All Forum Posts by: Darius Kellar

@Keyonte Summers

Informing is not bashing. If you ever start investing in real estate you will find out how the banks highlight on small loan deals, which I only partially explained in a previous post. Also, when an investor starts to use commercial loans to by 40K small deals in real estate the fees are typically a bit more. In many markets rent can define the value of a property. To get large portfolios in low value markets only using one's own cash (without borrowing or flipping) and waiting on rent to come in once a month can take a substantial amount of TIME, which Bigger Pockets fails at detailing. When you listen to the podcasts it is popular to here the amount of rentals someone has and the money coming in but it is un-popular to here how long it takes to do the rehab or just to get inspectors to approve of the work. 

@Greg Scott 

Everything you said is correct. Our associations special assessments can increase over 3% in one year which can be max up to $702 in my case. 

When I was doing my research I found that many associations had different rules on how many rentals a landlord can have. Ours was no more than 2 units per investor. 

Many people will say that 1 unit condos in associations are not great deals because of some things like the association fees, limitations to adding to the structure and stagnant values. This is not true for all condo associations.

After buying a 1 unit condo as an investor I can vouch that for small investors sometimes these are excellent deals. The association that I am apart of charges a $230 dollar monthly association fee, which covers ALL exterior maintenance (except the doors and windows), water expense, gas expense, snow removal, lawn care, trash removal, repair on common lines like sewer/gas/electric, and all liability outside the structure. Landlord insurance was 14 dollars a month and property taxes are 45 bucks a month.

Pricing for the condos has already really jogged up. I’ve seen them in the recession for 20K and now they are selling at 79K, which is pretty good considering all the units are alike. The tenant only pays their electric bill and throughout the association rent ranges from 850 to 1050 a month. Keep in mind unlike a traditional single family investment, you will never have to worry about the expensive repair cost of a roof and broken piping because the association covers it.

Many associations are not FHA approved which means a home buyer will have to put down 20% to purchase it or just use their cash. After 20 years of the association being in business and just 6 months after I purchased my unit, the association were just 100% approved to accept FHA loans. Which will increase the possibility of the values to go up because they are easier to purchase with just 3% down.

I understand that your original goal was to just generate cashflow. However, Between the 40:15 to 40:30 point in the podcast you stated "this time next year you will have over 2 million in real estate. Because you are working with banks to Cashout Refinance for bigger and better deals like multi family units." With that being said, my previous response in a nutshell was only referring to making that move earlier in the timeline because of the fact the market was rising and to save on time, no pun intended @Ashley Hamilton. And because I was listening closely, at a turning point in the time line you referenced to purchase multiple units at the same time which means you had the boat going long before you got to the 10th unit.

I have experienced a similar situation from being a night janitor for nearly a decade while investing in cheap real estate. In which I talk about and blog on what not to do because the time passed up is not worth it. Elaborating more, I was a banker at quicken loans for a short time and a investor now for 5 years. Doing cash out refi's on properties that only appraise for 40K will cost roughly 4K each (10% of the loan), which you can get a bigger bang for your buck by cash out refinancing higher value properties.

For anyone who is looking for 1k properties there are still opportunities like that now. There is just better markets to do it in so that you get paid more for your time. Here is an example of a 3K purchase property that was sold for 93K just last week. And there are definitely better deals than this in the Detroit metro area. https://www.zillow.com/homedetails/14-S-Jessie-St-Pontiac-MI-48342/24410481_zpid/

@Keyonte Summers

@Keyonte Summers

@Account Closed

This could help you @Maria Luna . https://www.biggerpockets.com/forums/88/topics/713345-my-thoughts-on-podcast-331-detroit-rentals-with-ashley-hamilton

I am from the Detroit metro area but I invest in Pontiac. The reason why I invest in Pontiac over Detroit and Flint is because the rent margins are simply not high enough for what you are paying for and putting time in. As well as the equity upside.

On the podcast Ashley describes what the appraised value of her 10 properties were, which was 469K total. She stated her all in cost were roughly "20K" per property. So even though she purchased many of the single family's at roughly 2500+- dollars or practically nothing. She still had to use her time and money to repair everything. Not including each unit was roughly worth 40K in the end which is not much.

This is a good example of how the value of the property can be a big determinant of how your rental business will scale in the future. Especially for people who are relying on equity value to grow. When I bought my second rental property is when I realized that, so I started aiming for properties that had alot of equity upside, which worked out very well. I think that Ashley did well in the short term because she was able to generate some cash flow. But I feel that she should have focused more on bigger markets with more equity upside alot earlier like maybe at her 3rd property instead of her 10th.

In my opinion this is just not worth it unless her focus was to remain as a small investor, which I don't think so because she mentioned about scaling up to 30+ rentals. My advice to Ashley would be to spread your horizon and look into bigger markets other than areas like 8 Mile Detroit. Atleast Downtown Detroit where the rent margins and equity upside is high or even has potential to be high. 

Imagine if 1 of her rentals had 100K in equity vs 40K. That would be a better situation. If not than explain how ?

@Ashley Hamilton

If someone wants to bring in a dog I would charge 100 dollars a month extra. This will cover a insurance increase as well as compensate you for this risk of having the dog as a tenant. Defining weight, and so on is extra work for you, that I personally would not do.  I would tell the tenant 100 dollars a month take it or kick rocks with open toe sandles. 

@Taylor Howe

@Aaron Foye If you been living there for 5 years. I assume  you bought the property when the market was still down. This is exactly why I do not not buy multi family homes. for the 131K tied up into 1 multi family home for 5 years. Could you have made more money buy getting single family homes ? 

I don't believe most of the time multi units are the best case scenario because of how large they are. For example that is more paint, more carpet or flooring to cover which increases time and money. 

In the time that it took you to rehab it and with the amount of money spent. Could you have made better moves?

I had the opportunity of buying mutli units. And I am happy I didn't. For the same money and time I would spend on 1 multi unit. I bought 3 single family homes and a 1 unit condo. 

SHE HAD 102 YEARS TO BUY HER OWN HOUSE. PLUS SHE PROBABLY LIVED THROUGH 10 RECESSIONS.  LMAO

@Joe A.  Sure would