All Forum Posts by: Christopher Malone

I think I answered my own question after reading my post. My fear is pretty much every conservative investors fear...

@Anil Samuel @Nilesh Makhija These are some great tips. The pyramid structure is the structure I plan to use in by business as well. I will definitely add (Nickerson_William_-_How_I_Turned_1000_into_Five_Million_in_Real_Estate_in_my_spare_time) to my book collection. I will be buying low income multi units, my only concern was purchasing a  property and getting in over my head will rehab cost. Most of the multi-units in my market were built in the 1920's. Some were well kept, but are in rougher areas, while the not so well kept are in my target neighborhoods. Any suggestions? 

Good evening,

I was checking out www.padmapper.com and looking at units currently for rent in my area, as well as the amenities they are currently offering. I have seen some units just posted today, and some that have been posted for 19+ days. Before I pick up the phone and start calling some of the local land lords in my area, I would like to know how long are some of your rentals sitting vacant? I want to get somewhat of an idea of how the Cook County market is performing with rentals. I am also interested in how Section 8 rentals are performing as well. 

Thank you in advance!!

@Derrick Craig 

Thanks Derrick. I've only found  2 so far. 1 was listed at 60k and put under contract almost immediately. The 2nd is 65k in a rougher neighborhood, and would need a ton of work. Far more than what i would be ready for. The sub 30k idea probably will not work for 4plex's/flats. If I did pursue one of them, the repair cost could easily get up in the 100k range. Rehabbing a 4 flat for less that 200k would still be better than buying 1 retail, as those prices are 275k and up. At least from what I have seen thus far.    

I recently posted what my idea of a  "Good" buy and hold deal looks like. 

What are some you your strategies for buy & holds? When analyzing, when do you feel "the calm", right before you pull the trigger on what you think is a good deal?

@Michele Fischer Your correct Michele. The multi-units I have seen on the MLS are a disaster, but they are in working class neighborhoods that are clean in well kept. In the low income neighborhoods I am farming in, these areas are far and wide, but they do exist. Some are 20k not because they are a complete wreck, but because of the bad neighboring areas that keep people away from buying there. The banks are sitting on these properties and the wear and tear kicks in.

As far as living in them, this is an option that I am considering, at least for 1 year. If I do decide to go he 203k route, I would probably go bigger. By bigger I mean 4 units. If I find a deal that is worth using the 203k ace in the hole, i will take advantage of it. 

Are we talking expenses such as month to month, or the unexpected expenses that occur annually? All of my month to month expenses will be covered by my gross income. I figured about 5% of the gross income per month would be stored for the unexpected.  I am currently reading the Section 8 Bible to learn and avoid as many expenses as possible. 

@Matt R. Hello Matt, yes I will be self managing, at least until my business scales enough where I cannot continue to. I will be using a Conventional Investment loan with the community bank that financed my car. But... The more I research 203K loans, the more my interest is peaked in taking this route, as i currently do not own a home, and this would be my 1st :).    

So I took some time to evaluate my strategy. I made a couple of changes, but for the most part, I think I may have a plan...

I am going to buy and hold my first property very soon. (the search has already begun) I a looking for multi-unit properties between 20k-100k max. I am willing to do a rehab is necessary, as i will need the experience eventually. I have found a few working class low income neighborhoods that I am interested in, and i have be very conservative when crunching numbers on what i may consider a good deal.

$100.00 per door cash flow after all expenses are covered, is what I would consider a great deal (@Brandon Turner ). To add to this strategy, the $100 per door cash flow has to be from the property operating at the next lowest rent rate offered in the area. To elaborate on this, in the area i am looking to farm, a 3/1 would rent for around $1100. A 2/1 would rent for about $900. My potential 3/1 units have to produce at least $100 per door at $900 rent in order for me to take the next step. I have thought that this may be too conservative of an approach, but I won't find out until I make offers.  I personally feel that this strategy would also give me more of a competitive edge with my units.

I would like to get feedback on this section first before I bore you with the next section of my plan. Let me have it, and thanks in advance!   

@Brie Schmidt - Thank you. I have an idea of what direction I would like to take. I really appreciate you taking the time to respond.