All Forum Posts by: Diane Bartley

Love the idea of painting it all to match! I think you'll be very happy with it. One thing to consider for the stucco front - I imagine you can do a different color / same intensity, but can you safely use a more intense (darker) color than what is on there currently? I ask because I researched this issue for siding and found that you can re-paint siding but only a color of the same intensity. Not sure if this is the case for stucco but recommend looking into it.

Also, agree with @Michaela Graham but I would expand it to say that all colors always look different in the store vs. actually on the wall, not to mention at different times of day, different lights, etc. Since you are painting two different materials I would also wonder if the color might look a bit different on the stucco vs. the brick. So, the only thing to do is to paint a bunch of patches (both on the stucco and on the brick) of some different colors and see how you like them in different lights.

As far as which colors - I definitely like the charcoal color in the second picture and overall really like the gray family these days. Some of my current favorites (from darkest to lightest) include: Kendall Charcoal, Silver Fox, and Revere Pewter. These are all Benjamin Moore (interior) colors but could give you some ideas to play with. I also really like yellow accents against gray, like you see in that 2nd picture. Have you spent any time on Houzz for additional ideas?

Hi again - wanted to follow up on this great discussion with a quick update.

Thanks again for everyone's advice, and thanks especially for additional great insights from @Michael Seeker and @Sharon Vornholt about the particulars of the Louisville market.

@David Beard - I agree with your assessment, and thanks for linking that calculator. I had not analyzed cap rate (newbie move, I know), but instead have been focusing on annual net income (in absolute terms as well as ROI on the down payment). The spreadsheet I put together for my own analysis has a lot of what you cite in your calculator but I was SWAG-ing more on what the estimate for each category might be - I really like your analysis there.

So, the conclusion is that I am going to: (1) pass on this particular property; (2) thank our realtor for his time and part ways; (3) educate ourselves further on the market as well as generally; and (4) watch for a better opportunity in the future.

Thanks to all -
Diane

@William T - on the thread now - thank you!

@Paul Timmins - thank you for the suggestions! I've read most of the resources in the first links; have yet to get involved in a REIA but appreciate the recommendation; have not read the J. Scott book - will check that out; and LOVE that quote! I clearly need to keep it posted on my monitor so I see it constantly.

Also - I have bookmarked the IREM site (and found 2 ARM-certified property managers in Louisville). However, the contractor friend I mentioned has also been a property manager in the past as well as running his own successful business as a contractor. He's recently moved to Louisville, and is looking to build up his business now that he's moved away from his old client base. My instinct is to want to work out a clear business arrangement with him (NOT just treat this as some sort of hazy friend arrangement - I agree that would be a terrible idea), because he's someone we already know and trust. In your experience, is that the wrong instinct?

@David Beard - thank you for such a detailed reply, I really appreciate your suggestions. I'm completely fine with anyone being negative on this deal - if I was 100% positive on it I would have gone ahead with it and not done a sanity check here. :-) Fundamentally this is a business decision and I am trying to learn how to do this right.

To your point about our realtor, I have been a bit uncertain about this as well. We specifically chose this realtor because he is also an investor (owns multiple SFH in Louisville) and in initial conversations, we thought we were seeing eye-to-eye about investment strategy / cashflow. At this point, though, I am not as sure - I still think he is a fine realtor, but I just don't think he looks at the investment strategy in the same way.

I have been reading up on @Sharon Vornholt's blog and also reached out to her directly yesterday. Appreciate the idea to talk to @Michael Siekerka as well - or just to look at other markets.

@Mya Toohey Thanks again for running and sharing these numbers. If we do go ahead with a low offer, your comments (and the 10+ scenarios I have run in my spreadsheet) are giving me what I need to stick to my guns!

@Jerry W Thank you so much for sharing your thoughts - very helpful. When I used to develop business cases around enterprise software purchases we would call items like "peace of mind" a soft dollar benefit...it doesn't show up in the hard dollar calculations, but it is worth something nonetheless.

@William T. Thanks for your suggestions! We were planning on conventional mortgage (25% down) which would make cashflow positive just not exciting. Great idea to network with wholesalers as well. Thanks again for all of the good ideas.

@Mya Toohey Thanks for the great advice! Our realtor is advising us not to do too much of a low-ball offer because of all the work that the sellers have put into the property. But I like the idea of trying an embarrassing offer and seeing what happens! And yes - 20% below would be a great deal - definitely would meet the 1% rule.

@Will B. - absolutely, let me clarify - we're mostly looking at duplexes and triplexes for this first property. Also, my husband has childhood friends in town who are quite skilled (professional contractor, inspector, etc) - we actually would feel comfortable trusting them with an arrangement like this.

@William T. Absolutely - $240k list, assuming we could negotiate down somewhat although the sellers have put a lot of work into it; currently $1925 monthly income, think we could raise it to ~$2040/month rent pretty easily given other rents in the area.

Hello BP community!

Who I am (& Why I am already a Big BP Fan)

I am Diane Bartley: work in IT by day, chase an almost 3 year old child during the evenings, and during the later evenings have started to plot our eventual exit strategy via a diversified portfolio that I am convinced needs to include rental properties. Thanks to all of you who have made this such a helpful and informative site - I'm currently packing as much information as possible into my brain. Posts & discussions & comments - oh my!

Investment Strategy

My husband (Andrew) and I live in Northern VA and are big DIYers on our primary residence. Since metro DC prices are no fun, we've been refining the idea of investing in Louisville, KY, where Andrew grew up - and where he also still has family and a great network of friends and acquaintances. We're primarily interested in a buy and hold strategy, and would love to find a good cashflow-generating multi-family rental to start out with, get our feet wet, and then hopefully expand.

Management Strategy

In order to successfully manage an out-of-town property without tearing our hair out, we are considering a two-part strategy: first, we want a well cared-for property that will attract good people, generate fewer maintenance calls, and have less turnover. Second, my parents have been out-of-town landlords in a college town for years, and they have a carefully-constructed system that involves two key people - a smart and trustworthy handyman and a realtor - as well as a carefully targeted marketing system that greatly reduces vacancies. We're thinking of skipping a formal property manager for now and instead building a system along those lines. Feel free to chime in, though, if you think that would be a mistake, as I'm happy to learn.

Progress to Date - and a Question

I've spent the past month haunting MLS and constructing detailed cash flow spreadsheets to try to understand our options. We've had our realtor and my mother-in-law (who is good with a camera and very opinionated) do an initial review of a number of properties. At this point we're eyeing one property in particular that I want to ask you all about. The good part of this property is that it is extremely well-maintained with new systems and renovations and has, by all appearances, good quality and long-term tenants. The bad aspect of this property is that when I look at these numbers, I involuntarily say "eh" and make a face. It has positive cashflow, but given current asking price and monthly income, it clearly doesn't meet the 1% rule - in fact the ratio is .8%. However the rents are a bit below market and could likely be raised without too much fuss, and we could likely get it for a bit below asking price, so I'm thinking we could get it to meet a .9% rule. (Too bad there is no .9% rule.)

So What's the Question Already?

Look, I get it, this violates the 1% rule. It probably violates other rules as well. But I like the fact that, based on what we've learned so far, it wouldn't be a complete pain in our butts. Also, when I compared this property with a nearby property that has great cashflow, we learned that great cashflow place has wall-to-wall transitory students, deferred maintenance, and a bedbug infestation. Although the numbers are so-so, the peace of mind would be pretty darn good, so is there any way that this would be a good deal overall? If we pass this up, do you think we'll find a better deal later or be kicking ourselves?

Many thanks in advance for your thoughts!
Diane