All Forum Posts by: Account Closed

Love the enthusiasm - Michael, we spoke on my post but I just came across this. I'll be working at a tech company starting in May. I'm looking to set aside some cash every year and funnel it into deals.  That being said, to network with someone getting out of the 9-5 and is dedicating their day to deals is something I'm looking for since I'll only be free nights and weekends.

My goal is  to build a network in the Phoenix. I'd like to connect with both you @Michael Martinez and @Andrew LeBaron

@Chris Mason

Thanks for the break down on the depreciation write-off! That was something I was overlooking in my analysis. Also I appreciate the delivery..sense of humor and good info.

@David Faulkner Very good points in there as well much appreciated. 

@Michael Martinez Awesome! I'd like to connect with you and talk strategy for investing in the area. Are you typically looking in the central phoenix area?

@Jeff B. 50% taken out is assuming mgmt costs.

@Anthony Gayden Good point! 

Another thing to add - to pay those notes off before 30 years cash flow is a necessity. 

Hi all! 

I know what you all are thinking.."investing for 0 cash flow?" but looking at the current market in my area that's how the numbers seem to work. 

In my area, Phoenix Arizona (specifically Tempe, a college town) I'd be extremely lucky to find a 3 or 4 bed for 150k that needs work. Now, with a 30k rehab totaling 180k I'd be looking at rents around 1800 per month. Just to note, I haven't yet used the driving for dollars method which may change my outlook. (I will be doing this when I'm closer to buying)

So it looks like I'm just barely making that 1% rule of thumb marker. 

So for a easy example lets say:

Property: $180k 

Mortgage: $990 

Monthly rent at 1.1%: $1980

Annual income (minus 50% as a rule of thumb): $11880

Annual MTG Payment: $11880

Net Annual profits: $0

So here at 1.1% I'm breaking even, assuming 50% going to vacancies and expenses.

My long term goal isn't to cash flow necessary in the short term, but to have ~15 properties paid outright in 20 years while I work. 

That being said, would you recommend this as a model moving forward? Is that break even margin too close that I could actually move into negative cash flow?

Looking at 200 dollars negative cash flow for one property isn't a huge deal while the note is being paid down but 10-15 properties gets into the 20k-30k losses per year. Yikes!

Other considerations - were nearing peak market and these properties could go through a correction leaving my early investments underwater and rents lower adding to the potential for negative cash flow.

Thanks!

@Nicholas Lohr Thanks for the break down on your first property! so much good information in there. Quick question, when you do the cash out refi, that replaces the original mortgage correct? You're not generating a 2nd loan right?

So in your example that cash-out refi replaced the original note and since you have forced so much equity into the deal, you walked away with 90k and had the original note payed off? 

Thanks!

@Charles Elmer Awesome! Great advice. I'm currently living in Tucson, but moving to Chandler in May to take a job. I'll be looking to invest in both the Phoenix area and the Tucson area in time so I'll be sure to look into airbnbs in both areas. 

Congrats with the success with your rental!

@Charles Elmer

 That's a huge tip thank you! Is it just a game of finding a good lender in Tucson then? Or creating other areas of income to help build up the Airbnb portfolio. 

@Nate T.

I love those ideas! I've toyed with the idea of airbnb - maybe that's something I'll spend some time looking into. 

I wanted to start as owner occupied to take advantages of the low money down. A good model could be follow the BRRR model except look to airbnb as renting. I'll need to spend some time learning from airbnbers in the area.

Thanks, 

@Doug McVinua thank you for the information! I will definitely that advantage of that..if something pops up that interests me I will be sure to contact you. 

Thanks