All Forum Posts by: Eric Hardt

@Jake DeAtley obviously you will know the area better than I will. The one thing I'll very much encourage is just making sure your numbers are on the high end rather than low. 

Mortgage - someone already mentioned, but is that locked in or an estimate? Depending on area, credit, and experience, I think a half to three quarter higher than owner occupancy is pretty standard. If you are locked in at 4% on your first investment, great! Make sure you keep that relationship. Same question with quote or not regarding the insurance.

Vacancy - Is 5% reasonable? Based on what a few others have said, this seems to be a pretty nice area. Only real reason why I ask is because you say 2 of them are vacant now.

Repairs/capex - At 12% total, I'd estimate this is pretty low. If a bunch of maintenance was done recently, you might be ok initially. Just be prepared on this one.

Property management - assuming you are self-managing. Just be mindful of the cost and your goals in investing. If your goal is to continue

You talk about this deal looking right. Why don't you share the numbers you calculated? I think people would be able to offer you much better insight that way.

I'm not familiar with the area and know parts of Washington are booming, but have a hard time seeing this property as a good deal, and potentially not even cash flowing.

@Lisa Rispoli I completely understand and can agree. I have family that have done section 8 in Hammond for the last 10 years and love it. They only had 1 bad experience the first year, but learned better vetting processes and they can evict in less than 2 weeks in most cases. I'm not too sure that's an investment I want to mess with, so I have also been considering nicer areas of NW Indiana as well as SW Illinois (Blue Island and Lansing mostly). We are also looking at purchasing 2-4 units in a deal that looks interesting, but not in a rush.

Everyone has a different approach to getting their feet wet. I purchased 3 units in the downtown Oak Lawn area to learn what I can from about the management side of things. They won't cash flow as well as some of the C type areas, but I'm renting to doctors, nurses, and downtown commuters. It won't prepare me as much for the headaches and lower level rentals I'm sure to experience with C areas, but I'm learning a lot about the process of doing things, which like you said, you can't learn entirely from podcasts and forums. I'm definitely interested to see how your search goes and what area you end up landing on.

what areas of northwest Indiana are you looking? I'm sure living in the approximate area already that there can definitely be some pretty meh areas in the NW. However, you can also travel a few miles and be in some great areas. I think some areas of NW Indiana can really boom in the next few years depending on traintrack extensions. I think we see a lot more move that way from IL if they can get transit time down to 45-50 minutes from areas like St. John. I keep hearing possibilities for 2020.

For owner occupancy or investment? Definitely very high for owner occupancy by me. a friend of mine literally just locked in at 3.5 on a 20 year yesterday.

Of course it depends on your credit, etc. No one will be able to give you an accurate answer with a very broad question, but it's definitely not good if you are owner occupant with a 740+

As others have said, you should definitely be taking the 100% match on the 401k. 18k in free month can't be beat.

I had previously worked for a company that had matched $.40 on the dollar with no cap, so received matches of 7,000 and later 7,200. My thought process was pretty simple in that even if I withdrew money from that money, it was still a pretty fantastic return. Without factoring in vesting schedule and any annual return,  I'd still have 22,680 based on my 18,000 investment after paying 10% penalty, but before income tax. Yours would obviously be better.

As much as you would likely enjoy a $8M plus dollar portfolio in retirement by investing 36k a year, it's quite a bit more than most would need.

@Steve Vaughn 

You're taking one time costs and adding it to the yearly costs. New cost wouldn't be 10,750/100k = 10/75, but would more closely  be related to 6,750/96k = 7%. 

Granted I think your point was the same as others have mentioned and that it depends on what your time is worth, as well as the cost of money vs extra money you'll be bringing in.

Sam,

I am assuming you are already investing in the crapshoot that is Cook County. The one thing I would definitely watch out for is what appears to be an extremely low assessed value on the property. I could very easily see a true assessed value here 70% higher than the current levels, so a $4k increase in your annual tax bill.

It looks like the assessor doesn't have any clue what they are doing here, but to the potential benefit of you. I have two rentals in Cook that were just assessed at a 60% increase over 2014 levels. Each of those properties are now over assessed, so hopefully I will get them reduced. 

Only reason why I mention is because it was real gut punch to literally see my cash flow will be cut in half next year. This one already being tight, I'd just encourage you to be mindful.

Good evening all,

I was wondering if anyone has any experience with getting approval from lender to rent unit prior to 1 year. This is my 4th property, so the other 3 are rented. I started buying in 2013 in properties with the intent to buy, fulfill the mortgage obligation, and then buy another. I have since done that with the first and second properties I bought. The third property I bought was with an investment loan about 3 months ago right around same time I bought my 4th as a primary residence. The main reason why mentioned getting the investment loan is because I truly have no intent to deceive anyone.

I have been living in my unit now for about 3 months now. I had promised my fiancée that just because we were moving frequently, I wanted her to still be in places that felt homey. We have painted, hung drapes, hung our things on the wall and had every intention of staying the 1 year. Now my dilemma - I bought a unit in a 42 unit condo above a garage door. The building is the nicest in my town, so I expected to have an easy time getting them to convert from chain drive to belt, new rails, etc... despite great reserves, I've pretty much got a denial from mgmt company to change anything. They are also. It enforcing rules of garage only being used for cars, as people use it for bikes, walk through if they park outside, etc. The only big problem in this is there appears to be 2 people that get home and leave at 12 and 430am every day. I am not woken by it but my fiancé is every day. (We tried white noise, etc). 

I'm considering both filing a suit against the hoa, which under terms of the hoa would go to arbitration. I feel like I would win this for future renters, but unsure of how long it will take. And also asking lender for an early out. Has anyone heard of smaller things such as this being grounds for a lender to allow renting before 1 year?

Any insight would be appreciated.