All Forum Posts by: Arthur Schwartz

I have two properties I am interested in.  One is already rented out, the other is less expensive but may require extensive repairs before being rent ready.  Is there a timing issue where you would prefer to buy early in the calendar year for the properties requiring extensive repair while the cash flowing rentals can be purchased at any time?  Appreciate your thoughts.

Any State Farm agent.  

Another option would be to use a hard money lender to continue buying properties.  Also, another option, you can often hire people who can help get through a few items on your credit report and raise the score faster than normal.  The location is good; I would be interested in buying in that area.

you can do a google search for "hard money lender west virginia"

David Greene likes to say the Core Four are deal finder (often an agent); general contractor; property manager; lender. 

With a property in the Fayetteville area, the reason these properties are so cheap is the flood risk.  You can get a free estimate of flood risk at this link:  https://fris.nc.gov/fris/Home....

  Are you going to factor in the cost of flood insurance, nnot just for actual purchase price but the 30% higher replacement cost?  

"All that glitters is not gold".

There are many rental property calculators including here at BP. I would pass on this property. Here's why: 1900 rent; less 1427 mortgage; 275 taxes; 100 insurance; 190 repairs (at 10% of rent); 190 cap ex (large costs which you have to budget for like roof, HVAC, at 10% of rent); 95 vacancy (5% rent) leaves negative 377 monthly. Subtract HOA fees; utilities; trash; lawn care. The reason is that the home is too expensive relative to rental income. In contrast, a few months ago, I bought two homes in SC for $140,000 combined. Rental income is $2,000 monthly -- higher than yours! Yet my purchase price was less than half your proposed purchase price!!! Basically, for your proposal, there's no "meat on the bone" -- it's been charred to a crisp :)

In the Seattle Tacoma market, having modest negative cash flow on entry is probably normal. Your true cash flow is actual cash flow plus pay down of principal.  On that basis its probably positive.  As debt gets paid down, you can do successive refinancings which will turn the property cash flow positive.

1.  realtor.com, zillow.com. redfin.com, and trulia.com all will show a rough idea of what a home is worth and the estimated rental value.  Their estimates are based on a mathematical model  which considers assessed value and recent home sales.  But the estimates do not consider the condition of a home's insides; tend to be about 5% to 15% too high; and do not take the place of a true appraisal.  

2.  With a contractor or home inspector you can zero in on estimated repairs.

3. most banks require 20% down on investment homes. however you can buy all cash and later do either a cash out refinance to pull out 80%; or take out a HELOC which is a low cost loan against the equity and is a non-taxable event.

It's not only the interest rate!  Also, it is how much principal has been paid down!  As a rough rule of thumb, in today's interest rates, paying down principal by $20,000 will reduce the P&I of a new mortgage by about $100 per month.