All Forum Posts by: DJ Cummins

Hi @Kyndall Ogle,

I would say i had a bit of anxiety before the first one, but once you get it closed and rented out, all you can think about is the next one!

Flipping houses seems like a fun way to make a living, but the prices in our area are not overally favorable for flipping in my opinion.  It can be done, but dont be expecting the crazy lookin returns like you see on TV shows.  

I personally, am going to stick with buy and hold.  At least for today.  lol

Hi @Zane We have really been toying with the idea.  I think we have 40-50k equity in that property right now.  Our goal is to buy a larger building in a few years 24-40ish units.  50k in equity isnt enough for that right now, but its on a 20 year mortgage, and in 5 years, we could have nearly double that in equity, and we could afford the large building.  

Plus i love the cash flow.  this 4 unit rents for 1900, and our pitia is around 800 per month.  If i take out all the equity, a large portion of that cash flow is gone.  We are probably going to keep growing slowly without using that equity, but it sure is tempting!

Sure is nice to hear from a good ole college buddy!

DJ

@Zane Beldenundefined

congrats @Mike Henkel.  you are where i would like to be in a few  years.  i think 40-50 is the number i am shooting for...i am at 5 units(2 properties)1.5 years in, so i have a ways to go! LOL

Hello friends! So i thought i had a deal about 3 months ago, and it fell through after the inspection. I decided to wait on posting until we actually got this SFH closed. The property is a 2 bed, 1 bath in Bethalto, Illinois. We closed with a sales price of $43k. The appraised value was $44k, but if we were to put around 10k into this property, I would imagine it would appraise it the mid 70's. Very happy with the purchase!

The numbers:(20 year mortgage)

Rent: $725

PITIA: $295

25%(vacancy and expenses/cap ex): 182

Cash Flow: $248 per month.

The kicker with this property, is that the owner of the property's daughter(a senior citizen-who has lived in the property for two years) needs to live in the property for approximately 6 months until her house renovation is completed(by her son, which is taking longer than expected).  We actually are acquaintances from church, so that was kind of nice having a bit of a relationship with her, since this was a unique situation.  

At closing, we were given the keys, which we gave right back to her, and she signed a lease and has paid her full rent and deposit.  What a good feeling to close, and collect rent and deposit all on the same day.  Wish they all could go this smooth, but i doubt that is going to happen!

My wife and I are still new at this, but in about 1.5 years, we have 5 units, and a gross income of $2,625.00(small potatoes for a lot of investors, but I am proud).  We have bought both properties with 20% down, 20 year commercial mortgages, from a portfolio lender.  We are planning on buying 2 more properties next year, hopefully by the end of the summer.  We have a fairly large amount of equity in our 4 unit, as we have rehabbed the 3 of the 4 units, but are saving that equity for a big purchase some day.  We plan to keep saving our pennies, and growing a bit slower for the next few years.  Hopefully 4-5 years from now, that equity will be traded in for a much larger property!

I don't know if any information in this post could actually help someone or not...but if nothing else, hopefully it provides a bit of motivation.  It seemed like it took forever to buy our second property, but now that it is closed, we are planning on buying 2 more in the next six months!  Stick with it my newbie friends... a little hard work, determination, and penny pinching can really make this happen!

DJ

I am not an expert yes, but i am working my way there. ha. That being said, i am closing on a SFH in Bethalto, Illinois today. I already own a 4-unit in East Alton, Illinois. I have done quite a bit of research on both sides of the river, and I feel like in my opinion, this just comes down to what you are comfortable with. The tax amount might be higher in Illinois, but that isn't really a big deal. There are so many other important factors. When i have looked in Missouri, i don't know the area, and it is quite a far drive when you are managing yourself. When you look on the MO side of the river, each street in a certain city is like its own "neighborhood." If you aren't really good with that market, I feel like you leave yourself open to extra liabilities. Missouri also seems to have much more competition, and the purchase prices are higher, but the comparable rents really aren't much different.

As someone said above, look for the right deal, not the right location. That would be my advice. My 5 units are all within 7-8 minutes of my house, and once i get this SFH ready to rent in the next month or so, my positive cash flow should be between $1100.00 - 1200.00 per month(after PITIA, cap ex, and vacancy). $1100 per month might not sound like a lot to some people, but i am really happy with that, and I can already see where this is going to snowball and help me keep growing. Hoping to buy 2 more properties by this time next year.

You can do well in either market, i am sure of that.  You just have to figure out what is the most important thing(s) for you.

Good luck, and keep asking questions.  that is how i have learned/continue to keep on learning!

DJ

The property and the neighborhood.  I don't ever plan to wear a bullet proof vest to go and collect rent :).  If the property is either nice(or i can make it nice), and the neighborhood is solid, then i move to step 2, the math.

thank you @Deshawn Lewis !  same to you.

Hi @Chase Loeb.  Thanks!

Well, i have read dozens of books, hundreds of articles, and thousands of posts.  I have learned a ton from the site and BP gave me the confidence to actually get started.  We looked at close to 50 properties before making an offer on our 4 unit property.  This property we just put under contract was only the 5th or so that we had seen, which makes me a bit nervous.  LOL.

I have 2 rules of thumb.  1. If i wouldn't live there myself, I wont even consider it.  2. run then number with a "worst case" rental amount, and if you still make 150-200 or more per unit, then it is a pretty good deal.

Good luck making your first purchase.  I am not an expert(yet) but would be glad to throw my opinion your way.

DJ

Hello my BP friends.  I don't post as much on this site anymore, but i still stalk the different posts each day.  What more can i say...i love real estate.  We are a long way from our goal of replacing our W2 income, but things are starting to move much quicker.  We haven't spent a dime of money from the 4 unit building we bought 1.5 years ago.  We are just letting that money add up.  One of these days that will be used on another property(ies).  So far on both properties, we have just used our savings.  This has slowed up the process a tad, but we are starting off slow and steady, and not putting any extra stress/risk on our business.  The wife and I are 34/33 years old and while we would love to leave our current jobs, we don't have to be rushing to much.

Anyway, the house/numbers:

The house is a 3 bed, 2 bath, move in ready property with updated bathrooms, and a fairly nice kitchen.  We will have to add a refrigerator, but that is all.  Fenced in yard, and a detached 2 car garage(that needs to be scraped and painted).  House has new AC, and new windows, with a fairly new roof.

Numbers:

Purchase price(after 4 counter offers) $54,000.00(with a 1 year home warranty, and $2,000.00 of seller paid closing costs).  Property should rent for $775-800.00.    The inspection and appraisal are next week, but I think this house is probably worth 10k more than the contract price.  I am hoping so, because we could parlay that into property number 3!

$800 - 150(vacancy and repairs) = 650 - 417(pitia) = 233.00

Even if the property doesn't give us the equity we need, we are on pace for buying another property in about 6 months or so.  I will keep everyone posted!

DJ

We are looking at trying our hand at our first SFH, BRRRR. I don't want to over-improve, and i wasn't sure exactly how nice everyone makes there rentals. The property we are thinking about making an offer on will need a gut in the kitchen. What type of counter tops are suggested? Standard cabinets? Etc. Just trying to get a feel for how "nice" to make this place.

thanks,
DJ