All Forum Posts by: Josh Dillingham

"So my plan was to use the extra income from these properties, to pay down their mortgages, and once they're all paid off, begin acquiring more properties"

@Carl J. if your plan is to acquire 50 properties as quickly as possible don't use your cash flow to pay off the mortgages.  Use that cash flow as a down payment for another property.  If you use the cash flow to pay off your mortgage you are saving yourself the roughly 5% interest on your mortgage, but your opportunity cost would be the 20% cash on cash return you could be making if you rolled that cash flow into another cash flowing property

I wouldn't renovated the house just to increase the rent, I don't think you'd make your money back with that strategy. I would sell it and use the cash to invest in multifamlies in less expensive parts of the city, or outside the city. $800 of cash flow per month before cap ex, maintenance etc. Isn't much, especially on a $400k investment that is now worth 850k. I say it's time to realize your profits and turn that 500k of equity into $30k of gross monthly rents (which would be 1.5% of a 2 million dollar multi family)

@Aaron K. I'm not saying I would only offer what they owe, I'm saying I would use that as a gage to whether or not it is worth contacting them.  If they owed 100K and I would only pay 70k I wouldn't bother contacting them.  but if they owed 70K and I would be willing to pay 90K it might be worth reaching out to them.

I bought my first 2 deals via the MLS and am looking to get into off market deals. I'm wondering if anyone can talk about their experience finding pre-foreclosure deals. My town website has an online search for Land Records So I can find notices of foreclosures, notices of liens, warranty deeds, mortgage documents etc. the day they are filed. So my thought is that I can find out right when a property is beginning the foreclosure process then find out approximately what they owe on the property by looking up the original mortgage and taking into consideration how long they have had the mortgage, and if they owe less than what I would be willing to purchase the property for I could contact them and try to make a deal before the date of the foreclosure auction.

Can anyone share experience they might have using this method or thoughts about it?

@Shaun Geary  I just saw a list the other day that showed Vermont as the #1 tenant friendly state.  You can't charge late fees, you have to give a 14 day notice to vacate for non payment, 60 day notice to raise rents.  you have to hold all possessions left behind by a tenant for 60 days. Evictions can drag on for months and months.

That being said, all of these things only hurt you when you get a bad tenant.  So if you do your due diligence in screening and place a good tenant the "tenant friendly" stuff won't hurt you.  I've been a landlord in Vermont for 2+ years now and I've had no issues.  Granted at some point I will get a bad tenant but i figure if I am screening very carefully it will be insignificant.  

I also own rental property in New Hampshire and I will say what I like about Vermont is you can charge as much as you want for a security deposit whereas in New Hampshire you can only charge an amount equal to one months rent (regardless of if you call it a security deposit or last months rent), meaning you can charge First, Last and security. 

As far as Buying property in Springfield, I live 45 minutes south in Brattleboro. I look at the MLS listings for multi-families in Springfield on occasion. The prices are attractive but I know Springfield is struggling economically and I'm thinking there is a good inventory at low prices because they can't keep them rented. Checkout Springfield Craigslist apartment listings, It looks like those listings stay up for a very long time, not like in Brattleboro where I can have an apartment rented in 3 days to a qualified tenant.

I don't see why not, as long as the bank doesn't have a minimum loan value.  Home equity loans and Home equity line of credit could be some other options you could use.

I wouldn't include your utilities as an expense as it is your personal residence and not part of the rental.  If you pay expenses like water and sewer for the whole building I would split them in half an include half as an expense for the rental when calculating cash flow.

the appraisal will be valued off comps, but in your analysis you'll want to consider cash flow. are you going to be self managing? when it comes to monthly cash flow I ask myself the following question: how much money would I need to make per month to justify taking on the added responsibility of dealing with this property. for me that answer is $250 per unit cash flow, after all expenses and accounting for repairs/capex.

@Marc Appel as others have mentioned you wouldn't be saving the 4.5% interest because that savings only becomes real after the mortgage is completely paid off. because you are not planning on completely paying off the mortgage you will not realize that 4.5% savings. and even if you did, as @Thomas S. said there are better ways to invest the money and earn more than 4.5% and still have easy access to the money.

check out The Book on Rental Property Investing by Brandon Turner. I think you'll Hain a lot from that and other books here on bigger pockets. the metrics you use for analysing a deal are determined by what your goals are do you want to hit a certain dollar amount of cash flow per door? for me that number is $250 per door before factoring in property management. do you want a certain cash on cash return? is the property bigger than 4 units? then you'll want to look at cap rates.