All Forum Posts by: Alexander Churchill

Just got the inspection report back on a property I’m currently under contract on. I do have the inspection contingency in tact. The report came back that termite shelter tubes observed in basement sill plate areas of all three apartments, the entire back wall of the structure. They are recommending the entire structure inside and out be treated for termites and they’re guaranteeing for 2 years.

A little info on this property and my area. I’m in a very unique market. A small town in Central PA where there are a lot of older homes built 1900-1940s and a lot of doubles and multi units. Homes typically range from 80k-200k. This particular property is a 3-unit row home 2bd 1 bath per unit. Rows aren’t very common in my area and it has some cracking in the stucco and mainly cosmetic issues on the exterior as well as an almost flat rubber roof. I think a lot of these things along with the uncertainty with Covid and rent moratoriums/unemployment, the world crashing down etc etc has a lot of investors kind of riding the bench right now. I used this to my advantage and negotiated a deal at 75% of the asking price (listed at 102k and buying at 77k). One units rent would essentially cover the whole mortgage with everything escrowed.

I’d be lying if I said the state of our country and economy doesn’t give me cold feet but I decided if he came down to my price I’d jump and he did. Now it turns out there are termites and I have very little knowledge of how serious this issue could be. Is it easy to mitigate? Will the treatment keep them away for good? How much of a deal breaker is this? Any nightmare stories with termites?

@Nathan G.

Right! Thats kind of my thought process, although there's always those people who don't invest in re-estate who want to lecture you on why you need an LLC so I figured due to my lack of complete knowledge I could be missing something. What kind of units do you have? Do you pay them down yourself or let the tenants? The reason I'm asking is because I live and invest in a market where you could very well be paying just as much taxes a month as principle if not more

I’m 26 and fairly new to investing, I own 2 Rental properties, both are doubles and bought my first in 2017. I currently have a verbal agreement on a 3 unit and intend to sign paperwork this week. I don’t have millions in the bank or in or networth. I do own my own home which I just bought a couple of months ago and have about 20% equity in that. All of my rentals have about 25% equity in them.

Wondering if LLC is really worth it? Obviously aware of the ability to protect your personal assets, but are there any other really good benefits to it? Not to familiar with the tax advantages everyone is always talking about. Is it that important to set one up or is liability insurance enough? I have 500k liability on each rental

@Alexander Churchill also wondering if anybody has experience with row homes? The 2 I own are standard double homes. I don’t really have experience with anything less than 3bedroom as I try to attract a larger tenant pool. Any thoughts?

@Bjorn Ahlblad ahh I see, thanks!

@Darius Ogloza

Well there’s always going to be a risk/reward. The housing in my area compared to a lot of areas would probably be considered “cheap” most of the homes are 80-100 years old. I mentioned that the property would probably fall under a c or d class property. So it isn’t immaculate but it’s certainly not falling apart. It’s a stucco row building with some cosmetic needs outside like cracks in the stucco and maybe a new roof in the next few years which would obviously be it’s biggest expense. Aside from the that 2 of the 3 units are rented and the other is ready to rent. As far as the tenants go I do plan to make some adjustments as far as length of lease and raising the rent as they are both on a yearly and only paying 575/m. The guy who owned the property is apparently very old and not doing super well health wise and he didn’t run the place on a super tight ship. As far as I know, and I’ll be consulting legal guidance this Monday, that legal buyers are still able to decided whether they want to keep tenants or they’re current lease that they are on. So I’ll undoubtedly inquire about what we can do there and have the agent add those contingencies into the sales agreement which would then fall on the seller to make sure the tenants are aware of what’s going on so they can decide if that want get on board or leave

@Bjorn Ahlblad thanks for you’re input! What do you mean by the 2% rule?

I’m a buy and hold investor in a small city in PA. Home prices in my area are typically considered very affordable and the average rent also mirrors that. I have two rental properties, both are doubles with 3 bedrooms per unit.

Due to the lower average income of my area the majority of rental properties are probably considered D and C properties.

So I submitted a verbal offer at 75% of what the place was actually listed. It was listed around 100k and I offered around 75k. The numbers would certainly work as each unit would bring $600/m for a total of $1800/m with the mortgage w everything escrowed estimated at being just over $600/m.

I’m getting cold feet, I think I speak for a lot of investors when I say the uncertainty of the Rental market with rent moratoriums and uncertainty regarding unemployment and Covid makes me feel very hesitant investing at the moment. I offered and essentially named my price because of that and had no problem walking away, and the seller actually ended up meeting me at my price which I feel like is a no-brainer deal. Any advice? Or also just wondering how you guys are feeling/investing during all of this madness?

@Ryan Hazelwood

I’m 26 and own 2 Rentals (both doubles) bought my first one 2017 when I was 23 and and the second one at the very end of 2018 before I went overseas with the military. Just closed on a primary residence for my family in May. Currently looking at trying to acquiring another multi unit this year if the numbers work. In my opinion the current market is very intriguing yet kind of daunting for investors due to Covid and rent moratoriums. A lot of landlords may be overwhelmed due to lack of rent and may be forced to sell, at which point a very good deal for another investor may present itself. Be patient, if you see a deal snatch it but don’t rush, I have a feeling there will be a lot happening in the rental market over the next 18 mos

Hi BP

I’m a residential RE Investor from a small city in PA.

I’m currently 26 and started investing when I was 23

I currently own 2 rental properties (both doubles) plus the home we live in which we just closed on 2 months ago.

I was wondering how you guys calculated ROI? The way I do it for my properties was always a COC (cash on cash) version which was always my personal preference and I looked at it sort of like this

For example:

Property A: 25k + 7k to close (25% plus closing cost)

Property required 32k to close

Property A as an investment/business is now sitting at -32k and Produces 10k/y cash flow. After 40 months with occasional expenses and relatively consistent occupancy pays off its 32k in debt and is now sitting at 0. Now everything after that is considered profit on that investment/business.

In this process I more or less look at the mortgage loan not so much as “debt” even though technically it is. I look at it as a leverageable variant in other words as long as I don’t “overpay” for something or try to sell during a market crisis I can usually always count on that mortgage as being something that I’d always be able to at the very least pay off in a sale therefore not really considering it as “debt” but more a less just a floating variant.

What are you guy’s thoughts/opinions?