All Forum Posts by: Christopher Derr

Yeah my buddy is in Des Moines and its tough he paid 90k for a condo that rents for 1100 but he paid all cash to get in.

Our rental market in the more rural areas but still 30k people I can buy for 40-60k and rent $700-800 all day.   My appreciation wont be Des Moines quality though.  

Makr sure you know the areas well... you can find 2% but its usually not where I would go.

"tax deduction trip" to check on properties also

Where in Iowa? What $ amount for properties? Certain types? Etc?  

I always wonder what constitutes "low income" and war zones.   Everyone's tolerance is so much different.  Even our worst parts of town in my area seems like the "grandma ghetto" where you can buy a $45k 2/1 house and get $700/mo.  

What kind of rent can you get on those 2/2's for 40k?  How much do you need to put into them.  


All I think when I hear Maryland is Baltimore and thats scary to someone who lives in an area that might see 2-3 murders a year for a 50k population in the 8-9 small towns in my area.

I agree your on the upper end by almost $300 from what I could find on Craigslistfor comparable rentals.  The Majority of people can purchase for far less than that rent range.  

I think you did the right thing reaching out the hospital etc.  

Did you try any of the local property management firms? Some of the ones in Mason city area have placement fees but will find renters and do all the background checks if you still want to do the monthly peoperty management.  You could try that.

Welcome from another small town Iowa guy!

Hello from Garner!  

Thanks Jason and Mike, I think we all agree option B.  Just wanted to get some second opinions.

Mike my 80% desire was 80% of BPO/ARV the BPO came back at $50k so 40k still met it. If it would have come back at 45k most i would borrow was 36k.

Property $40,0000 + $3,000 Rehab ($850 Closing) - Rent conservative $700/mo - optimistic $750/mo   (its a 3/1 I have a 2/1 close that I rent for $700 right now)


Commercial loan from portfolio lender that will finance upto 85% of broker price option of $50,000 (terms 25yr at 4.35%) as long as DSCR is over 1.25 its over so no issue.

Would you rather

A. put 20% down and finance $32,000 ($11,850 in) with $244/mo cashflow on $700 

$700/mo

- $175 mort

- $75 tax

- $56 prop man (8%) (I pay 6% because every property over 4 with them drops from 8% to 6%)

- $45 ins

- $70 repair (10%)

- $35 vac (5%) - property management is local and averages 2-3%

= $244 ($174 if you figure 10% capex, but some people only do 5% repair then, which would be $209 cash flow)

$2,928/$11,850 = 24% cash on cash

or

B. put 0% down finance $40,000 ($3,850 in) with $200/mo cashflow on $700

$700/mo

- $219 mortgage

- $75 tax

- $56 property management (8%) (I pay 6% because every property over 4 with them drops from 8% to 6%)

- $45 ins

- $70 repair (10%)

- $35 vac (5%) - property management is local and averages 2-3% usually 20-30 people per open house I rented my last house in 4 days

= $200 ($130 if you figure 10% capex, but some people only do 5% repair then, which would be $165 cash flow)

$2,400/$3,850 = 68% cash on cash

I live 25 minutes away,  I like the cashflow higher but I have a good W2 job that allows me to invest $2,000 a month of my own income into real estate plus cashflow from properties is all re-invested.  My thought is lower cashflow is ok because I could save that $8,000 finance and buy one or two more properties and then if those are also cashflowing then I am even further ahead. 

I'm truly just working on building my portfolio, but I don't want to over leverage and get myself in trouble either.  Goal is always to be at 80% or better equity on a property with over $150 cashflow on 25yr mortgages. 

Are my numbers o.k?  Would you pull the trigger and which option? 

Thanks in advance

It is turnkeye no rehab on this one. I already have a property on management with them its 8%. 1 months rent. After 4 properties it will drop to 6% As far as the others their vacancy is like 3% on average and my other house was rented in 3 days. 5% was my assumption for SFH for MFH i would call it 10% I threw cap/repair together for 10% do that on newer or recently repaird homes. this had new AC siding roof etc in 2012. i woukd have upped it if an older home unless I rehabbed it myself. just to explain my #'s