All Forum Posts by: Brian Volland

@Josh Whitney, the lack of rentals at or near lighthouse point is what had me concerned. I know the area is almost entirely affluent home-owners, so I didn't know if renting in the area would be difficult.

@Tom CooperThanks for the feedback. I know there has to be a ceiling on what could be asked for rents for the area, I just didn't know if it was known value to folks operating in the area.

I'm reaching out to investors active in the Daytona Beach / Ponce Inlet area to try to determine if a potential property is feasible to rent out. I have access to your typical stucco 2-story in Ponce Inlet on the Halifax River 4br/3ba 2-car garage. The home was built within the last 15yrs and has your standard dock w/ boat lift, deck, 2nd floor balcony, florida room, jet tub, etc. (no pool). It is within 3min walking distance of the lighthouse, park, and beach (both river and ocean side). The property is paid in full but tax documents show yearly taxes @ close to $11k. If I were able to get the property for say...$100, I figure monthly rent would only NEED to be in the realm of about $1500 (to cover taxes and minor upkeep). I would like push that up and over $2000, say...$2250. Rent-o-meter supports that this might be possible, but most of the rentals in the area are not on the water so gauging feasibility becomes tricky.

So, for those y'all that work this area, would the Daytona Beach / Ponce Inlet area be able to consistently support that high a rent rate for yearly leases? Before someone asks, I'm not deep enough in the game to be able to support a vacation property yet, nor have I focus my learning there, yet, so that is not an option.

I'm going to have to disagree with you there @Shaun Weekes. From Investopedia:

"Credit agencies recognize that shopping for a mortgage results in a single loan (and not multiple new lines of credit). The FICO Score, for example, disregards multiple inquires when they happen within a 45-day window; other agencies have a 14-45 day window."

additionally http://www.myfico.com/crediteducation/creditchecks/inquiries.aspx says about the same thing but in more detail. 

Just for giggles, I took a look at the appraiser's page for property tax rates in the part of FL I'm looking to invest in. They leave you with this gem to help figure out the taxes on your future property:

"While we would like to provide a tax estimate that is meaningful, future taxes can no longer be calculated due to a multitude of variables, many of which will not be determined until Notices of Proposed Taxes are mailed."

Hybrid VA Loans. I've seen a number of articles written about them which basically say that they are still around but I haven't seen much of anything on BP forums about them. As someone with limited capital who is looking for a MFR for his/her first purchase, I don't really see how this financing option could be a bad thing; especially if, like me, your focus is on cash flow.

If I pick up a MFR on a 5/1 or even 10/1 VA loan, recycle the profits to bulk up reserves and equity then I'm paying less to make my property a more secure investment. This could very well allow me to pick up a second or third property sooner once I have enough cushion (assuming a good cash flow). At worst, I could always refinance if I don't like the way the rates are looking. It's a terrible option if you're looking for a relatively short-term resale due to equity, but I don't see how it could be a bad option if the goal is to hold long-term.

Am I missing something about this or is this really what it looks like: A first-time real estate investor's dream financing option for cash flow?

Thanks for any help/advice y'all can offer.

I thought about using these numbers but, based on past experience using a VA loan (yes, the benefit has been reset), I was anticipating rolling the VA fee into the loan. Additionally I was going to use a tip from one of the books and settle on a price, then raise the offer ~2% (assuming it's still within the budget) and having the seller pay closing. It makes for a much cleaner closing but, of course, it means you have to really know what you price cap is and deduct closing costs from it.

Assuming the above reasonable, that really only leaves me with the inspectors' fees. It's something, but I doubt it would give any more reasonable information than if I left them out of the calculations.  

Thank you for the response.

I have been using a couple of calculators, including the BP one, to run quick numbers just to gauge cash flow. The problem is that I'm looking at properties that don't need rehab AND I'm using the VA loan. I'm looking at what are basically turnkey properties that need some light maintenance and/or updating if anything at all. So while I have an initial nest egg, it doesn't go into the calculations because it isn't anticipated to be spent. I cannot calculate ROI, CoCR, IRR, etc or other long term forecasts that will help gauge when best to sell and help plug in future cap expenses. I'm limited to cash flow, NIM, GRM and other relatively limited metrics.

I'm just curious as to what other folks who are anticipating buying with literally nothing planned to be spent up front are using as their metrics. Are they looking at cash flow and stopping or are they using something else to forecast a couple years down the road?

As I continue reading through more books I have noticed that, often times, it is pointed out that you cannot calculate anything more in-depth than cash-flow when using zero down (as in VA loan). Or as one book clearly stated, "It's not investing if you don't put anything to risk in to it."

I realize that this is directly related to the fact that you cannot run returns that have to multiply 0 but as someone looking to make their first purchase in ~6 months using zero down on turn-key or light rehab, how are the rest of you running your numbers? Are you putting a non-existent down payment in to get your IRR and other metrics? Are you not bothering with anything more in-depth than cash-flow since you have nothing really invested and are just looking for the return? Throwing some numbers into rehab costs?

I just want to make sure that I'm running as deep an analysis as I can so that I don't get tripped up by something later down the road, if possible.

 I can promise you, I did not read the "teach your kids" version.

As far as the rest of the comments, I will admit that, if you had no knowledge of real esate investment or weren't sure  you wanted to go about making/saving money so that you didn't have to work,  this would b.  good book to help you see possibilities. My mistake was expecting a book more along the lines of, "You've made your choice, now lets show you how to make it all work."

Thanks again for all the feedback.

Thank you, all of you, for the feedback. @David Greene , I will certainly be taking your advice to heart and seek out folks with more experience in my niche. I'm just glad that I'm not the only one who found the RDPD book lacking; as opposed to me just being too thick to understand the message. I've already been in contact with my local real estate group and will be meeting them in a couple of weeks. 

In the meantime, if anyone has any recommendations for books on locating, inspecting, and buying small (2-4) MFRs in the local market I'd love to hear them.