Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here
Pick markets, find deals, analyze and manage properties. Try BiggerPockets PRO.
x
All Forum Categories
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

All Forum Posts by: Eli Ettinger

Eli Ettinger has started 2 posts and replied 24 times.

Originally posted by @Dennis M.:

I’d leverage your equity like Cody said and use this as a launch pad to get another asset 

Yes, Using it as a launch pad might be making the best out of the situation.

Thank you!

Originally posted by @Ola Dantis:

@Eli Ettinger Hey Eli, 

Welcome to BP!

I'd say do nothing and keep the deal, as your Cash on Cash Return is 4%, which isn't great; however, that is you putting a pretty large amount of capital aside since there is no mortgage. 

Yes, this deal might not be a home run but its a good start. 

You can always pull a HELOC after some time but I think for now sit tight.

Thank you Mr. Dantis,

Appreciate your contribution and wisdom. It's nice to see different views. 

Originally posted by @Meir Greenblatt:
Originally posted by @Eli Ettinger:
Originally posted by @Meir Greenblatt:

@Eli Ettinger

Cap rate is used more for commercial property and less for Residential investments.

Can you please share the monthly rent and for how long is the lease with the tenant, and also how much is your expenses, so people that don't know how to calculate a cap rate will still be able to provide answers And also use the answers for the benefit for them to understand

Thank you in advance

Hi Meir, Sure. My bad I guess.. I assumed the terminology is clear but thank you for pointing that out. Am still new on this site.

Monthly rent is $1025

Monthly profit :$300

One year lease.  

 Thank you  :)

I'm in the same boat, well similar. I got a $65k condo in la port, I got it at Market value, after getting that 1st property I started learning about REI.

I get rent of $1075, mortgage $295, HOA $275, tax $140, insurance $25. Total: left $340 cash flow. But After the 30% for vacancy, capex, and management I'm left with $10 a month real cash flow.

I'm keeping it 1, since its not negative,  2, my tenant pays of my mortgage, 3, I self manege it,4, I put a 2 year lease in place, 5, it looks  good on my record to have a property on the file whenever I go for the 2nd one. But I'm all in about $17k which is why I think if you can get a heloc or a refinance or get a mortgage for a new place and putting the condo for collateral. 

Even though your cash flow will be $0 you still have a lot of benefits. But keeping $90k in the deal making $300 is not a good option. 

I hope I helped:)

Thank you Sir!

Will def look into. 

Originally posted by @Pete Harper:

@Eli Ettinger

At $1025 rent; no mortgage, and self managed; only $300 cash flow. Your expenses seem to be out of wack. I would look at the expenses and see what you can do to reduce. See if you can reduce you tax appraisal. Being a condo you can go on county website to compare your taxes with others. If you are high, I would protest. I did this once in a neighborhood of cookie cutter houses. All the newly sold properties were 2X everyone else on the street. We successfully reduced ours using comps. The long term homeowners had theirs increased.

Hi Mr. Pete,

I actually looked into the county website and everybody on the complex pays the same amount as me (in ratio to their sqft of course) So not much I can do about it, so it seems. I was able to reduce my insurance coast already by switching from metlife to safeco. But I doubt it I can find a cheaper insurance.. Maybe  should lower my coverage? 

Originally posted by @Steve Vaughan:

If you are a higher income earner,  keeping it may make more sense.  Condos have no land value so you should be able to depreciate your entire purchase price over the 27.5 years, but check with a pro.

Normally my 1% producers (buy for $100k, rent out for $1000/mo) I buy with cash provide me with an ROE of 7%, but those are houses. The big return and reason I would pay all cash is for the equity capture buying quickly at a discount and value add opportunity.  Otherwise I'd finance the purchase. 

The HOA eats cash-flow, but also provides value. You won't be cleaning gutters, painting your exterior or replacing/fixing your roof, mowing/watering your lawn, removing snow, trimming trees, maintaining the driveway or the deck, pool, etc but I will. I'll also be paying higher insurance premiums as your structure and exterior are covered already.

So, a headache-free 4% return with tax advantages and appreciation potential isn't the end of the world.  Condo financing can be tricky, especially as investment property.  If good terms are avaialble to pull some cash out I'd consider getting to it while you can. I would not be motivated to sell as long as you have a good tenant. 

When you do sell, FSBO and seller financing are options to maximizing price and reduce transaction costs significantly.

Thank you Mr. Steven For the valuable Info.

Will look into pulling out cash.

-Eli 

Originally posted by @Tim Healey:
Originally posted by @Noah Mccurley:

@Eli Ettinger

I wouldn't refinance or heloc as that woukd only cut down already slim cash flow. I would either sell or hold, it is all dependant on how much cash you have on hand ready to buy your next deal.

If you have enough cash for your next deal i would just keep this property and move on but if you don't i would sell and then put the cash from the sale into your next deal

 Hi Eli, Noah is making a decent point. You need to look at your overall situation and your goals too. If you're a high income earner and can gather cash to invest in another place quickly, then sitting on it and taking the roughly 4% return might not be the end of the world, particularly if you get some appreciation too.

If you need this particular cash to make other investments then I guess you should look at pulling it out per one of the suggestions on the thread.

Thank you TIm, When you say " Pulling it out" do you mean sell or refi? 

Originally posted by @Noah Mccurley:

@Eli Ettinger

I wouldn't refinance or heloc as that woukd only cut down already slim cash flow. I would either sell or hold, it is all dependant on how much cash you have on hand ready to buy your next deal.

If you have enough cash for your next deal i would just keep this property and move on but if you don't i would sell and then put the cash from the sale into your next deal

Thank you SIr!

Originally posted by @Kalanie Tran:

@Eli Ettinger I'm no expert, but if you've deducted tax, insurance, vacancy,money set aside for repair, PM etc...and still profit $300/mth...I think it's a decent deal imo. I would just hold it since appreciation is 5% and maybe refi out later or HELOC to put money into next deal. I'm also interested in what others suggestions are. Thanks for sharing your situation so we can discuss and learn from it and hopefully help you out.

Hi Kalanie,

Yes I have deducted all the above. The profit is after ALL Expenses.

Thank you for your opinion! 

Originally posted by @Cody L.:

lol, don't listen to them. CAP can be used on your property. But to answer your question:

Since you own all cash, I'd STRONGLY consider putting debt on, and using that to continue to grow.

If you can't get good debt (sub 5%, greater than 70%) then I'd sell and move to the next deal. 

Thank you Cody,

I actually spoke to a credit union in TX a few weeks back. and with my credit I can get a loan at around 4+% . in TX one can take up to 80% of the money out.

If I understood you correctly, it does fall within the numbers you have presented, and I should refi and invest the money forward in a much better deal obviously..

Originally posted by @Joe Villeneuve:
Originally posted by @Eli Ettinger:
Originally posted by @Joe Villeneuve:

OK, let me try this again.

1 - Refi makes it worse.  You could only get 70% of maybe 90k = 56,000 at a cost of around 260-270/month...which would leave you with about 30-40/mo or a max around 500/year in CF.  You would still have 34k in cash left in the deal, which means it will take you almost 70 years to recover it...and start making a profit on the cash flow.  Can you say "grandchildren"?

2 - HELOC isn't any better.

3 - If you did nothing, you will have spent 90k plus, with a CF of 3600/year.  That will only take you 25 years to recover your cash, but you would have 90k of your cash dead in the water.  At least the refi would get you a new 50k+ to reinvest with.

4 - My choice would be to sell it, even if all you walked away with was 70k, and reinvest in in the next deal.  Let the next deal recover the 20k you left behind, and start profits from day one.

Thank you Sir, appreciate your valuable input and apologize for the unclear post! 

CAP Rate is a commercial term. It doesn't include financing costs. This is residential. Use cash flow instead

Got it. Thank you Sir.