All Forum Posts by: Dan Mumm

Great tip @Bill B. on the vacancy timing!

Hey Richard, this is a little general so it will be hard to help without more specifics. Here is what you will need to run numbers:

Price, Rental Comps (be conservative), age of properties, average vacancy (look at the rental comps and see how long their average DOM is, add more time for turnover), property management expenses, age of components of house (used to calculate cap-ex), any HOA fees, taxes/insurance/financing costs.

If you can get estimates on these you can run them in the BP rental property calculator tool which will tell you everything you need to know.

Hey @Ryan McDonald ,happy to help here. Will message you my contact info.

Hey @Dan Schweit, I have a couple of C-class long term holds here in the NE. I invest in other markets in apartment buildings. 

There's some good info in here. If you are back-filling your reserves with the cashflow, then I wouldn't really consider this $587 to be free cashflow. This probably was in reality a capital expense you incurred last year with the rehab you did. In this case, it is sounding like these properties may not be as big of cash cows as they initially seemed. This may be good reason to consider selling. I was giving my recommendation to hold assuming that the $587 was completely free cashflow after all expenses.

The biggest question mark here IMO is the age/class of the property. Cap-ex is probably your most variable expense and this will correlate closely with the age. As others have mentioned, I wouldn't assume just a flat 8% for ppty mgmt, be sure to CLOSELY look at leasing fees, start up fees, etc. I usually end up at 10-11% when factoring these in.

This being said, I disagree with a lot of the sentiment above. $200/mo free cashflow on a turn-key rental in today's market is a FREAKING GREAT return, ESPECIALLY for a first-time investor just looking to get their feet wet. I'd buy that in a heartbeat, ASSUMING that the capex/repairs/ppty mgmt costs you estimated are true, which I have a feeling they may not be.

Hey Dan, I live in Vegas and am an investor myself. Yes, you can cashflow with 80% LTV in Vegas still, but the returns will be low. In general if you can find a 3-4% cash on cash with 80% LTV in Vegas with anything B- and above, buy it immediately. If you look at C/D class, you can find 6-8% cash on cash from what I'm seeing.

@Jim D. and @Phillip Dwyer, I would say investing in rentals in BC would be similar experience to Mesquite, Pahrump, Laughlin, etc. Similar tenant profiles. Lot of veterans, older people, those who want to be away from noise/hustle/bustle/, etc. Good for long term tenants, but keep in mind the rental market is MUCH less robust. You will definitely experience higher vacancy rates as the percentage of home ownership is much higher. I think it's a good idea to consider it, but it might be harder to pencil out due to higher vacancies and less rental demand.

Love all of the comments above. Completely agree @Account Closed. Some people get away with it, but its a very high risk due to regulatory changes and not a sustainable long term plan. It's illegal in most of the city and only getting more bad press. The only areas where it would be do-able would be in high crime/D/C areas where you probably don't want to own anyway unless you are an experienced investors and the returns are off the charts.

@Travis DeForge , this type of return in LV (although his aren't here) just depends on the price point, asset class (C/B/A properties), and when they were purchased. For an average $250k home that you could spend $55k on (20% down plus closing costs), you could expect a 3.5% cash on cash in the CURRENT MARKET in a decent area which would equate to $160/mo in free cash flow. So, $587 for 2 isn't crazy if he bought them when the prices were down back in 2010-2011. Let me know if you want more info on investing here, I'm a local agent and investor and I service the surrounding areas as well.

@Jonathan Ard , my advice would be to hold, and start bankrolling your next investment from the cashflow you're getting currently, combined with income you are able to bring in from other sources.  Personally, I roll all of my cashflow from my investments into my next investment and never touch them for anything other than servicing the property. This is assuming this $587 is free cash flow after expenses (management, taxes/insurance, capex, repairs, vacancies, etc). A lot would depend though on how much you spent to get the $587/mo. Refinancing/line of credit is probably not going to bring enough capital.