All Forum Posts by: Daniel F.

Hey Elbert - can you point us to some towns or areas in Indiana that you recommend? I'm in Chicago and would love to hear more.

@Brie Schmidt

Also how is the monthly P&L being calculated? I see you're taking the Purchase Price loan amount, dividing it by 100K and multiplying it by 500? Thank you!

@Brie Schmidt 

Hey Brie- looking at your Recently sold properties spreadsheet. 

In general have you found 5% for maintenance and 3% for capex to be sufficient?

 Beauty of real estate! Different ways of skinning a cat. 

@Derek Luttrell I think it depends on your time horizon. If this is a property you're thinking of buying and holding for the long haul, maybe worthwhile on doing the 15 year route and sacrifice that marginal cash flow you'll get today while building up equity way faster. 

If it's more like a 5 year hold, you need cash today, and think that extra cash flow will help continue a goal in mind of buying more properties, then 30 year maybe not be bad either. 

Point being, a lot of people forget to factor in the equity piece and if you're buying this thing for the long, 15 year isn't a bad idea if at the end of the day your monthly cash flow is marginally different and won't have an impact on your bottom line.

@Derek Luttrell 

I'm a strong believer in that it never hurts to own condos. Little to no time effort required and always will rent out in a breeze. That being said, it all depends on your expectations on your return and the type of investment you are looking for. You may not see as much appreciation as you potentially would see in say buying a C class multifamily and turning into a B, but that requires time, money, sweat. A condo is a great way to have a tenant pay your mortgage off for you and build equity. 

If a condo is slightly positive on the cash flow or even breakeven with a 15 year note, I say that's a win. You're 25, imagine you are 40 years old and you have a fully paid down condo you own outright that your tenants paid for. Of course that comes with the occasional tenant turnover, maybe getting a new fridge in there, etc. but that's easy. Of course can always refinance as well to pull out equity and roll that into another deal when time is right.

As you mentioned lenders look for that tenant-occupied metric, along with that comes with the fact that majority of high rises also have their own restricts on rentals, i.e. the building I live in has a cap at 10% rentals and owners need to get on a waitlist.

Big thing to consider is your availability to attend to maintenance and tenant needs. With a condo most likely won't see that appreciation, especially with where we are in the cycle, but it's a relatively headache-less investment as far as time commitment and operating expenses goes. Sure you may have to replace the fridge once in a blue moon, but you're not dealing with HVAC or plumbing issues. At the end of the day a) do you have cash reserves for an entire building b) do you have the time availability to DIY property manage?

Hello all,

Does anyone know of a template or way of determining what the best approach is for financing with all things considered including PV of money, etc.?

My basic scenario is this: 

First Option:

30 year mortgage

Cash flow of $168 a month

Second Option:

15 year mortgage 

Cash flow of $162

Thanks!

Hi all,

I passed my real estate license exam in Illinois over the recent weekend. I just received a solicitation via the phone from a brokerage trying to get me to join them. He found my information online showing that I passed. I'm pretty certain this is not legal based on the recent material I just learned, can anyone confirm this? I'm having trouble point to a specific rule speaking to this topic in the Illinois Real Estate License Act of 2000, but do recall there being a practice exam question mentioning how its illegal for a broker to be recruiting right outside the exam center after they take the test, which in my mind is the same thing here. 

Hi Lumi,

Thanks for the reply. As noted in my original post, my intention isn't to do this full time due to already having a career. I mainly got it for transactions related to family owned assets, and of course if any friends or family ever need my help with anything.

That being said, I estimate on average of 4-5 rental transactions a year and the one off purchase/sale, is it worth paying 50% commission? I completely agree in what you mentioned, if my plan was to jump into being a real estate agent full time, I by all means would be looking to join a standard full service brokerage for purposes of learning and obtaining leads.