All Forum Posts by: Elliot Larkin

Thanks Daniel, you nailed it!

I was under the impression it mattered for tax purposes. 

Does having tenants (being a landlord) constitute offering a product OR a service?

Thanks for your posts! something about this feels fishy. Why, after having been on the market for 150 days, does there happen to be another offer right now? Has anyone heard of these type of scams? 

@ Matthew: Definitely not willing to waive the inspection period!

I ended up putting my 'highest and best' in at asking price, cash, with 10K in earnest money…we will see what happens.

Looking to purchase my second home in cash (foreclosure) which I will hold for some time as a rental. It is a 3/1.5 with 1250 sq ft and a HUGE detached work space (shed) (making the property unique). Also it is about 80 yards off of a state highway (you can hear the traffic from the front yard but not so bad from the backyard), any thoughts on this? ARV is looking like $110,000-120,000.

Asking price is $64,900, the bank is asking for highest and best offer between myself and another buyer. My initial bid was $63,000, (it is priced to sell) and this was lower than the other bid. I am trying to decide what to counter with as my 'highest and best'. 

To get it nice and rental ready looking at $18,000 in rehabbing…total investment of $85,000 at the asking price with closing costs and holding costs during rehab.

It looks like it will rent for $1,100-$1,150 monthly = $13,200 annually

Operating costs include:

Taxes: $2000

Insurance: $800

Maintenance & CapEx: $1,600

Property management (myself) at 10%: $1,320

Vacancy (1 month rent): $1,100

Has anyone been in these highest and best situations before? Would an offer of $69,000 (making a total investment of $89,000) be too high or low? Any input would be great!

Elliot

Living in Gainesville, Florida the 2% rule is not common at all these days. Here are the numbers for this home 3bed/1bath with nice shed, fenced in yard:

purchase price $60,000 CASH (seller pays closing)

square feet 1047

repairs: floors, HVAC, cabinets, painting ~$15,000

holding costs while rehab is completed: 500

Total investment: $75,500

monthly rent: 800   -    yearly rent: 9600

vacancy: 800

Maintenance and CapX fund: $1,600/annual

taxes: $1435/annual

insurance: $900/annual (is 75$/month a reasonable assumption)

I will manage the property

I am looking at annual cash inflow of $4,600

I recognize this return on equity is only %5.7. I am calculating a 7.5% cap rate and 6% yield on investment.

If I were to put 20% down and take out a loan including the repairs at ~4% interest, I would be looking at 12% return on equity. My partner wants to put down the cash and we are splitting 50/50 since they are family and helping me get started.

I am planning on buying and holding, perhaps selling if the market significantly increases. What am I missing? Any thoughts would be much appreciated!

 What do you mean by "Have supporting documents with your offer"?

Thanks for the post Nick! I see your point, but if I don't intend to make real estate a full-time gig would this influence your response?

Hello Everyone,

 I recently graduated from the University of Florida with a Masters in Management and my parents are interested in investing in some property. I am currently educating myself to make an investment in 2-4 single family rentals (~$100,000 each) to buy and hold and manage these properties as I move forward with other entrepreneurial ventures. My goals are to get experience finding, buying, marketing, and managing properties with positive cash-flow. 

As of now my parents are considering paying cash for the properties, but the more I read, the more it seems like this option will not be the best to maximize return. Anyone have thoughts on this?