easily take several year's of your projected profit to pay for.  That's problematic if you're not expecting appreciation.

- No matter where you're at, it seems like materials alone would cost more than $6500 for a roof and an AC.  Having said that, I'm definitely not familiar with your neck of the woods.

- I'd closely inspect those drains that need snaking to confirm that you don't have pipe, root, or some other major issues.

Good luck!

Thanks for the input. Believe me, I know my post sounds like something straight out of 1973, and sometimes it's even hard for me to wrap my head around, as while I'm a native to this area, I grew up largely in central coastal Florida, where prices are understandably quite disconnected from prices where I am currently. I couldn't imagine quotes for a roof and AC condenser replacement in FL, but here in OH earlier this year I had a complete AC system installed in a house with no previous AC for $2800, and last year I had a full roof tear off and replacement done for about $5700 on my own property (which is a lot bigger and has a crazy steep roof). My contractors told me they could get everything done for roughly $1600 and $4,200, which is actually less than $6.5k but there's always something else that's bound to need addressing. Labor and material prices here are considerably cheaper than a lot of places, but I'm also lucky to have found a couple of good reliable "handymen" (a retired HVAC business owner, a carpenter who has extensive electrical experience, and a couple of not-so-bright guys who are surprisingly good at roofing but nothing else). My old line of work was insurance and I was a licensed adjuster, so I'm pretty involved when it comes to finding the best deals and purchasing the materials myself. 

You're right though, constantly comparing deals is enough to make someone go crazy. Bottom line is that it works out well with my conservative numbers on paper, and I've got the spare cash for the investment... worst case scenario I'm on the hook for PITI with awful tenants who don't pay rent, but even then it's a pretty landlord friendly state and my other rentals will cover the costs, so it's not the worst in the world.

And regarding the drains: Good point. I think I'll see if I can have a plumber come take a professional look at the drains before I pull the trigger, if I'm still able to.