All Forum Posts by: Andrew Perkins

We just purchased our first rental property and purchased a new refrigerator with an ice/water dispenser because I mistook an old gas line on the opposite side of the refrigerator as a water line. A plumber estimated that it would cost around $500-$600 to run one from the attic to the refrigerator. Should I pay to have this done or would it be acceptable to have the ice/water portion of the refrigerator not working? The refrigerator is non refundable.

Thanks!

@Joel Gierbolini

We are just about to close our first deal and we used a HELOC from our primary residence as a down payment. So far there have been no issues with using this and it only required moving the money to our checking account a couple of weeks prior to closing. Our HELOC also allows an option to lock in the interest rate and covert the amount into a loan after we use it.

@Todd Powell

Thanks for the reply! Honestly, those numbers are just so we know what kind of return we can expect on a certain deal. They are not representative of anything we've actually found. We are looking to be all-in around $100,000, with a rent of $1,100. That would be whether we can find an almost turn-key or a rehab. If we are not planning on using the property that we purchase for further leverage, would it matter if the ARV came in right at or just above purchase price? The plan is to own these rentals long-term.

I guess what I'm really worried about is if the extra work of having 3 rental properties is worth the extra return?  I'm sure it would be much easier to put all the money in one rental, have a larger cash flow from it, but a smaller return.  

My wife and I have been working on our first deal and I would really appreciate some feedback on my analysis. I attempted to transfer over my spreadsheet to this post and I posted it at the bottom. Basically, I have a $45,000 HELOC and $25,000 Cash. My thinking is rather than putting the full $25,000 cash on one rental, we split the cash into a few properties and use the HELOC for the remaining 25% down on these properties. The overall return on the amount of cash invested is higher, but each property would cash flow a smaller amount. Would using the $25,000 cash and the HELOC to buy multiple properties be the smarter route? These are just sample numbers close to what we are looking for.

Thanks,

Andrew

Purchase Price $70,000

Closing Costs $3,500

Rehab Costs $20,000

All-in Price $93,500

Down Payment $6,000

HELOC $19,000

Financed Amount $68,500

Property Tax Rate 1.70%

Interest Rate (Mortgage) 5.00%

Interest Rate (HELOC) 6.50%

Expense Rate 10.00%

Insurance $100

Extra Expenses $0

Vacancy Rate 8.30%

Monthly Rent $1,150

30 Year

Monthly Annually

Rental Income $1,150 $13,800

Principal $82 $988

Interest $285 $3,425

Principal (HELOC) $63 $751

Interest (HELOC) $103 $1,235

Taxes $132 $1,590

Insurance $100 $1,200

Extra Expenses $0 $0

Expenses $115 $1,380

Vacancy $95 $1145

Total Expenses $443 $5,315

NOI. $707 $8,485

Net Income $319 $3,825

Cash Flow $174 $2,086

Cash on Cash 35%

Return on Investment 64%

@Frank Geiger

Thanks Frank. We have really focused on applying this, and it’s great! Not only do we spend more quality time together, but also more focus when we work on finding our first deal. Trying to balance everything all at once seems to make everything suffer some.

@Mike D'Arrigo

Honestly, turn-key sounds like the best option for us, but when I run numbers on ones that don’t require a decent amount of work, I’m not sure how I can make it cash flow. Originally, I was planning to buy a fixer and try to put sweat equity in to get the numbers I am looking for. My wife is unsure about this, and I understand why. I guess part of me also started thinking that I wouldn’t get the true learning experience from a turn-key purchase. Do you recommend a turn-key company geared towards investors or just finding a home that is ready to rent? Thanks!

@Theresa Harris

Thanks! Setting a limit is something I will definitely do. It’s too easy to think, “I’ll just look at one property” and then realize I’ve been staring at my ipad for an hour.

@Nancy DeSocio

Thank you, this is very helpful. It helps to be reminded of how important those moments are. I love that everyone emphasizes prioritizing my wife and family first.

@Matthew McNeil

This is great. I noticed a big change in our discussions when it went from, “I’ve been doing research” to “We should look at properties together”. She also has many of the qualities we need to be successful. I really like what you said about yours kids. We also believe that is very important.

@Brian Adzadi

Thanks for the advice. Funny, I actually just started reading Rich Dad last week and we’ve been discussing a lot of the concepts together!