All Forum Posts by: Dave Versch

Kevin,

Thanks. I'll keep you in mind if I decide to go that way.

Hi,

I'm considering having vinyl siding installed on a 2.5 story upper/lower duplex in Lockport, NY (near Buffalo and Niagara Falls). Does anyone have any idea what this might cost?

Thanks.

Hell, why stop there? If you pay cash for the whole thing, then you'll have an even better chance at positive cash flow according to that way of thinking. But it's the wrong way to look at it. If I find a property that will gross me $800 per month in rent and has $600 per month in expenses, and I decide to pay 300K cash for it, I suppose you could say that I'm cashflowing at $200 per month, but the reality is that I've just tied up 300K in an investment that's returning 0.8% interest per year. THAT SUCKS. I can probably do better than that just leaving the money in my checking account.
If I have 300K cash to put down, I'm still going to evaluate my deals as though I was going to finance the whole thing, even if I decide to pay cash later. THE AMOUNT OF MONEY I PUT DOWN DOES NOT MAGICALLY CHANGE A BAD DEAL INTO A GOOD DEAL.
And because of that, I still say NJ does not support successful investing in residential rental real estate, regardless of how much money you put down.

Here's my take on this, for what it's worth. It's been said that across the U.S., expenses will average out to 50% of scheduled income over time and over a large amount of units. I have no reason to doubt that whatsoever, as it's been said by several people on this site many times, who have much more experience at this than I do. The problem for me, is that I'm not investing across the US. I'm investing in one particular area (Western NY state) at this time. What I'm experiencing there, is that my STATED expenses actually come close to 50% of my scheduled income. So when I evaluate a deal, I'm actually assuming that my expenses will be more like 65% of income. (Does that make it a 65% or 35% rule?) Anyway, the reason for this is that rents are pretty low, but at the same time, the price of housing is EXTREMELY low. So even though I only assume 35% from which to carve out debt service and cash flow, my debt service is so low that there's still room to make between $90-$100 per unit.
I guess what my point is (and it's something I've read on this site over and over again from experienced investors, regardless of how they feel about the 50% rule) is that you need to know your market. All the rules and calculations and cool little spreadsheets are extremely helpful, but they are far too general to be of any use by themselves.

Why??? Life must be good in MA!

Hi Aly,

I've done Elizabeth, Irvington, Newark, and Jersey City, and continue to look. Plenty of properties for sale, none worth purchasing as a rental IMHO.

Aly,

I've done Elizabeth, Irvington, Newark, and Jersey City, and continue to look. Plenty of properties for sale, none worth purchasing as a rental IMHO.

Hi Joe. Nice to see another guy from NJ. I'm in Union County. The negative sentiment you've been hearing is likely due to the fact that it's almost impossible to successfully invest in rentals in most of NJ. The extremely high property taxes combined with the high cost to purchase make it that way. I know there are a couple of people here who claim otherwise, but I haven't found it to be the case at all. You can probably fix and flip to homeowners, but you won't be able to sell to investors, and rentals just won't cashflow.
I've been investing in upstate NY. Prices are very low, taxes are reasonable, and rents are relatively high compared to expenses. I'm not talking about Westchester. I'm talking about the Buffalo and Rochester areas. You won't find much appreciation, but you will find cashflow that will enable you to pay off your expenses, pay the mortgage, and eventually end up with a free and clear house, even after paying for a property manager, of which there are many. Just stick to the low-income/blue-collar/non-war-zone areas.
I hear Philly's not bad, but I've never tried it.

Not at all. You're incurring an opportunity cost that way as well. In other words, what you're gaining in cash flow, you're losing by not investing the 50-60% somewhere else. If it won't cash flow positive at 100% financing, it's not really cash flowing.
That's not to say that you should never put that much down on a property. If the property would cash flow with 100% financing, but you choose to put down a chunk of cash anyway, that's a different story.