All Forum Posts by: Dan Hertler

Hi All, I have a quick question that I wasn’t able to find via BP Search:

Is there a way to find out what a house sold for during a recent Auction.com sale?

I am speaking to someone regarding an off market property for sale, and a quick google search showed it was listed on Auction.com about 2 months ago.

I would like to be armed with this info so I can go into negotiations with an idea of the seller’s built-in profit spread

TIA!

@Bill Brandt where is this magical land where no natural disasters exist?! I’m guessing by your mention of stucco and tile, somewhere out in the desert?

I agree with your assessment and it’s a mindset shift for me. Long-term, everything will likely be fine, just a painful pill to swallow after only owning for 1 year and believing I had more time on this particular HVAC

@William Walker Just curious, what do you run your capex reserves at? For my houses, I run about $75/month for capex in my model, which is usually around 6 to 7% of gross rent (usually in the $1200-1300 range in my area).

This is exactly my point though, even if I ran capex at 10% of gross rent, a $6k expense to replace HVAC in the first few years of ownership will take years to recover from, cashflow wise.

@Zee Abbas Sorry, I meant that on paper, all my properties should have a great ROI, based on their rent vs PITI/typical expense forecasts.

@Taylor L. My question was more theoretical and not tied to any current investing opportunities.

By any measure, my portfolio is comprised of "cashflowing" properties that are well over the 1% rule and hit all the common ROI targets (on paper) you'll see mentioned on BP.

And yet when I look at my portfolio holistically, I am seeing houses that are cashflow negative for years to come due to major capex-related expenses.

As I build up my SFR portfolio I am starting to ask myself: "Is the idea of SFR cashflow simply a spreadsheet myth?"

The common "goal" for SFR investing is $200+/month in cashflow, i.e. cash leftover after PITI and all expenses/reserves. This sounds great on paper, and when you get paid out by your property manager each month all is right and good in the world.

In reality, each of these houses have several "time bombs" just waiting to go off, namely roof & HVAC replacement. Build up enough SFR's in your portfolio and you're destined to be replacing one or more of these components each year. It is a mathematical certainty, as these components age out over different timelines across the portfolio. In 2 years, I have bought 7 houses, 8 doors total- and have now unexpectedly had to replace 2 HVAC units.

So for arguments sake, let’s say I’m making $200/month in spreadsheet cashflow on a given house after expenses/reserves, and reserving $75 each month for capex expense. I get a call from my property manager saying the HVAC died and it’ll be $6,000 to replace it. I bought the house 1 year ago, so best case scenario I have $900 saved for this time bomb.

Assuming $200/month “cashflow”, it would take 2+ years to make up for the difference, meaning this house is cashflow negative for the next 2+ years.

Now, I have cashflow and capex reserves from the other houses in my portfolio that can theoretically cover this expense. But when analyzing my portfolio, I have to assess each house independently to identity outperformers/laggards.

But since this will continue to happen - time bombs knocking out cashflow for 2+ years at a time, I’m questioning whether my portfolio is cashflow positive at all at this point. And will it ever be in the future?

Is all this “cashflow” showing on my spreadsheets simply a figment of my imagination?

@Christian Butler I went through a similar predicament a few weeks ago and came up empty handed. I had gotten a callback from one of my mailers- a beachfront property in Long Beach that clearly needed to be lifted to get top dollar. I posted this same question all over the place...mostly crickets. The best (and only) advice I was given was to figure at least $100k to lift the property and probably a few months timeline, not to mention permitting hassles, and dealing with LI contractors who know they've got you by the you know whats...

Good luck!

Dan 

Hi All, I am communicating with a seller who has a house in Long Beach, Long Island NY about a block from the ocean that I think may need to be lifted. This would be a possible flip (my first one) or potentially a wholesale if the numbers line up. 

Does anyone have experience with either lifting a house or buying a property near the beach in an area where others are doing lifts/rehabs? Cost estimates, permitting process, estimated timeframe to complete would be great if you could share. 

The neighboring houses on both sides are small bungalows that recently sold and will likely be either torn down or lifted/majorly rehabbed. Houses directly across the street have also been torn down/rebuilt in the past 2 years. So I am worried that if I don't lift this house I won't be able to realize it's full profit potential.

Thanks in advance!

Dan

Hi @Emily Ellis I am a wholesaler who is just starting out in NY as well. I've done some research on this topic and connected with some lawyers on the subject- would love to connect and share some ideas, maybe even JV on a deal! I'll PM you

Hi All, I am building a wholesaling operation on LI and am in search of an investor-friendly lawyer to write up my buyer's contract + assignment clause. I have heard that not all lawyers in the area are comfortable using a contract with an assignment clause. 

If you're a wholesaler doing deals on LI, I would love to hear from you about who you've used for your attorney in the past!

Dan