All Forum Posts by: Alex Corvin

Thanks @David Dachtera! I definitely agree that I don't want to buy for appreciation, I think that's why I'm very hesitant to pull the trigger on this one. I want to make sure it makes sense even if the property never appreciates. I'm not super concerned about a loss in value because I intend to hold for the long term and the rental income should be able to keep it afloat if there's a downturn.

As far as cash flow, in my market with the 1% rule my analysis says I can generally expect to make about $100/month, which I'd be happy with. For a purchase price of $125,000 on this house and $1,100/month I'd break even month to month. 

I think I can accept this because in the long run I get equity due to loan paydown, and any appreciation is icing on the cake.

Hello BP community. I'm considering buying a property to hold and rent out, and would like some more input on whether it's a good buy.

The property is in the Raleigh, NC market, specifically in the downtown Cary area (probably a C market right now). It's a 3 bedroom, 2 bathroom, 1050 SF SFR built in 1988. Structurally the house seems to be in fairly good shape, roof is new, HVAC has been maintained, hot water heater is recent. Needs paint and carpet and a little TLC in the kitchens/bathrooms, but overall it seems like a good little house.

The property is currently rented month to month to a tenant who has been there for about 7 years. Rent is currently $785/month. Market rent is more like $1,100/month. The seller is another investor who has since moved out of the area. They want to walk away from the sale with $125,000. Market value for the house is probably about $128,000 - $130,000. This is an off market deal, and properties on the MLS in this area tend to go very quickly with multiple offers. At market rent, this is just under the 1% rule, (my ideal target for my market). At the current rent, though, I'd obviously be way under what I'd need to cover expenses.

If I left it at that, I'd say this deal is mediocre at best. What makes things interesting, however, is that the house is in a market that I think has a strong chance for serious appreciation. The house is 2 blocks from the historic downtown section of one of the most desirable towns in North Carolina, and the town is putting a lot of resources into revitalizing this area. My thought is that I could acquire the property, get the rent up over the next couple of years where I'd cover my expenses but not really cashflow for a while. At this point, if the house never appreciates I'd be fine but if it does I'd get a nice bonus.

What do you guys think? Worth buying?

And another thing that might be relevant -- this would be my first property and I'm wondering if it's worth buying an ok deal to get my foot in the door.

I don't have much experience in this situation, but have a couple thoughts that I thought were worth mentioning.

1) I live in the Raleigh area, and my electric bill for last month was just shy of $300. That's for a 2400 square foot single family house. I keep the AC at 76 during the day I believe, and around 72 overnight.

2) Some of the newer smart thermostats (e.g. the Nest) have the ability to set a pin that is required to adjust the temperature. It might be tricky to implement, and might not be the best for fostering tenant relations, but maybe that's something to look into if you're going to continue to be responsible for the electric bill. Not sure if there would be legal concerns with this strategy.

I'm looking for someone with knowledge on the Moscow and Sterling, PA markets. Anyone actively investing there or know someone who is?

Thanks Adam! PM sent. 

Is anyone here investing in the Clayton, North Carolina area? I've got a highly motivated prospect that I made contact with through my marketing in another area, but I know very little about the Clayton market. I'm hoping to find someone who can give me a more accurate feel for quality of the location, property values, and rent numbers.

My chosen niche is single family homes, ideally with 3 bedrooms and 2+ bathrooms in the areas near downtown Cary. This is proving to be extremely difficult to find at the price I'm looking for, but my logic is that if I find it I'll never have any issue renting it out, and I should be able to find pretty good tenants since it's a desirable area.

The concensus is that duplexes (and other multifamily) tend to cashflow better since you can get more rent. There are definitely duplexes to find in the area, but they tend to go pretty quickly. 

Many experienced investors will tell you that the real money is in larger commercial multifamily (greater than 4 units), largely because the management is easier at scale and you can force appreciation by increasing net operating income. The main drawback to commercial multifamily is that it takes a lot more money to get into.

You also want to consider what "grade" of property you want to invest in. Grade A areas are the nice areas with great schools that people want to live in. Generally, the lower the quality the neighborhood, the more rent you'll collect relative to the property's value/purchase price. This generally translates to better cashflow, but comes with the sacrifice generally of worse tenants (which brings a long higher turnover, potentially higher vacancy rates, and maybe more repair costs).

Welcome to the community @Nick Ferrer! I'll take a stab at answering your questions, but I'd highly recommend listening to the BiggerPockets podcast and reading as many real estate books as you can get your hands on. The podcast is a great way to gain knowledge on all aspects of real estate investing, letting you benefit from the experience of hundreds of successful investors. A couple good books I'd recommend you start with are the BiggerPockets book on investing in real estate with no and low money down and the BiggerPockets book on flipping houses. These will give you a good base of knowledge on strategies for financing deals and the mechanics behind what makes a successful deal. Also, if you haven't read Rich Dad, Poor Dad, it's pretty much required reading for any real estate investor.

To answer your questions:

1) Which markets are best depends heavily on what your strategy is. Some markets may be great for buy and holds (rentals), while others may be better for flipping. Ultimately, I think a great deal can be found within a close drive of any market, you just have to be willing to work for it. Most experienced investors will tell you to stick with the areas that you know well, which is usually the area that you already live in.

2) Whether you do the work yourself on a flip project or hire out the work varies person to person. The people that build large, successful flipping business invariably hire out the work to a qualified general contractor, or hire someone in house to manage the projects. The general consensus is that your time is better spent doing more deals that will make you more money than laying carpet and hanging drywall. That said, if you have the time and skills, and don't mind doing fewer deals, you can certainly do the work yourself.

3) As far as credit goes, my best recommendation is to read the aforementioned book on investing in real estate with no and low money down. There are absolutely ways to invest in real estate without money and/or credit, and that book provides a great primer on many of the strategies.

@Yvette Alasti I use Kathie Russell (http://www.rdulaw.com/) as my real estate attorney. Others that I've seen recommended here are Norman Praet (http://www.bwpf-law.com/) and Travis Barkley (I don't know his website)

@Jason Chopin How are you estimating the costs for insurance? Have you talked to an insurance agent to come up with that number? I haven't done so yet, so I don't have a more accurate estimate, but I've been using 10% of rent as my estimate.

What kind of shape is the property in? Depending on that, $50/month for each of repairs and CapEx might be too low.