All Forum Posts by: Brandon Roof

1% of $176k and 194k would be $1,760 and $1,940/month in rent, respectively, well above your $1,350, meaning the 1% rule isn't even close in this case.  I wouldn't go by the 1% rule anyway because it rarely leads to the outcome an investor is looking for.  It may have at one point, and may still in certain markets, though if you spend a little more time in the forums, those opportunities seem to be few and far between or are in questionable neighborhoods, usually not on $150k to $200k houses.

Each property.  If the entire portfolio isn't a dud, there's likely to be some you'll need to exclude from the deal or unload in case you have to take them all.

Viewing it as a collection of units wouldn't provide you with a very good picture as the revenue possibilities and expenses of each property are going vary considerably, leaving under-performing properties to hide within the portfolio, draining cash flow from the others.

I'd be very careful here.  Your pool of owners for a 10,000 sq. ft. house will be super small.  You could end up stuck with this thing for years unless the margins are so good that you can sell it well below market.

I'd want to know why the current owner is looking to abandon the project when all materials are already purchased.  My only guess would be is they have some very high interest debt they are trying to get out from underneath.  Just make sure you don't end up in the same position.  I'd leave a project like this to somebody with a lot of experience in developing and constructing houses of this size.

At first glance, it looks like a slam dunk, particularly if you charge a monthly pet fee.  Birds generally stay confined within their cage and aren't likely to cause any damage to your rental.  That being said, a parrot is a little on the larger side and owners may often have them outside their cage.  I'd like to think one wouldn't cause much damage but I think it would be best to inquire as to how much time it spends in a cage versus being out and about then go from there to determine the risk/reward.

@Steve Barounis

Low crime is certainly up there along with minimal noise and traffic. You will find lots threads in the forum stressing the importance of good schools in the vicinity. Other things I really like to see is a nearby hospital, close access to major highways, and lots of options when it comes to shopping and dining. Other forms of entertainment are always good in my book as well. Parks, beaches, a zoo, museums. The more boxes you can check, the better.

The easiest and best thing to do in this scenario would be to ask your lender.  If they won't be able to provide you with the solution you are looking for, ask another.  Try your smaller banks in your region and develop a relationship with one willing to work with you on this project.

Hi @Chris Collins!

I'm sure you could get a number of responses that are going to differ based on everyone's risk appetite, but based upon what you are describing and your familial situation my suggestion would be to continue to leverage as much as you can within your current rental properties and make your primary residence and the industrial warehouse untouchable.  In an apocalyptic scenario where all is lost, your family remains protected with the roof over their head and you still have the space to continuing running your HVAC business.  Some would argue that you are leaving too much equity sitting there doing nothing, but I could argue that it is providing you and your family one heck of an insurance policy.

@Steve Barounis

I can only speak in generalizations regarding nearby neighborhoods similar to what you describe, but buying in a bad area because it falls in your price range is a bad idea. I see attempted flips around here that never recoup their money and a BRRRR would suffer the same fate. I think you already know the answer to this question but are hoping for a silver lining as it feels like this is all you can afford at the moment. Be patient, explore other neighborhoods and be ready to act when one comes along that meets your criteria. Don't compromise because it will likely end with you being the helpless landlord in the scenarios you describe.

Don't get too ahead of yourself yet.  Three interested parties does not equate to three qualified parties.  Have them go through the motions of completing an application, follow your process and go from there.

I don't know what type of scam you would be referring to.  They are looking to potentially give you money, not the other way around.  I could only speculate about the three you've heard from thus far.  The one with cash may have horrible credit or a checkered past that they are trying to distract you from with the promise of cash in hand.  The real estate agent acting on behalf of a client is legit as they come, and like a good agent they are trying to provide the best deal possible.

If you let them know your renter criteria up front, I think more often than not, your pool of interested parties will quickly whittle down to one or none.  Put them to the test.

I'm not sure why your banker would be encouraging you to take a certain path.  They should merely be providing you their best options available for your needs and not attempting to influence your decision making.

If your goal is to expand your portfolio, as good as having that additional cash flow sounds, it completely counteracts the option to grow as it will significantly impact the cash you have on hand for future down payments.

A HELOC or home equity loan is a cool arrow to have in your quiver, but with rates on those products being higher than almost any conventional loan at this point, I would use it sparingly.