All Forum Posts by: Brett Russell

@Mark Moore , some of your numbers don't add (or multiply) up.

--$875/month is $10,500/yr not $10,800

--those maintenance and management expenses seem very low.  Where are you finding a property manager for ~6.5%?

--have you confirmed that insurance and tax bills?  They may be the current owner's bills, but it is possible he is underinsuring and it is very possible the tax basis might change significantly for the new owner making the tax bill jump accordingly.

--even assuming your net income of $8330 is correct, thats 13.8% return on that $60K purchase price.  Of course, it will be a lower return for your end buyer once they have to account for your wholesale fee.

Now, as to your posed question of if it's a no brainer, that really depends on what buy and hold investors are expecting in your area.

Just my $0.02

@Kevin Keene , 

Here are my thoughts:

First off, you should definitely NOT be relying at all on Zestimate for values.

Secondly, it took me a bit to figure out what you were doing with the ARV calculator formula. Yes, you could rearrange the formula they way you did and it makes mathematical sense, but I think it messes with the psychology.  If you say, "I can get the house for $150K so the ARV better be $278.5K to make it work" I worry you would end up fudging numbers a bit to make it work because it seems a bit more committed already. 

Instead, you should approach it the way the formula is stated. Find ARV (again, not from Zestimates), estimate repairs and then determine max allowable offer. The property has to be purchasable at that price, or you don't do that deal.

I know it seems like semantics because, yes, you can rearrange the formula but if you have the foregone conclusion of what the purchase price is, you could be tempted to fudge repairs or choose slightly better comps to make it work, but if the comps and repairs are figured out objectively, then you can't argue with the MAO.

Hope you follow my thinking.  

@William Ellis , I think you are looking at this correctly.

I think it is very smart to still budget for management because if you are going to be doing the management, you should be paid for that separately from how you are paid as the investor.

If you are planning to hold for just a few years, you are probably correct your take home cashflow will be higher, but if you're planning to hold for the long term, that extra cash flow should probably be going into a future capex fund so you don't get blindsided when all those things need to be replaced at the same time.

@Jason Bridges , welcome to BP and congrats on getting started.

I think most people would say you should start with the end in mind and know what your planned (and backup) exit strategy is for a property before purchasing.  Obviously too late for that on this one.  This is a personal decision... flippers will tell you to flip it, landlords will tell you to hold it.  What is your plan for your investing?  What do you want/need out of this property?

Also, I would recommend spending a bit more time reading this site because I think your projections may be a bit too rosy for either exit strategy as you may not be considering all costs, but once you figure out realistic projections, you need to decide what you want.

@Account Closed , your projections are probably a bit too rosy.

You don't account for insurance or management.  Yes, you may be planning to manage it yourself, but you should budget for it so (a) you can afford to use it later on if you choose and/or (b) be paid separately for that time irrespective of the investment itself.  Put those things in there and you are only cash flowing maybe $100/unit.

And then you need to consider maintenance expenses and future capital expenses.

Now, if there's a way to offload those utilities onto the tenants, it looks a lot nicer.

Just my $0.02

@Shane Casad , welcome to being active on BP!

I'm just down 94 from you in Chelsea.

Keep reading and engaging... I wish I had started looking into real estate when I was in college.

@Ed Kahle , I don't think you'll have much success creating motivation, so just focus on finding more leads until you uncover motivation.  Now, people who aren't motivated now may become motivated later on, so repetitive marketing to them could pay big dividends down the road. 

Good luck.

@Yirmeyahu Sofer , the loan would still be in your name, so it would stay on your credit.  Plus, you would risk the bank calling the loan due since title is being transferred.

@Jake Matthew , I can't speak from personal experience, but have seen others have success getting a list from title companies or realtors.

@Scott Weaner , I wasn't on the site a couple of years ago, so I can't comment about what you had seen then.  If you get an upgraded membership, there are calculators on BP under the "Analyze" tab of the blue navigation bar.

Otherwise, a quick google search for "real estate investment calculator" gives a ton of options:

http://www.goodmortgage.com/Calculators/Investment...

http://investfourmore.com/rental-property-cash-flo...

There are two.