All Forum Posts by: Amir Navabpour

@Nicholas Misch I see that, but goodness how long? When I look at what rents to costs to own are you’d be waiting decades to cash flow. In the Bay Area for example you’d be lucky to get a .25 rent to price ratio. Even when I buy 1 percent deals often times I’m breaking even cause things inevitably go wrong

Recently on the podcast I’ve noticed David advocating pretty strongly for growing markets: Austin, California, Denver etc and being more bearish on cash flowing markets: Cleveland, Detroit. Most recently he spoke of how these cash flowing markets have high turnover of investors who end up exiting the game, in favor of the growing markets. I’m curious if anyone has gone through that process? Personally I can’t imagine it, as it’s hard enough finding good cash flow in the 2nd/3rd tier markets. To me any growing market is almost certain to be negative in cash flow and it feels more like you’d be speculating and hoping for appreciation and rent growth. Curious for any who have exited a cash flow market to go to a growing market, what am I missing?

@John Teachout in aggregate my 8 sfr portfolio with this particular PM had repair calls run at 18 percent of gross rents for 2021. That’s for B class houses that all had make readies done addressing issues found in inspection reports. My expectation is that we’d run at 10 percent or less given the quality of the properties/the comprehensive make readies we did. So to me something seems off. The one caveat is that 70 percent of this portfolio was acquired within the last 18 months and I know typically repairs can be front loaded when taking on a new rental

@John Teachout I do inspections and address the moderate and major items every time with a make ready. In the examples I have the repairs are for Items that weren’t called out in an inspection report. Specifically one of my properties that had an inspections and a make ready done has has 11 repair requests in about 7 months. Examples of the items are: stove went out, cleaning out a line, re lighting a water heater, moisture in a basement ceiling, torn window screens. About 1600 in repairs total in the first 7 months for a house that rents out for 1200 in a B class area. This is my first tenant for this particular property

Curious. Once you did your due diligence on a rental and get a renter in there. Say you get alot of repair requests early on from the tenant and the pace of repairs does not slowdown. What trends or types of items tell you this isn’t just a tenant breaking in the home but rather will be a money pit for years to come?

Does anyone have a property manager they would recommend in Kansas City? I have one now, and like several things about them but the repair costs are out of control and I think could be managed better. I prefer smaller PMs that are more nimble vs larger companies with multiple “departments.”

Hi Everyone

I am reading that the provisions within the tax code that allow for accelerating depreciation are sunsetting over the next 5 years. From what I can tell, in order to do that one must get a cost segregation study done. Can anyone confirm if that is true? I am seeing they can cost 7-8K and up depending on the complexity of one's portfolio. Assuming it was required, can anyone provide guidance on how to pencil out the ROI on something like this? I have a SFR portfolio of 13 doors and don't even know where to start on trying to figure out if it would be worth it.

I know the conventional wisdom says you make a higher COC return when using debt, but I don't see it. Here are the numbers

Purchase price: 125k

Rent: 1% (1250/month)

Monthly costs:

Prop taxes: 160

Capex (10%): 125

Repairs (10%): 125

PM fee (10%): 125

Mortgage (assuming I finance 81k) at 3.9%: 383

closing costs to refi will be around 2500, I blended that cost in over 24 months: 104

In this scenario, my COC if I keep this as an all cash purchase is 5%. If I finance it at the numbers above my COC is 1%.

Can anyone please let me know what you think I am doing wrong? I am willing to refi to pull cash out to buy more if my COC is higher, but if its not I don't see the point.

I haven't invested in Warzones, but I own one C class section 8 out of state.  In comparison to my higher quality properties (B or A), I did not find the cash flow on paper to actually materialize.  There is something to be said about the quality of tenant you attract.  My C class attracted a reckless tenant pool where in one case the person destroyed the property before he left.  Another tenant just stopped paying.  Even if you have one of these types of issues every 4 -5 years it neutralizes the higher return you see on paper in comparison to B and A class. If not worse. 

Trying to decide if its worth the 1k fee, and the hassle of beating the 45 day window to find a replacement property that the 1031 rules call for....

Bought the property for 112k, and it will sell for 148k

I am crediting the buyer back 6k in closing costs

My agents commission will be about 7k

I have spent about 17k in rehab costs and repair costs since owning this property over the last two years.  

Can I deduct all of these costs when against my proceeds when I do my taxes for a conventional sale?  I read somewhere that if I wrote off part of those rehab costs in a prior year I cannot include them when the property sells.  I also read that I have to "give back" the depreciation write offs. Anyone have an idea whether either of those are true, or whether we can deduce agent commissions to proceeds for regular sales?