All Forum Posts by: Brian Stark

I personally have no experience with being a onsite landlord.  But it is something I am thinking about doing.  I would say maybe keep it under your hat that you are looking to be the landlord.  Pose yourself as a possible tenant looking at the vacant unit.  When I rented I had that happen a few times I was asked about the area from people looking at the vacant units.  It also helps if you can catch them outside instead of knocking on the door.

@Julie Macd

The house is in good shape overall.  some minor fixes here and there.  New paint inside and out in the last 3 years. New high efficiency central air and heat installed in the last year.  The house was also a builder demo house when originally built so it has all the upgrades the builder offered.  Or at least I was told that when I purchased the house.  I've never thought to confirm that before.  

I have no idea on the utilities.  I will check into that.

Thanks for the insights.  

@Thomas S.

I wasn't thinking of putting the whole amount down. I was going to look into an FHA? loan at 3.5% something in the 4-5k total down and hold the rest as operating in the house hack multiplex. I just can't figure out what to do with the SFR I have.

So I'm looking to get into real estate.  I am hoping to get about 15k for a down payment for a small but nice mutliplex house and house hack it.  My question has to do with my current house.

Some back ground. 

About a year ago i refinanced the house and took all the available equity out and lowered my monthly payment.  So there is basically 0 equity built up.

Current Loan amount is basically market value.  So if I sell I will have to pay the closing costs out of pocket.  I've heard of the 1031 but have never looked into it so don't know if that would help.  I plan to do some more reading on learning on that.  Any good links to read some info?  But I spoke with a realtor and they did a rough top of the head quote of 11k in closing costs eating up most of my down payment I was looking to use.

Current rentals in the area for SFR are going for 1200-1400 a month. Current mortgage and escrow payment total 760$. So below the 50% cash flow rule that most people talk about here.

So what would you all recommend for this situation?

Rent the SFR our and understand it maybe a 0 or even negative cash flow.

Sell the SFR and eat the closing costs.

Give up the house hack idea and continue to live in the SFR.

Something else all together?

Having not yet invested in anything yet.  I would probably do what I'm planning now.  Long term buy and hold.  

But I would like to hear what others would do or not do.

@Steve Smith 

It does help.  thanks

 

@Steve Smith If using the 50% rule shows that the cash flow is $-30.70 a month. How would spending the time on a full analysis helpful?  I would need to make up $430.70  every month in cash flow just to hit my goal of $100 positive per door. It might be possible with raising rents or low balling an offer or both.  And people might be able to do just that.  But this would be my first foray into real estate and I want to minimize my risks as much as I can. And banking on being able to rent out with a higher rent or have an offer nearly 50% the asking price get accepted both seem to add a lot of risk that I'm not sure I can take on today.

@Matt Owen Maybe I'm applying the 50% rule incorrectly. I thought 50% was for Property management, repairs, CapEx, etc. And the other 50% was your mortgage and profit. I was thinking that it was over priced but I wasn't really sure.

Thank you both for your insights.  Still totally new at this.

I just found and read this whole epic today.  All I can say is wow.  I know several pages back you were asked what you would have done differently had you had the foresight and it was answered that with out a crystal ball there is nothing that could have been done differently.

I was wondering what might have been able to be done differently had you been looking for a rental not a flip.  Would the process looked that same?  Still had to do the eviction for the squatters and the BK and the false marriage rig-a-marole?  Would you have had another avenue?  Looking at the question now that I've typed it out I would hazard a guess that it would have been the same and the same delay.  

I hope this is in the right forum.  Apologizes if it's not. I'm looking at my first buy and hold rental.  I want to get a multi plex and I found one at random locally on loopnet.  I just want to make sure I'm looking at these numbers right for the 5 minute quick analysis talked about in Brandon's videos and blog posts.  Can somebody help double check me?

Property is listed at 240k

It is a 4plex that is fully rented out and all units are 2 by 1's and rented out for $500 a month (seller info provided not confirmed)

Using the 50% rule I would get approx. $1000 to pay for mortgage and cash flow in pocket. ($2000 in rent X 50% = $1000)  Wanting to cash flow positive for $100 a door that leaves me with about $600 to pay for a mortgage.  Playing with a mortgage calculator I would max out a conventional loan at about 110k to get the payments at $600 a month. And that's just the loan amount no counting anything down.

Since the numbers don't jive with out something drastic like a crazy low mortgage with a crazy high down payment or way low balling an offer, or something like raising the rents to $700+ to get a mortgage clearance of 1k a month payments.  This is an offer worth passing on because it will negatively cash flow or just barley break even at the end of the day.

Am I applying the rules for the 50% quick test right?

Thanks for the welcomes and opinions.  Defiantly feel better looking at rentals over flips and wholesales.