All Forum Posts by: Ben Fernandez

If you house hack, your payment toward your mortgage would be about $1,140/mo. This is what would be left to be paid, being that the other side is rented for $1,000. 

As you mentioned this doesn't include any operating expense for maintenance, capex, vacancy, turnover costs, accounting, snow/lawncare, extermination, common electric, water, sewer and trash (or property manager).

Excluding all operating expenses, except for taxes and insurance, when or if you move and rent the other side achieving $1,200 per side, you are then cash flow positive at ~$260/mo. However, you need to run a cash flow analysis so you are not leaving out any eligible expenses.

Only then can you determine what you should put down for everything to pencil. Feel free to DM me if you need a free tool for this cash flow analysis.

Don't use the 50% rule. Use the real numbers.

It appears your taxes and insurance is not apart of your stated mortgage note.

You likely could self manage. My motto is, if you know nothing is mechanically wrong and condition of the property is really good, why have someone else collecting your rent only to charge you 7-10% and nothing is being managed...This sounds like a nice property. You may just need a local agent you can pay a flat fee to for showings while you screen tenants yourself by way of a Zillow/Facebook Marketplace listings. Otherwise, plan the 10% PM fee. But I don't think you can afford it unless you're prepared to come out of pocket each month for holding the asset.

In regard to operating expenses, consider PM, maintenance, true capex based upon the actual life-left of the components and upgrade timelines, vacancy, common electric and accounting. DM me if you need a tool for the CapEx calculations.

Overall, at (roughly) anything over 6% in expenses, your cash flow goes negative at the current gross income stated. If you can get to $3,000 GI, your expense ratio can rise to about 22% before you go negative in cash flow.

Provided your taxes and insurance are at or below 1.4% ($5,200), you self-manage, and you achieve the $3,000 GI, you can break even each month or better if your CapEx is below $130/month.

I always advise my clients to pencil the exit strategy of any investment even if its their personal residence. 

I don't want you to become discouraged. You did a great job house hacking and you're on the right path. Good job. You just need to clear as much air over this hurdle as possible in your next steps. Being that this duplex was almost $400k, I'd bet you're in an area that appreciates well. So, this is another positive. What you don't achieve in cash flow, could be made up in the appreciation. Although, an unrealized gain, you can determine your next action plan based upon this metric. So, think of the equity you'll gain even if you're only breaking even (or close).

The only way this one would have penciled, at its entrance price-to-rent ratio of 0.68%, is if a down payment of 25% was put down and it would then cash flow $25/month at the stated figures.

The balance is always little-to-no cash flow and high appreciation, high cash flow and little-to-no appreciation or a combination of the two. This is based upon asset class. Sounds like you have a B class asset here. 

Your backyard isn't a bad idea. What are there like 4-5 new Amazon plants within 30 minutes of Plainfield? Plainfield is rising. You can do well there with rentals. You also have North Lawndale, Woodlawn and Southeast where many new data centers are going in. Depends on your preferred barrier of entry...

Otherwise, Arizona, Texas, North Carolina and Ohio all come to mind in regards to emerging markets. Other locations in Utah, Idaho, South Carolina and Montana have also shown much emergence.

Overall, using the proper zip code research, you can find pockets everywhere. So, you don't need to invest far away for everything. But, it just depends on your comfort level. 

Overall, finding the zip codes that are growing in population is recommended.

I call this turbulence. The first stages of change are resistance, hesitation, confusion and uncertainty.

SPY has bounced 7 times in the last 90 days. However, bearish is nowhere in sight. We'd need to drop to 485ish for that to be validated.

Despite the consistent upward momentum, all news, even when positive, has caused dips in the market. This shows desperate activity for those who are bearish.

A huge upset, was the announcement of only 1-2 rates drops in 2025. Although, all last year we were prepared to expect about 6. Therefore, recent consumer sentiment has been terrible.

I rarely listen to news anyway because most of it is noise. Especially, since the current interest rate climate has been historically low for the last few decades. Higher rates for longer makes absolute sense if we expect to maintain strength as a nation. So, an expectation of best possible rates, over the next 10 years, being about 5%, and the worst possible high being about 7%, is reasonable. We will likely never see anything below 4% for at least 20 years. (That's if if don't an event where a something unexpected breaks - like a COVID outbreak for example).

Overall, real estate is not crashing. In fact I recall this clickbait word a little while back and...

Well, I'd say you should invest where you've performed best and not venture into new territory all because you're letting news trigger fear. No inventory, and high demand, still puts real estate owners in the power position. That won't change until new inventory arrives at a level that establishes a heathy balance between supply and demand. I will admit, many real estate markets have gotten stale since the election. But I attribute this to the failure of the expected rates drops. 

Keep a close eye on the 10 yr. That'll be the trigger to bring buyers out again.

P.S. I bought ethereum in like 2000 (i think) and I do like XRP! So I'm into crypto. Just not dropping real estate for crypto! Lol

Overall Texas has the highest growth over the last 20 years.

Mainly attributed to job growth and that respective growth throughout the south. Which includes; Arizona, Nevada, Alabama, Tennessee, Georgia and Florida.

Texas and its high volume of major metros and central location (for the south), has made it an ideal central headquarter location for many employers. North Carolina and Georgia have seen similar characteristics.

However, they are catering moreso the east coast where about a third of the USA's GDP based commerce occurs. East coast also ranks the highest contributor to commerce.

To summarize, perhaps the drivers for major corporations could be cost of land, consumer based logistical lead times, current population to support talent fulfillment and forward growth projection potential.

These factors contribute to the drivers that make up emerging markets and then appreciation.

@Melvin Martinez Good. You're aware of historic performances and the metrics best used for evaluation purposes. That is great feedback.

You could certainly risk little-to-no cash flow for what would be unrealized gains in the form of potential appreciation (if you choose). 
You could also use data sets in the same manor to purchase elsewhere where you either gain moderate cash flow and moderate appreciation or high cash flow and little-to-no appreciation.

- Emerging markets could grant you both.

Thats the decision that'll be based upon your comfort zone. I wish you well in your quest.

Data is your friend. You'll want to identify what locations interest you most (likely by zip code).

Things like population trends, price to rent ratios, median income trends, school rankings, employment trends and crime trends can all the evaluated by zip code.

All the locations mentioned have emerging markets. So, your next evaluation factors could also be resources. Property management options, cost of your visitations when/if needed, and access to reliable real estate professionals that can assist you as needed.

Feel free to DM me for reference to great tools and articles that can help.

You all would establish the term that the seller would finance. Some will finance the entire time until the property is fully paid off and some will finance for shorter time periods.

If it's a shorter time period, the remaining amount owed, would be due by the end of that period, or called a balloon payment. The balloon is when you'd refinance.

All terms and agreements should be reviewed by your attorney if the seller is providing the contracts. If you are expected to produce the contracts, or you prefer to, you'd have your attorney to complete this for you. At that point he/she could explain all the important factors within the agreement you should be aware of.

There are various contracts that could align to match the commitments and preferences of the parties.

You are on track! Great job!

Using zip code analysis is a good way to identify the micro market once you know the metro you want to invest in. 

I'm a licensed PA realtor and investor and would be happy to assist in finding deals or helping you critique potential markets. (717)945-7040

It depends on the performance of the investment compared to the performance of the personal residence.

If the investment property doesn't add to your monthly earnings, and doesn't appreciate equally to what your personal residence would, it's not worth the investment. Being that you mentioned that the personal residence would appreciate well, the favor lies with buying the personal residence.

Generally, it's better to buy the investment property first, if you buy what will perform. This way, you're adding to your income and when you buy the personal residence, you're more stable than before (if considering an equivalent purchase price as before and not increasing your affordability due to the extra income).

You are exactly right in pursuing other markets for your investment property. Feel free to connect for more insight on asset class and choosing the right type of investment suitable for your targeted performance. I'm a licensed PA realtor and have plenty of opportunities that could be of Interest to you in your price margin/targeted performance.