All Forum Posts by: Kevin C.

Currently have a few rentals in the North Dallas area and am looking to do the long distance landlording thing in St Ann, MO.

Why St Ann?

Wife and I are from MO, been in North TX almost 20 years now. Wife is from St Ann, her mother and sister still live there. She has other family members near St Ann and we have friends in the St Louis area too.

We know the area of St Ann near where Northwest Plaza used to be and would be focusing on the area South of the Rock Road, West of Ashby and East of Lindbergh.

We're working with an investor agent that knows the area, just wondering if anyone has rentals in that area and would share their experiences.

Specifically, things such as DOM you're experiencing when you turn a unit over. From comps I've seen, DOM is all over the map, from a few days to a couple hundred days.

There are a lot of 2/1's in the area, if you have any 2/1's, how have they worked out for you? 3/1's seem to bring maybe an extra $75 to $100 a month, but then garages and/or larger lots don't seem to add much in the way of rent - is that what you're seeing?

We'll be looking at several houses next week and would like to get a feel for what is working for others in that area. We'll be looking at homes listed in the $25K to $50K range in areas where rents are in the $750 to $900 range.

A lot of these homes are distressed and/or REO's.

Any input would be appreciated.

Thanks,

Kevin

In response to the original post, the Chase Ink card is a great card to use for business purchases. The Ink Plus card, while it has an annual fee gets the edge for me since it earns Ultimate Rewards points which can be transferred to travel partners. Those points have a much higher value when used with travel partners.

Look at the Chase Freedom card too, it has rotating categories that earn 5 points be dollar (limited to $1500 in spend per quarter). The Chase Freedom card has no annual fee and earns Ultimate Rewards points, so those points can be transferred to the Ink Plus card, then to a travel partner.

Points earned with the regular Ink card are not Ultimate Reward points, they are cash back points.

Used properly, Ultimate Reward points are worth far more that .01 per point.

As an example, wife and I are flying RT - DFW to STL on AA for 9K points + a $5 fee each. Ultimate Rewards points made it happen.

Those 9K points were probably earned with no more than $3K in spend due to bonus points achieved by using the rights card with the right spend, putting the effective return at over 10% (RT DFW to STL tickets run $300+).

Credit Cards, used wisely, can achieve pretty decent returns on your spend - well beyond the 1% rate advertised, but that's a whole other discussion.

Just realized that in your example, since you're getting 5 points per dollar on the initial spend, then you are correct, the effective return would be 6.25%.

$400 in spend @ 5 points per dollar = 2000 points.

2000 points for a $25 card would then equal 6.25% return.

Receiving a $25 gift card for $20 in rewards points (typically 2000 points or $2000 in spend) would be an effective return of 1.25% not 6.25%.

2000 x .0125 = 25

2000 x .0625 = 125

I played the 0% game for years back when no fee offers came all the time.

At one time I had well over $100K of the banks money earning me 5% or so.

I wasn't into RE at the time, so I'd just move the money into high yield accounts and earn the free interest.

I have several Chase cards that send balance transfer offers every month. Generally they are 0% for 12 months with the fee capped at 3 or 4%.

Have an RBS card that sends me offers capped at $99. I've used that one for large expenditures I want to spread out over time. I charge the purchase to a Chase card for the points, then balance transfer to RBS for $99 fee, that way I get the points and the 0%.

There's no need to cancel a card since you'll get the offers over and over again. I get them like clockwork on the RBS card, a couple of the Chase cards and a Citi card.

I still play the CC games, charge everything I can to earn points, then pay the card in full every month. CC points, If you know how to use them, are quite valuable for flights and some hotels. With the right cards, you can earn points at 3 to 5 points per dollar spent. I routinely pick up certain RT flights for 9K points, and those points can sometimes be earned with less than $2K in total spend.

Play it right and the banks pay you to use their cards - I've done it for years.

Slip up though an it'll cost you dearly.

I use Chase's QuickPay as well. Tenants do not have to a Chase account to use the service. Money is in my account quicker when they have a Chase account, it takes a few days when they don't have a Chase account.

Either way, it works, and it's free.

Down side is the delay in getting funds from those tenants that do not have a Chase account.

Bought my first rental 6 years ago, at age 50.

Got into competitive ballroom dancing at 54.

Age is just a number.

Thanks for putting the Podcast together Joshua Dorkin and Brandon Turner! Already subscribed for future episodes.

Edited to add: And Marty Boardman!

FatWallet.com has a Finance thread where a number of investment topics pop up. http://www.fatwallet.com/forums/finance/

MrMoneyMustache.com is full of interesting finance/investor based threads.
http://www.mrmoneymustache.com/

Enjoy!

My first deal was a new SFR I purchased to rent to a family member.

Paid 155K, borrowed 124K @ 6% for 30 years.
P&I on loan was $743.44.

I rented it to a family member for $1200 a month.

Using the 50% rule, subtracting $600 for expenses left me in the hole $143.44 each month. Not the best investment huh.

It was a loser for sure, but it was bought for two reasons, one to get me off the sidelines and into the game, and secondly, to help a family member.

Fast forward 5 years, the family member is no longer in that home (but is in another investment property I purchased just over a year ago).

Home is currently rented below market to a fine family that has been there over a year now. Current rent it $1395, but market shows I could get closer to $1600 for it. Current tenant is first rate, pays on the 1st like clockwork and keeps the place immaculate.

I've paid extra on the home and have the principal balance down to $97K. I'm in the process of refinancing this property with a new 30 year fixed rate loan @ 4%. The new payment will be something like $477 (P&I only).

With the new payment of $477, the 50% rule will now look like this:

Current rent @ $1395.
50% for expenses comes to approx $700.
Subtract $477 for the note payment and it leaves me with $233 a month in profit.
I manage the property myself so my expenses will probably be closer to the 40% level, leaving me an additional $139 a month in profit.

I have 3 rental properties today, two are rented to family.
Would I recommend taking this route, probably not, it's full of issues, but I knew it going in and was willing to deal with them.

In the end, it got me in the game and that's what counts.
I had the resources to carry the properties losses and knew it would just be a matter of time before they would become profitable.

All my investment properties are in very desirable areas.
None met the 50% rule when purchased, none even met the 1% rule. I've only purchased properties I would personally live in.

It's been slow going to get to where any of my properties could turn a profit, but they are there now. I know there are quicker ways to profit with RE, but this was the approach I was most comfortable with.