All Forum Posts by: Chris Mackey

@Theo Hicks Thanks for the reply.

1. Unemployment has decreased over the last 5 years, but the rate is 1.3 points higher than the state average and 1.5 higher than the national average. Your thoughts?

2. The population has increased by 5.5% from 2010 to 2017 according to census data.

3. I'll be honest, I'm not sure who my target demo is. 44% of the population is over the age of 50. So, possibly retirees on a fixed income, but I don't feel they'll be looking for a 2 family, which is what I am investing in. I would think that demo is looking for amenities like you would find at a condo or 55 plus community. I may need to rethink this part.

4. Where do you find this information?

5. I didn't find a lot of info on this.

6. 

- The supply of multi-families aren't increasing due to building, but there are a few on the market in this town.

- Currently there is a 78% occupancy rate, which seems low. I was not able to find an occupancy rate history.

- The current median rent is $1267 which is my sweet spot. Unfortunately I was not able to find historical data.

- The median income is $60535 and my yearly rent will be $14400 which puts me well below the 30-35%.

What demographics and statistics do you look at before investing in a market? Ie. population growth rate, income to rent ratio, vacancy rates, etc.

What ratios and percentages do you require in the above or any other demographics before concluding the market has potential?

@Aqil Dharamsey my tolerance level for headaches is somewhat low due to me being a first time investor and also it being a state away from where I live. 

Initially I'm ok with a little less ROI or cash flow if the area has a more stable/reliable tenant pool.

@Aqil Dharamsey thank you for your response. Do you feel any of the surrounding areas are of a better value? My partner suggested Fairport, Pittsford, and Penfield.

Hello BP, I’ve been looking at multi family listings in the Rochester area for long term buy and hold rental units. I am looking for feedback from members that are currently in that market as it relates to what areas are better/worse, how is supply and demand of units, and overall general thoughts on Rochester. Thank you.

Hi BP members,

I will be taking on a partner in an upcoming deal and am looking for advice on how to structure the partnership where we are protected from each other.

Our concerns are that we both have things we are involved in outside of this upcoming deal. We both own property and businesses that we are not partners with each other in. What we want to avoid is having a legal issue with one of our individually owned ventures that a judge or lawyer could tie in to our jointly owned property.

Is this even possible and if so how would it be done?

Originally posted by @Jerome Morelos:

What about a property manager? Are you managing it yourself? Even if you are, I would still include that just in case you decide to outsource it in the future.

I have not factored in PM as I will be managing the property. If I were to add a PM to the equation I would be at roughly $0-$100/mo cash flow.

I am currently analyzing a single family home as a potential buy and hold deal and am looking for further input.

Here are the important details:

Price: $160000

Local Comps: $200k-$220k

Down Payment: $32000

Closing Costs: $5000 (estimated)

Rehab Costs: $15000-$20000

Monthly Rent: $1800-$1900

Mortgage: $1254 (includes principle, interest, property tax, insurance)

Vacancy 5%: $90

Repairs 10%: %180

CapEx 5%: $90

Cash Flow: $186-$286/month

I am still new at this, but came up with a 3.9%-6.0% COC return. While not great compared to other investment vehicles the potential ARV is appealing to me.

Is there anything else I should be factoring in, and if not, your thoughts on the deal?

Hello,

I am new to this forum and real estate investing. I have been doing some reading and feel that real estate could potentially help me reach my goal of financial freedom so that I have more time to spend with my family. 

After giving the idea some thought, I also felt it was a good idea to review my current stock investments, their performance over the last few years, and the overall stock market return since inception to see which strategy (stock vs real estate) would be the most beneficial option for passive wealth generation. At the end of the day, I want to make sure I am making the best possible decision for my family.

The S&P 500 return since inception is in the 10% range without adjusting for inflation. I feel this is a good benchmark to use to compare to investing in buy and hold real estate. 

With that said, I have ran some different scenarios and feel as if I am missing something when comparing the 2 strategies.

Below is what I came up with.

A recent property deal (a small apartment)  I used as a comparison was this:

Purchase price: $140,000

Approximate value: $155,000

Reconditioning: $5,000 - $10,000

Down Payment: $35,000

Annual Appreciation: 1%

Approx. Positive Monthly Cash Flow: $225 (after deductions for principle, interest, insurance, tax, HOA, 10% of rent for maintenance, 5% vacancy)

The numbers over 30 years I came up with were as follows:

Property value at 1% appreciation: $209,000

Mortgage balance: $0

Positive Cash Flow Accrued: $81,000($225/mo x 360 months w/ no add for rent increases. Not sure best way to figure that)

Initial Cash Investment: $42,500 with upfront reconditioning costs

Using the above numbers my investment would give me all the equity ($209,000) plus the 30 years of positive cash flow ($81,000) for a total worth of $290,000.

I realize I am not factoring the tax benefits, but I am not sure of a good way to do this.

Stock Market Investment:

Initial Cash Investment: $42,500

Rate of Return: 10%

Value After 30 Years: $741,600

As I said, I feel as if I am missing something. I feel that there shouldn't be such a large gap between the two returns ($741,666 vs $290,000).

What am I not factoring?