All Forum Posts by: Blue Presley

@Greg Scott

Oh, I see, pull the money out through refinancing where 7% interest rates are less expensive than paying capital gains tax, let the tenants pay it down, then do it again. That's a good way to look at it

@Tyler M
I did feel like 7.5% was a bit high. Per your point 3, I think about this one a lot. I benefit from step up inheritance laws, so almost no capital gains tax if I sell, I do like the idea of liquidating and putting it into a larger property or multifamily, I do worry about the amount of time hands on, which I need to be s minimal as possible.

Thanks! Good points!

After a  few deaths in my family over the past 3 years, I've inherited 5 properties. For context, professionally Stocks and Options is my career course and comfort zone. And although I've wanted to invest in real estate, I just haven't had the opportunity until now. All the properties are empty, and I'm just paying for basic upkeep, taxes, etc., and that has started to add up, so it's now or never.

Three of the homes are 2 bed, 1 bath, appx 1000 sq ft. Local market rents are between $1400 and $1900 /mo within 2 mile radius.

Two of the homes are 3 bed, 1 bath, appx 1230 sq ft, same rents as above.

Each home is worth appx $265,000. So, for easy math, let's say $1 million as that's roughly what I'd get to sell them in current condition after transaction costs. They all fall within a 50 mile radius. Relatively local, but I DO NOT want to manage my own properties, and well, can't given other time constraints, so a property management company is a must in the decision making.

Each home is paid for, each needs about $15,000 in rehab to make rental ready. (They have the deferred maintenance you'd expect after a fixed income senior lived in them for several years, plus smokers, pets)

So how do I turn 5 straggling houses into a proper real estate portfolio and well-managed rental business?  How do I structure everything to be profitable? (See below)

The stock broker inside me wants to just sell and add that to my portfolio where I know I can consistently make my ROI goals. Further more, some back of the napkin math at an avg of $1500 per month per property is:

$1500 x 12 x 5 = $90,000. So, what, let's say $75,000 after vacancy, PM, taxes, and other operating costs.

$75,000 / $1,000,000 = 7.5% ROI? 

As is, the current structure I mean, that's abysmal. It just doesn't seem make sense to collect rents on free and clear properties. 

I'm an avid reader having recently finished Flip, Rent, BRRRR, and The Millionaire Real Estate Investor - all great books, but if there is another to recommend please do or point out chapters in those I should pay more attention to.

Thoughts? How would you structure these properties to be a profitable real estate portfolio and grow it as a business?

 

I'm looking for something that Google is having a hard time helping me find - a one page chart that compares the historical averages of different investment vehicles - Bonds, Stocks, Real Estate, etc. Historical averages for each independently are easy to find, but before I put together my own compendium from those sources, just wanted to make sure that nothing is already out there before I reinvent the wheel. Any suggestions?

I wanted to get some advice on the following opportunity.

I have an opportunity to purchase a condo in a good location and whose complex overall has had a historical vacancy rate of about 5%.

Single family homes in my area are making a small comeback, and over the past few years the area has seen 7% avg annual appreciation rate for residential homes.

Condos in this area, this one too, are the exact opposite. The units in this building were selling for $50k 3 years ago, and 3 units just this year have gone for $28k. Not updated, these condos are renting for $600 per month; updated, around $700 per month.

The unit I am considering I've negotiated down to $32k; I'll paint and replace the carpet, but other than that the unit is in great shape (although I do foresee replacing the HVAC unique within the next few years).

In the title I mentioned "a property that I can't resell." This will be my first condo, and I've learned a lot. In particular banks have policies that don't lend on condos if the renter to owner ratio exceeds 20% to 25%. This is particularly true of my bank, and my banker suggested that this had a lot to do with the falling prices - banks won't lend against them so owners (landlords) are having to sell to other investors at prices that are easier for another investor to pay cash for. Whether or not this is all true, I don't know so feel free to comment if you have experience with that. But, when I do sell, I estimate getting what has been market for these - $30k ish - and that's if prices don't continue to fall.

In any case, here are the numbers:

$36,000 - Purchase price plus make ready repairs

$4744 - Annual NOI (with 5% vacancy calculated)

$4744 / $36000 = 13.17%

I am calculating that I get 0 appreciation benefit from owning this property. Another con is I'm about to tie up $36,000 that would be hard to liquidate (compared to SFDH in the area) But a 13% ROI is a heck of a lot better than the money sitting in my bank account.

Thoughts?

Thanks!

@Jd Martin,

That's an interesting idea.. I worked on an events app not too long ago, and it strikes me that scheduling maintenance for a property would be the same as creating, say, a community event at a local church. Instead, the event would be "Change Air filter" and the venue would be "123 Road Dr" on "such date." The software I worked on also lets events recur at regular intervals, so you could enter one event once; set it to recur, say, every 30 days (or whatever custom period), and then you'd be able to see on an actual calendar a list of what your day, week, month, or year looked like at a glance.

Is this for rental properties? I ask because I've also worked on related listing technology for properties. Would it be beneficial to have a site where you listed properties for rent, visible to potential clients on the front end, while being able to manage the scheduled maintenance on the backend?

If I may ask, at what number does managing a portfolio start to get encumbering without such an app? Thanks!

For 20 years I've worked in the IT industry creating Web, mobile app, and software technologies with a heavy focus on helping real estate agents have mobile, responsive websites to list their properties. I'd like to transition into real estate investment, and that's the reason I'm part of the BP community.

But, I'm curious.. for those who are already engaged in RE investment, what tools or technologies do you think the industry could use and benefit from that doesn't really exist yet?

For example, I see a lot of flipping calc spreadsheets.. Indeed I've bought a few of them myself, and they've gone a long way to help me get organized and be precise in my estimating / deals. But, these are spreadsheets, and nothing really exists (that I can find) that's accessible on the web and suitable for use on all devices (responsive).  Sure there are things like the analysis tools like we find here on BP, but nothing comprehensible or customizable.. So, I see an opportunity for a SAAS application so that investors can keep all their estimates and management tools in one place, accessible from anywhere on their phone, tablet, laptop, or otherwise..

Another idea is a listing site specifically for deals (a place where wholesalers and others can list). I entertain deals throughout my state, but, we have so many MLS sites that finding professionals who are a part of that market and then working with them seems convoluted.

What do you think? Those are just examples. I'd love to know what your pain points are as you engage in flipping or renting and how technology could help alleviate those issues.

Hello Nathan. I followed that link. It seems that that is another individual unaffiliated with Homefixers selling it?

You purchased it. Was it the FLIP software? Was it available for immediate download after you purchased it?

How about you Dennys? Did you get a copy? I don't mind buying it from that link, just kinda skeptical.