All Forum Posts by: Blake Denman

Hey @Christian Nachtrieb congrats on the purchase!

I know people usually are satisfied with Salem Five - definitely add them to your list of banks to investigate.

I'd have been bowing down if you'd found a house in that condition in Stoneham for that price haha, but still an AWESOME deal!

Great to see that people are finding deals on the MLS in Eastern MA too!

I guess I'd define my strategy as a bit of everything - looking to build some capital wholesaling, then flip or hold properties I find depending on how the numbers work out.  Much more interested in the long term benefits of holding though.

Also planning to buy a 2-4 family in Eastern Essex County this winter to househack.  Looking for $100+/month/unit cashflow in a value-add property.

@Steven Rubino nice!  I can't wait until I can post about my first deal.

How did you source the home, and was it in Stoneham?

Blake

Hey @Robert Blocker - this could be way off, but have you inquired in the district court?  The DC is where pre-foreclosure info can be found in Essex County at least, so perhaps tax delinquent information can be found there too.

Just a thought/bump for this question.

Blake

Welcome @Jackson Kellogg !

I'm in a very similar situation - 22 and looking to purchase a 2-4 unit on the Northshore this winter.  Even though you're just getting started, it seems like you're definitely on the right track.

I agree with Kate, there are deals in any market - don't let the current hot market delay you for years until something changes.  Establish what numbers you're looking to get from a property, tell everyone that's what you're looking for, and don't stop until you find the property that works!

Get involved with local REIA groups, network on BP, and get FHA pre-approval to improve your odds!

@Julian Ramirez luna

Thanks for the info, it looks like with other contingencies added you'd be negatively cashflowing more than the $110/month it appears right now.

Although you are not paying rent right now, this does not justify a negatively cashflowing property.  The money you are spending on the condo per month plus the negative cashflow likely could be better invested somewhere else.  If you're in Weston now, the 'boroughs and Worcester are just as close and there are more deals to be found there for sure.

The upside of the condo right now is appreciation, and that would be too risky for me.  Without appreciation or cashflow, all you're getting is some principal paydown and tax benefits - likely not justified.  Betting on the appreciation is speculation btw, not investing - although lots of people do that (didn't end well for people in 2008 though).

My .02c

Hey Julian - Welcome to Beverly!  It's definitely a city that has been booming recently.

When you say your expenses per month are $1910, is that PITI (Principal, interest, taxes, insurance), and HOA fees combined? Any idea what the HOA fees cover? ie do you have to pay any extra for maintenance/capital expenditures? (I'm not the most familiar with condos)

You are self managing I imagine?  Do you have a contingency for vacancy (with the demand in Beverly, it doesn't have to be very much, but you should still have some).

These are all things that investors on here think about when weighing the costs and benefits of a property. Factoring other "hidden" expenses like vacancy (when you don't have a tenant in there, you'll be paying the PITI and HOA!), maintenance (beyond what the HOA covers), and property management (if you ever decide to no longer self manage) - you may be losing more money than it initially appears.

HOWEVER, the Beverly area is on fire right now, it is completely possible that property values will continue to climb quickly, and you could exit your condo in ~5yrs and make a nice profit (keep in mind you'll have paid closing costs once as a buyer, and once as a seller at this point, which will really eat into the profits if, say, you bought at $250k and sold for $300k - not a straight $50k profit, plus you had negative cashflow over the years too).

So... I'm not sure, I suppose it depends on what that $1910 number includes.  If it includes everything, including contingencies, I might hold onto it considering the market - still a risk though.

If it doesn't include any of that extra stuff, I would strongly consider exiting the property somehow.

Run the numbers, see what the return on your investment is.  You put X down, the tenant pays down X principal a year, and you lose X per month in negative cashflow.  Then you've got tax benefits and potential appreciation to look at.  If you can find a better place to put your money, then get it out of the condo, if you think you're happy with your return then keep it.  Or not, it's up to you.

Oh, and an added benefit of keeping it is that it's your first investment and it will be an excellent learning opportunity!  This does have value as well.

Hope this helps!

Blake

@Jami Krietzman Sounds good - definitely get a look at the interior with that 32 year tenant.  It could be great and the tenant/prior landlord kept up on maintenance, or it could need 30 years of updating.

@Brian Pulaski @Ned Carey Thanks for the clarification, that makes sense.

Nothing really jumps out as being incorrect on this, but I'm new as well.  I'd just ask what condition the property is - if it's not turnkey then the 5% for capex, maintenance may be too low (and I agree with Cade that vacancy should be bumped up a bit too) - 8% is where I'd start with those three, being as conservative as I am.

Who is paying utilities and associated costs?  Will you have tenants pay water, sewer, garbage, electric, etc?  If not, that will eat into your profits.

Also, closing costs seem low unless the seller is paying some of them or you're an agent (or this is off market).  Again, unless it's great condition turnkey the $3000 repair cost may be a little low too.

Those things considered, see if you still have a good COC, if so then it looks pretty good.