All Forum Posts by: Brandon Shewbridge

What area of Chesapeake?  South Norfolk?

Assuming you've done a drive-by so what does the property look like?  What does the roof actually look like?  The inside will likely be a reflection of the outside.

Assuming you finance $100K, you're looking at a $500/month mortgage (PI only w/o T&I).  $1050 rent using the 50% rule would imply $0 cash flow.  Add T&I and you're likely negative.

Most would suggest using 10% Vacancy, 10% Capex AND 10% maintenance. Maintenance and capex are not the same. Capex is big things like roof replacememt, HVAC replacement, etc. Maintenance is for minor repairs and refurb. (Leaky faucet, electrical, appliance repair, etc.) These percentages are pegged to the monthly rent amount - not the sales price. If rent is $2K/month then you should set aside $600/month using the above formulas.

Depending on what coverage the HOA provides in your condo docs, you could probably adjust the maintenance and capex numbers to 5% each. This would apply to situations where the HOA covers the exterior, roof, foundation, and landscaping. Don't forget to factor in the HOA dues as part of your monthly operating costs because you'll be paying them as the owner.

To answer your question, it is best to use percentages in my opinion. Your vacancy costs are directly tied to the price of rent.  As rent increases with inflation, the rest of your numbers will follow.

If buying a condo, thoroughly review the financials and make sure reserve account balances are in line with the most recent reserve study.  Also ask if any special assessments are pending.

A 4.5% note would put your payment at $1371/month (q tax & ins).  Look to refi again as soon as you can and in the meantime use that cash out to cover the difference.

On an investment in a condo or co-op, what numbers are you using to calculate Cap-Ex and Maintenance in situations where HOA fees cover external items like the roof, building exterior, foundation, landscaping, etc.? For purposes of discussion here, assume the HOA is well run, the annual operating budget is sound and the account balances for reserves are within the guidelines set forth in the most recent reserve study. Under normal situation most investors would factor in 10% of rent for each category, but where should one adjust to in this situation?

(I understand that some investors don't prefer condos due to the HOA. I'm not looking to start that discussion in this thread.)

@ Chris Malo - Can you provide more info on the recent legislation?  Is there any reference to the lease duration?  My current association will not allow less than 12 month rentals and I think that I could have some good results with Airbnb.

As a Virginia Beach resident I am fairly familiar with the East Beach area.  I think your assessment to sell  is spot-on. Until the rest of Ocean View catches up to East Beach, East Beach will remain an island unto itself.

The other consideration for any investors looking in Norfolk over a longer 20 plus year horizon is flooding. Sea level is rising and Norfolk is sinking. That's not a good combination. The schools are closed there today due to flooding from excessive rain. East Beach is an area prone to flooding already. It's only going to get worse over time. I would highly suggest that anybody looking at investing in Norfolk look at the flood maps for the city. Larchmont won't even be here in 50 years.

So you wire $2500 and he finds some reason not to fund.  Do you think youll see that $2500 again?  If he is legit, then he shouldnt need anything from you up front (maybe a small $100 application fee at most)

Use an escrow service.   You put in the $2500 and he gets it when the deal funds as verified by your closing attorney.

It can actually increase values. The FHA wont back a loan on condos where the rental rate exceeds 50%. If potential owners can't get qualified financing then units dont sell and thus prices decrease without rental restrictions.

Can you call him now or should you wait was the question right?

So many investors forget that they are actually selling too when acquiring. You are pitching to the seller that he should part with his house for your money. You are selling them on why they should give it to you at a less than market rate. If investors were just buying, they would be paying what the sellers are asking without any negotiating.

Given that, you just learned your first sales 101 lesson.  Never leave the current appointment without setting the next one.  In some cases you should set it for them and instead of asking what time, suggest two times and let them pick. 

Given the information that you have provided regarding his attachment, I would have handled it by saying something like this: ”Mr. Seller, I know this house is important to you and I want you to make sure you are ready to sell it.  I do have other properties that I am considering in addition to this one. I don't want to give your money to someone else without giving you a little bit of time to consider it.  My final offer will stand for 24 hours and I'll call you at this time tomorrow for your answer." 

First you would have established better rapport and more credibility by sympathising with his attachment to the house. It also would have put him temporarily at ease assuring him that you want to make sure he's ready to sell. It helps take the pressure off.  Second, you're letting him know that the money is his, but that you could take it away if he doesn't accept your offer. It's just a gentle reminder of the potential negative consequences. Last you are effectively setting the next appointment. By setting the time of the call you've given him a deadline about when the decision needs to be made, and you've given yourself the time that you will have your answer.

Expect cheap (sub Goodman) components.  Our warranty co replaced a 20 year old  Carrier with a badgeless no name unit.  It ran fine for 2 years before we sold.  Who cares?  It's free or minimal deductible for a new system.

Ask the service co what they use for replacements.  If you're that concerned, you can also ask them to put in a better unit with you paying the difference.