All Forum Posts by: Dean Suzuki

Welcome Aboard Daniel.

I'm a buy and hold investor, live in SoCal, and work in the Tech field as well. I purchased three SFR in Phoenix in 2011. However since then, the market has rapidly appreciated and the numbers are harder to make work. So, I started looking at multi-unit this year. I recently purchased a couple of fourplexes in Phoenix and the numbers work. There are agents on BP that specialize in Phoenix so you could reach out to them.

I just listened to @Arthur Garcia podcast (BP006) and his investing in the Inland Empire so that maybe another place to look at.

Thanks,

Dean

Hi

My attorney recommended against it since he mentioned that I would lose the capital gain tax exemption (up to 500K for married couples, I believe) if I sold my house in the future and had a gain. You can take the deduction if you live in a house two out of the last five years.

Also, you lose the asset protection barrier between your house and your business assets in the LLC if your house is in your LLC.

However, I would check with your attorney since your situation maybe different than mine.

Thanks,

Dean

Welcome Aboard Matt.

I'm a buy and hold investor and purchased properties in Temecula and in Murrieta. They are doing well. Please keep in touch and lets share ideas.

Thanks,

Dean

Hi,

I'm relatively new buy and hold investor (since 2011, have a dozen+ SFH rentals) so I'd like to see what others say. But for me, I look for positive cashflow to secure the property long term. I would be very careful on zero cashflow since there are always emergencies. If you don't have a positive cashflow, then you may not have built the reserves to pay for these emergencies (e.g. roof leaks, AC stolen, furnace breaks down, tree falls onto tenants car, tenant trashes the place during eviction). [I have had a roof leak (insurance covered, but still need to pay deductible), AC stolen (insurance covered but still need to pay deductible), tree fall onto my tenants car (turns out to be an "Act of God" but still paid the gardener to cut down the tree), and a tenant trash my place during an eviction.]

If I didn't have a positive cashflow on my properties and used it to build a healthy cushion, these situations would have been more stressful.

It's also important to look at what are you including in your expenses to calculate the cashflow. Are you including mortgage, property taxes, property management, insurance, maintenance, and vacancy? What percentages are you using for each of these factors? If your factors are too low, then you're actual cashflow maybe negative.

In summary, I use the cashflow to pay the expenses of the property, build a reserve so that I can hold the property over the bad times and have some passive income. Over the long term, I'll build equity as the tenant pays down my mortgage and as rents increase/house prices increase, my cashflow and equity will improve. A goal is not to lose the property because I didn't have enough reserves to pay for unexpected expenses.

Thanks All for the Welcome. I already wrote some posts and got some great advice.

Thanks @Brandon Turner for the book list. I read some of them already, but am excited to start reading the others.

Thanks @Ali Boone . I read your post on getting free and it inspires me to keep moving.

Do you know if there are any Orange County BP Meetups or RE Investor groups?

Thanks.

Hi,

I'm looking at a 4plex in Phoenix built in 1962. Each unit is a 2bd/1ba and 720sqft. According to rental comps, I can get $500-$600 per unit. The purchase price is $125K. With 30% down 30yr mortgage at 5.1%, I compute monthly mortgage payment at $476. Using the 50% rule (thanks everyone for showing how this works), I compute $500/unit * 4 units = $2000 * 50% = $1000.

So, based upon that, $1000 - $476 (mortgage) = $524. So, it appears like a good deal.

However, it looks like it will need about $40K to $50K in rehab work. The major rehab items are that the units have old evap coolers that are on their last legs so I will need to replace them with new AC/heat pumps and which will require new electrical panels. So, I'll need to purchase 4 AC units and 4 electrical panel upgrades. Plus, there are many deferred maintenance items that need to be fixed.

I'm wondering at what point does the rehab costs make the deal a bad deal. My realtor mentioned that after fixing the units up and by comps, they should go for $180K and possibly $200K by next year (at the rate that the Phoenix market is going). I'm a buy and hold so I was planning to hold onto them.

>> I'm looking for any advice on how people would evaluate this deal.

Also, would you recommend doing only the necessary fixes up front and trying to push off any expenses for fixes till later (e.g. taking out carpeting and putting vinyl planks/tile)? Or would it be better to try to fix it up as much as possible initially to potentially get a better tenant and lower the longer term maintenance costs?

Thanks for your help.

Thanks @ I think I am learning the 50% and now 60% rule.

Thanks @. Good to see you. Thanks for the tip on Rentrange.com. I'll go check them out.

Hi

I am working on my first multi-unit deal, a four-plex, in Phoenix built in 1962. All units are 2bedrooms/1 bath. I am wondering how to estimate the vacancy rate and maintenance amount in doing a cash flow analysis.

I have done SFH deals, but I had heard to assume a vacancy higher rate for multi-units. I am wondering if the maintenance would be higher.

Any suggestions and advice are greatly appreciated.

Thanks everyone for your advice. I'll start researching more about portfolio lending. Is that what the bank calls it? I'll start to reach out to our local banks and check which may offer that.

@ ; Can I talk to you more about investing in apartment complexes?

@ ; Good to hear from you again. Let's keep in touch and share stories.

Thanks everyone for the welcome.

Dean

I think that Memphis is the best right now for SFR. I started out two years ago in Southern California around where I live. Its pretty expensive here and I met some folks investing in Phoenix, so I started investing in Phoenix. Then, Phoenix got expensive and I met some investors in Dallas so I started investing in Dallas. Dallas got too expensive and I met some folks investing in Atlanta so I started investing in Atlanta. Atlanta got expensive so I'm in Memphis. All of the above experience was with single family residences.

I am looking at a fourplex in Phoenix now though. I think that the numbers may work in Phoenix with multi-units.

I'm a beginner though so I look forward to hearing what other folks say.