All Forum Posts by: Christopher Leon

I got a 30%CCR.

$800 Rent - 250 (P&I) - $171(taxes) = $379 (potential net cash flow barring additional surprise costs) x 12 months = $4548 Annual Potential Cash Flow / $15,000 = 30.32% and at that CCR there is plenty of wiggle room to account for vacancy rate, cleaning and maintenance, etc. Just depends on how he runs the business.

your accounting for the 171 a month in taxes right? I did my own calculations and yes, this seems good. Nice job! The real trick is getting this thing rent ready quickly, getting the right tenants, and collecting that dough! :)good luck to you amigo.

@Will Barnard I don't know if I am tagging correctly.

disclosure: I'm not a wholesaler and never done one. @willbarnard may be the right guy to answer this. But, as an agent myself, the first thing is don't get emotional about this. If the seller has tried to sell this thing for 130k two times for the past 5 yrs them clearly it is selling too high for the current market. I have heard from many a wholesaler at my local REIA that they usually offer about 70% of the ARV. I'm not sure if this helps, it's just what I heard. But what I can tell you is this, the seller is going to have to let that thing go for much less than 130k to get rid of it and for a wholesaler to want to buy it because they're expecting a good margin. If 130k is too high for the past 5 yrs I would be lead to believe that a wholesaler probably can't sell it for that high. Once again, I am not a wholesaler. Sorry if this didn't help. Ask Will he seems knowledgable. Good luck

I guess at a glance, this 'seems' like a straight forward deal. Then again, we don't know the area, type of property, who are your targeted prospective tenants. There's a lot I consider for myself and my clients when doing a rental. It has to fit in your style of investing and hopefully you have the ability to manage the type of tenants that are going to be attracted to this type of property.

My first question is why do you include tax assessment value? I have never seen or heard that before. Second, I guess me personally, when I consider a rental I use a total different formula, what's the basis for yours here? From what I can tell, your total cash vested is going to be around 62k (purchase,closing, rehab, barring any additional work needed) and the place "should" be worth 85k, so you'll have approximately 20k in equity which is nice! But, if the game plan here is renting, What can the place rent for (realistically?) and what's your CCR (cash on cash return)? Is this deal worth your time?

yes, that's exactly what it is. That's why you NEED to know the financials of the Association. They're great investments as long as your getting into a good complex, with a good Board, and in a desirable area.

Use a broker and find out if the complex allows rentals. They would allow investors, but may not allow rentals, which defeats the purpose, you see? Some associations have a percentage or ratio limit as to how many owners to renters there can be. In Illinois, the cut off for rentals is 20%. That's not a statewide thing, I don't think, just what I have seen in various associations. Some associations don't even care. So just look into it so you don't waste your valuable time. Also, make sure the association is FHA approved if your going to get an FHA loan. A guy I know just ran into that problem and lost a great deal just because they didn't check into it before hand. Your mortgage lender or broker can determine that for you. But if your using a private lender don't even sweat that.

as a agent myself that focuses on rentals and working specifically with landlords I think you most definitely want to use an agent, ESPECIALLY, if your not familiar with fair housing and such things. Now, could you do it yourself? Absolutely, you can save the months rent and feel proud; but, like Joe Delia said above, what is your time worth? How quickly can you get it rented? If you work with a broker that specializes In rentals, they may already have a prospective tenant lined up, it's just a mater of having them fill out the app and pay the app fee. When I help landlords rent units, I screen them accordingly so as to not waste the prospect/suspects time. If I feel they won't get approved, I tell them. Now, if they screen properly them I schedule an appointment get the app and turn it in. I run credit and then submit the prospect to you but YOU make the ultimate decision. I help my clients understand the strengths and weaknesses of the prospective tenant. You should never let someone else make the decision for you if your hands on in your business, just use your agent like a tool to help you make an informed decision. It is a preference though. Good luck.

furthermore, you should do your homework on the association first. Get to a board meeting if they allow it. Find out what's going on in the HOA with the budget, current issues, major repairs coming up, find out who the property managers are? Financials are the biggest thing! Make sure if they have amenities that the pool is up and running, and the flowers and such are well taken care of. Clear sign if the association is doing ok but you'll still need to do your investigations. If you can get info on account receivables (only in executive session) you can find out if association is having difficulty collecting dues and thus, tell you what kind of problems they're having. Also, You'd hate to get in when they're about to ask for a huge special assessment. If you get in the townhouse I encourage you get on the Board too and watch your investment from that perspective. You will be able to have some "say" when things happen in the association. Just some things to consider.

good for you McKenzie! Personally, I like condos and town homes as investment because of the amenities most of the HOAs offer. People want to live in those environments when there's a pool and all that attractive stuff. I also like the fact that the exterior maintenance is done for you. Less responsibility for you and your tenant. Depending on the tenant and the lease, can you really count on them to keep your investment looking top notch? In some cases, I think so but I rather not chance it personally. I like ease. Now of course, someone will say the HOA dues are another expense, they're too much, it lessens my cash flow blah, blah, but, if you invest in a desirable area where people want to live and there are nice amenities offered for the dues, you'll have no problems renting the unit as long as your at the right price and not greedy. SFH on the other hand, you can usually command more rent but you have more hard costs to account for as well as maintenance. I guess it's really a preference and dependent on your tolerance level. How many beds and bath in the townhouse by the way?