All Forum Posts by: Derek Luttrell

@Edward B. I like that strategy. So if a water heater is $1,500 and has 4 years left on it, that's $32/month. If a furnace is $4000 and has 6 years left on it, that's $55/month. Roof can be tough because you kind of have to take the seller's word for it's true age, but this sounds like a logical way of mapping things out. 

@Russell Brazil that makes sense. While it's certainly subjective, what is the price point where you divide "cheaper" vs. "expensive" for MFR and SFR?

Hi Everyone, 

On the hunt for my third property, I've been running dozens of properties through our beloved BP calculator. What I've been wondering is, why would CapEx be seen as a percentage of any given rent? Whether a property rents for $800 or $2,000, a water heater is a water heater, a furnace is a furnace, a roof obviously varies by size, but cost is pretty predictable, etc.

Anyway, my thinking is that....just because you stock away a certain percentage towards CapEx or repairs each month doesn't mean that you'll be safe when the unexpected (or even the expected) happens. Isn't it more about having reserves in general? Is there a widely accepted dollar amount people keep in reserves for each property they have?

Feel free to reroute my train of thought, but it just doesn't make sense to me to view these costs as a percentage of an arbitrary number (rent). How do you guys view it? 

@Wayne Brooks I'm not sure I agree. Whether it's by me or an agent representing me, the same preliminary questions are being asked. As a listing agent, I wouldn't consider interacting with an interested buyer a waste of my time. 

@Wayne Brooks I know what you mean. I'm searching for my third property, and I've used one agent to buy the first two (she's wonderful). To be honest, I just don't like inconveniencing another human being by having them scour the city with me just to see if any given property might be a good fit. At least for the first walkthrough, I find it courteous to do the first couple of steps myself. 

@Russell Brazil thanks for that--makes sense to me, since all I have to go off of is the Redfin, Zillow, Trulia etc info. I have looked up his agency, and even that goes to voicemail. 

Perhaps it could be a product of my low-commissioned price point (SFRs within an hour of my primary residence for under $150k), but one of the biggest hurdles throughout my journey so far has been finding responsive and knowledgable listing agents who have the answers I need, when I need them. 

@Brie Schmidt I suppose this could be supporting evidence for getting my own license. I often reach out and schedule showings with listing agents myself, and more often than not they spend the whole time assuming I'm an agent (one time someone even gave me a lockbox code without ever verifying who I even was.) They usually at least respond to me, and I don't like involving a buyers agent until the time feels appropriate. I'm plenty capable of assessing a deal on my own to start, but if that's against the rules, that's against the rules.

Hi All, 

What is the courtesy when you have found a property you're interested in, and the listing agent is impossible to reach? I don't like involving a buyer's agent until my own preliminary research is complete and I'm approaching certainty that I want to make an offer. Do I need to get one involved in hopes of them having a better chance at reaching the listing agent? 

I looked up the property on the county tax assessor site, and found the contact info of the owner. Is it kosher for me to contact the seller directly and ask him what I'd like to know? It's a SFR that has tenants in it currently. The listing says that the seller is prioritizing offers specifically from investors who are willing to keep the existing tenants. I like the location, price and looks of the property, so I'd like to go see it and eventually meet the tenants....none of which can be done without the listing agent getting back to me.

@Adam Meredith you are confirming all of the concerns I thought of when viewing some duplexes in the neighborhood last weekend. My findings have been that the good PMs in the vicinity stick to the comforts of Logan Square, Ukrainian, Bucktown, etc and have no reason to venture south of Chicago Ave/west of California Ave. 

If I could find a good PM who is well versed in the tenant pool of EGP, I would be much more interested. But that has proven to be one of the hardest parts of the process. 

@Adam Meredith thank you for bringing the harsh reality to life. The numbers on paper might be pretty as can be, but I haven't been able to meet anyone who has actually been in the trenches yet. The crazy part is that the listing agent claimed the 4 bedroom duplex down would get $2000/month after rehab. I then lowered my estimate from there. 

Props to you for spending all this cash on each unit and still sticking with it and making money. Do you self-manage, or have you found a great PM in the neighborhood?