All Forum Posts by: Andrew Brown

So you're saying that is the typical return in this market? I am still reviewing deal and waiting for more pictures of the property.

Need help analyzing my first deal. It's in a c class neighborhood in Warren MI. Price 105,000 rent ready. 3 bed 1 bath, basement and garage. Expected rent 1200. Expected taxes 3200 (unbelievable to me!). It meets 1% but the taxes have me doubting.

Depending on the data points used IRR seems to be somewhere between 6-10% yearly if sold if 5 years. Interest rate on loans 7.3 percent

Thank you everyone for your insight, this has been very helpful! My overall question at this point is with about 40k in student loans with a greater than 7% interest rate, should I try and back out now and hope they understand that with the reduced cash on cash expectation it makes more sense for me to pay off my student loans or should I just take the hit and keep moving forward? I feel it may make more sense to try and back out since the projected cash on cash will be lower than my student interest rate then buy from REINations in 1-2 years once I have enough cash saved up again after paying down my high interest loans? Has anyone tried to work with REINations about backing out prior to closing? I definitely learned a valuable lesson so far, and honestly REINations has been great to work with, but with accounting for the increase in property taxes that was not accounted for in the proforma, my cash on cash return seems to be higher paying down higher interest debt.

@Chris Clothier

That makes sense @henrichs. I am just torn, I really want to get into real estate but I want to make sure my first property has a high likelihood of success because knowing myself if the first one ends in disaster I likely won't want to continue. I know nothing is perfectly safe but I know there are some better deals than others. Unfortunately I have yet to be able to build a community for mentorship and I am trying to figure all this out through self studying.  I am wondering if Cris Clothier has some input or guidance for me with it being his company. It seems he is very well respected and was the reason I actually went with REINations in the first place. I'm a little nervous about a cash on cash return of only about 6 percent in a market that isn't well known for appreciation. Comparing that to say the stock market at around 8% yearly average it seems to be moderate risk for low reward? I know it's not accounting for appreciation or equity pay down, but it also won't be overly helpful in helping to fund additional deals which is my long term strategy? Not sure if I'm looking in the right market, if I might find better deals with REINations in other markets or perhaps other properties in this current location. I know how well respected the company is but with the volume they do I have no doubt some properties/markets are better than others and I honestly have no idea how to differentiate, I have read the books/articles/podcasts etc with some degree of analysis paralysis on the sidelines. The other thought is although I am a fairly high earner, I also have student debt some of which at around 7 percent interest (although currently at 0 and isn't compounded) but perhaps it makes more sense to pay off higher student debt first. Especially if right now the best REINations can offer is a cash on cash return around 6%, assuming this property is on their highest coc return level.  However with mortgage interest so low right now it is cheap money for leverage, and I want to start my wealth push early to help fund and early partial retirement in about 20-25 years. 

I would greatly appreciate some guidance, if there is anyone here that I could pick their brains about this deal. I am just realizing now that the projected property tax is based upon the previous value of house not the sell price/post renovation. This seems to be a very large oversight on their part on the proforma. It decreases cash flow from 3700 a year to 2700 a year the first year. And about 3200 the second year with about 50k down. It makes for a cash on cash of about roughly 6 percent not accounting for equity pay down/appreciation. What is everyones thoughts?

I am a very busy medical professional working in emergency medicine. I have been investing heavily in the stock market with good success but have always been intrigued by real estate investing for passive income with the hope of an early semi-retirement. Knowing myself, I know I want a good first experience because if things end in disaster, I would likely not invest in real estate again. That's what got me first interested in turn key rentals. I ran across REI Nations from this blog. The first thing I noticed comparing them to other turn key companies is they are definitely higher priced with lower COC returns. But they have been in the business a long time and seem to have a good reputation so I decided to include them in consideration.

I just signed a contract with them on a place in Jacksonville AK. 185k for a newer construction (1990s) brick house currently rented for 1350 the first year and 1400 the second. 

Depending on calculations used, on the riskier side it comes out to roughly 3000 a year after expenses (10% management, 4% vacancy, 4% maintenance). That makes for a COC of about 7%. Much lower than other turn key providers but about what I am getting on average with stock/bond investing.

I know one will not get rich turn key investing, but I feel like it is an easy(ier) first step into real estate investing. If my first property with them is very successful I may continue with the passive approach. If it isn't I can always change strategies, thankfully I have time on my side (32 years old going on 60 I feel sometimes haha).

I am one who over analyzes, always have been which is why I went into medicine. And I know there are others like me, so I'll keep a record as best I can about my experiences. This is definitely well outside my comfort zone and to be honest I'm actually terrified. So far I am not fooled into thinking I am going to make tons of money, but so far have been impressed by the customer service and reputation of the company and hope I experience a good first time rental property investment.