All Forum Posts by: Deric Lamphiear

Right now is a great time to buy in the West Central neighborhood.  There is about 7 months of inventory on the market compared with 3 or fewer months of inventory for the rest of Spokane.  The property values have increased around 9 percent compared to this time last year.  There are pockets with fixed up homes and pockets with run down homes.  I think you are right in that there are some good deals there, but I wouldn't classify it as "up and coming." It is going to take a long time for all of those vacant and run down homes to be bought and fixed up.  Also, more than 50% of the homes are rentals.  

The name "felony flats" came from the late 80s and early 90s - A LOT has changed since then.  If you look at the crime stats for Spokane you will see that the crime in West Central is on par or less than most other areas in Spokane.

Good Luck with your offers!  

Welcome Joe!

You will find a lot of great people on this site.  The information and advice is unparalleled.   

Invest well!

Deric

In my opinion, single family rentals are very good investments.  Even higher end single family homes are renting well in this economy.  When you talk about desirability of rental properties, single family homes are at the top.  Would you rather live in a single family home or a duplex with noisy neighbors next door?  Also you can sell single family homes a lot quicker than you can multi-family.  You do have the problem with vacancy if you don't have the reserves, but what happens if you get a renter in your duplex that keeps pushing good renters out?  Again, both can be good investments.  A good deal is a good deal.  

Right now you should have no problem keeping a property rented if it is in good condition.  So I would use 5 percent or less - maybe 3.  Appraisers use 25 percent!  At some point vacancy rates will go up, but right now the rental market is strong.  

Spokane is my area of expertise and I think you can do a lot with 150,000.  I am sorry, but I can't recommend other cities because I don't know.  You might check out Wenatchee and Yakima.

Your capital expenditures is going to depend on the property.  There is no number that anyone can give you.  I would expect to pay more for a 1900s home than a 2000s, but who knows?  Was the roof on the 1900s home replaced because of the last windstorm?  New siding?  Fully updated?  Are you planning on keeping it for 20 years or 2? 

Hi Noel,

Here are a few things that I would consider in your situation:  

1)  2-4 plexes in this price range are available, but not in the best condition.  Typically you pay 25% more for a duplex than a single family home - you get more rents for a duplex, but you also have a larger investment.  Depending on the home and the area, you can find good returns for single family homes.  One of the advantages of having more units is that your vacancy rate is less likely to be at 100% at any given time i.e., if you have a tenant move out of a fully rented duplex, you still have some rent coming in; if you have a tenant move out of a fully rented single family, you have no rents coming in until you find a new tenant.  Also, insurance is typically lower for single family vs multifamily.  That being said, single family homes on the 150 range are not staying on the market very long.  Having cash helps a lot, but you still have to be ready to make an offer as soon as the property comes on the market.  

2)  you mentioned that you are going to refinance in the "near future"  what does that mean exactly?  Have you talked to a lender about this?  If for example you are not able to refinance for 1 year, interest rates might be at 5.5 or 6 percent instead of your current rate. 

3) Your Cash on Cash return is going to vary based on your ability to obtain financing and favorable terms. Example: You invest 100,000 cash in a property with 10 percent CAP rate, so you are getting 10,000 per year. Lets say that you have the same property with with only 30,000 invested and pay 5% interest on the remaining 70,000 loan or $3500 per year. Now instead of making 10,000 per year, you are only making 6,500 per year, but your return on investment is 21%. Being able to get a higher cash on cash return is entirely up to your situation and how cheaply you can find money.

4)  You have 10 percent for capital expenditures.  What do you need to do to the property?  Does it need a new roof or some other major improvement?  Typically it is better to keep your capital expenditures low, as capital expenditures have to be depreciated over time instead of deducted.  

5) in my opinion your vacancy rate is a little high, but that depends on the property.  Before you invest in a property I would ask for the schedule Es for the last couple years.  This will give you a much better idea of what to expect in rents.  Every real estate property is unique - it is difficult and financially dangerous to make assumptions.   

I hope this helps!

I am not going to say that one or the other is better.  If you are looking for great deals in this market, you are likely going to be looking for homes that need a little TLC.  Right now in Spokane, there is about 3.5 months of supply on the market.  Good deals don't last long.  I think you are taking your time and getting different opinions - which is good.

I think a good next step would be to sit down with several lenders to discuss options.  Think outside the box, just because you can't get approved for traditional financing right now, doesn't mean you can't invest now.

Thank you for your welcomes!  I have already found some great people on this site.  I'm here to offer my skills in anyway that I can.

Here is something you can consider:  Purchase a rental property, fix it, and rent it out.  After a year or so, you will have established income and can take a loan secured by your interest in the property.  Then you can use that money to finance your next property.  

You can also find properties that offer owner financing.  Feel free to contact me if you would like to go over some of the numbers.

It really depends on what you mean by "quality rental." Do you want a home with a high cash return? Are you investing for appreciation and tax write-offs? Do you want a turn-key rental? How are you going to be financing?

There are certainly rental properties in that price range around Spokane. Perry is desirable, at least in part, because of the character of the older homes - with that is pre-1900s home maintenance; Logan is great because of Gonzaga and Moody schools; Hillyard and West Central Neighborhoods have good value rentals with a little higher turn-over rate. There are great rentals all over Spokane, just depends on your specific situation.

Since you are in Spokane, you might drive around some of those areas and see what kind of homes are there.

Davis Carpentry is reliable and does good work.  Bob Davis is the general.  Feel free to contact me for more info.

Hi Everyone,

I am a newer Real Estate agent in Spokane who wants to work with investors to develop strategies to further their investment goals.  I have a background in Law, Real Estate Management, and I know this city inside and out.  I look forward to networking with the BP community!