All Forum Posts by: Drew Judge

@Drew Sygit that’s great information, appreciate it. Good to know about the capital expenditures. I also have never heard of charging the tenants for repairs but I like the idea, something I will definitely look into. I am going to re run the numbers with a lower cap ex rate in the first 3 years and see how it looks. Thanks again, Drew.

@George P. The house is actually in Plymouth but I am at Farmington and Schoolcraft so not far from the orange lawn duplexes. Have your experiences with rentals in the area been good? Seems like the opportunities are good in Livonia and the surrounding cities from what I have seen thus far.

@Travis Barkel Since this would be my first property, I would like to cash flow on it. If I had a couple properties on hand already, then I would feel more comfortable about it being used as an appreciation property. I understand that’s not necessarily the best way to look at it, but anything I can do to minimize my risk. Appreciate your response!

@Tim Johnson thanks for your response. The estimated cash flow is based off the current rent at $2000/month. It’s good to know that the 24% isn’t over shooting it too much. My plan is to stick with numbers similar to those until I get some more experience and can be a little more aggressive with deals. The house is in good shape but it is an older build. Going today to see it with a focus on assessing some larger ticket items, I.e. furnace, roof, etc. thanks again for your reply Tim.

My wife and I live in Livonia, Michigan and are making to push to get out of analysis paralysis and into taking direct action in securing our first investment property.  We have been in the education phase for quite some time now and it feels good to get our feet wet and start looking at properties and making offers.  The most recent house that we are looking at is a duplex (unit #1 2Bed/1 Bath, unit #2 1 Bed/ 1 Bath) that has both units currently occupied and renting for a total of $2,000/month.  With the purchase price of $220,000 it is just shy of the 1% rule, however comps in the area show that the rent is marginally under priced and likely could secure closer to $2,200 to $2,300/month with both units being occupied.  My primary questions when analyzing deals stem from what percentage you should be allocating for capital expenditures, repair and maintenance, and vacancies.  In the literature that I have read and the videos I have come across on here and elsewhere, it seems that 8% for each of those (24% total between the three categories) is a safe and conservative approach.  Is this something that others, whom have more experience than us, agree with?  Or are we off on our calculations.  Using 8% for each of these makes our deal cash flow less than $25/month, but when we lower our percentages it obviously makes the deal look much more enticing.  The house is in an area where appreciation has been very good over the years as well.  Any thoughts on the deal itself or how much to allocate additional expenses would be greatly appreciated.

@Ryan Olsen appreciate the rec’s, will definitely take a listen!

@Ryan Olsen this is incredible. I currently dabble in the stock market and I am a hopeful soon-to-be RE investor and I think you make some great points as to why REI is more beneficial and reliable.

@Ian Imlach not sure if you are still in need but I have a good and reliable contractor downriver. If interested PM me.