All Forum Posts by: Andrew Merritt

@Brad E. Yes, my strategy is buy and hold.  And honestly, I guess I don't really know what I mean by safer.  Maybe easier to sell if I have to at some point?  Maybe fewer tenants to manage?  If I can't figure out what I mean by safer, maybe it's not worth putting in there.

Hey All, looking to purchase my first investment property. I'm in the Charleston, SC area and am trying to decide between a SFR or a duplex. Here are the numbers:

Duplex

Purchase Price: 180k

Rent: estimated at 1k/side, 2k total

Monthly cash flow: 300 w/ property management, 500 w/o (I'm planning on managing myself)

Pros: good cash flow, recently updated, good location job-wise

Cons: cigarette smoke (one side is significant), both HVAC units are about 25 years old, house is located very close to major road (noisy), some roof/ceiling damage near vents

SFR

Purchase Price: 180k

Rent: 1600 (probably high end of what I could get)

Monthly cash flow: 16 w/ PM, 175 w/o

Pros: completely move-in ready, recently updated, good location, great neighborhood, likely higher appreciation

Cons: not great cash flow

My calculations are based on: 25% down payment (I'm actually planning on paying w/ cash do close sooner then do delayed financing to free up more money for investing.  Expecting 30 year mortgage at 4.75%), 300/month in taxes, 100/month insurance, 10% for vacancy, 10% for combined repairs/capex, and 10% for PM.  

As I said above, I'm planning on doing my own PM for these properties (which I have no experience w/ but I've got to figure it out anyways).  

The numbers say that the duplex is the better deal, but I feel like the SFR is safer. Any guidance would be greatly appreciated on my first deal.

Hey Clyde, thanks a lot for getting in touch with me.  I'm still interested in investing in the Clemson area as I'm pretty familiar with it.  Right now, due to my inexperience w/ RE investing, I'm looking to start w/ more of a turn-key property, especially if it's out of town.  That will probably change down the road once I get more familiar with it though.  

How far outside of Clemson do college rentals spread?  Do they go all the way out into Seneca?  How has the increase in apartment complexes and student housing affected the home rental situation there?

I actually found a place I was interested in back in April or so and I showed it to a property manager down there.  He said it looked like a good property, but it was zoned such that it could not be used for a multi-family residence (I forget his exact words, but it was along that gist).  It was right in the middle of town, which I thought was weird and made me wonder how there are so many rental houses if there are rules like that around.

I'm in!

@Mo Gold Thanks, I'll check that out.  I'm sure I've listened to it already but will listen again.

Thanks @Mo Gold.  Is this valid everywhere or specific to London?

So I've found a group of multi-family properties that are being sold as a bundle deal, but the price is way out of my price range and way more than I'd be able to get financing for by myself.  If I were to find multiple people to invest with me on this, what is the best (or legally correct) way to pool our money together to purchase the properties?

@Scott Person Interesting, I would have never thought that buying a pre-built home in a large development would be profitable but I'll have to look into that.  

@Scott Person good point about not having to sock away extras for repairs, capes, and maintenance.  I actually just listened to one of the podcasts (episode 168) where the guy builds new houses and he said pretty much the same thing.  The more I think about it the more it seems to make sense to do.  From your experience, how does the cost to build compare to just buying a similar pre-owned house?

@Ross Sims did you buy it cash or finance (and if so, how much did you put down)?  By my estimates, the house will rent for somewhere +/-$1100/month.  If you put down 20%, that's about $50/month in cash flow (depending on how much you allocate for taxes, vacancy, capex, etc...) which isn't a whole lot.  Would you be open to staying there and just rent out one or two of the extra rooms?