All Forum Posts by: Ericka G.

My other question, which maybe wasn't clearly articulated earlier is HOW to present myself to best get funding? Should I put together some slides with the numbers I've shared here and also a summary of our other assets that could back up the loan?  Go in person with a portfolio to a local bank in MI?  

The goal is to do a bunch more deals like this, with the next few focused in Atlanta - just looking for the right property here.

@Don Konipol - great suggestion. I will reach out to the mortgage broker who helped us with my hubby's VA loan, he's the only trustworthy mortgage broker I've met so far. Any reco's on PtoP lending sites? Our model is working, we're just not sure how to take it to the next level, which is really frustrating.

@Scott Mclaren - We use Paypal or direct bank deposits.  My husband is a pilot w a DTW crew base and is "crashing" in one our houses, so he keeps an eye on things. I fly free b/c of his job and was doing my 9-5 job remotely for the past 7 months so I also could hop on a flight and go up there if we had any issues.  Things have worked well so far.

We want to buy a house in ATL, just haven't found the right house yet.  Most of the houses right by the airport need too much work in that price point or are too far from MARTA.  We also didn't see quite the same demand or ATL as most who get an Atlanta crew base actually want to live here full time.

For those with questions: a crashpad is a house or apartment shared by airline personnel who live in one city but have a crew base in another.  It is NOT a flop house.  We have rental agreements and most will stay 6 mos-1 year+ before moving on. Our houses are mostly pilots who work with my husband - these are class A tenants and our neighbors love them.  In fact, our next door neighbor at one house is a retired pilot who often gives our tenants rides to/from the airport! 

Last year, I stumbled upon a really solid niche investment opportunity - airline crashpads - and am on the cusp of closing a great deal BUT was turned down by my bank for the financing. This would be my 3rd deal in this niche area of landlording, 5th deal overall...my husband and I have the cash to buy outright but that would wipe out our liquid savings, which I don't want to do.  

Based on the numbers below: 1. Do you agree that this is a great investment? 2. Do you think my best bet is to go to a bank or seek a private loan, etc? 3. How best to present myself (recently self-employed) to get the funds? I pitched the idea to my family and they totally shot us down, plus they have no money (lol), so I'm feeling stalled after the bank rejection due to my employment status. I already have 2 mortgages in my name from previous deals (when I had a 9-5) and hubby has 1, a VA loan, which from our understanding might be jeopardized if he got another home in his name? We both have stellar credit, but debt to income is wonky with all the recent real estate.

Pls help, I feel like I'm sitting on a gold mine but can't figure out how to get to the gold...

PROPOSED Deal #3: 4/1.5 SFR in suburb of Detroit 

Acquisition cost (including rehab): $55000*

Current estimated value: $90000

Gross Rent: $24240 (rather high due to the crashpad niche)
Vacancy (5%): $1212

Expenses +Capex: $6480

NOI: $16548
Annual Debt Service: $3850

Annual Cash Flow: $12698

Cap rate: 30%

*This is a pocket listing/not on market.  Negotiated this price with the seller before market heated up, may lose the deal if he realizes how much prices have increased or decides to break his word.  

Below are the numbers we've seen on our last two deals in this same area.  We have a solid network of local contractors, know this niche and area really well now, and have a waiting list 6-deep of pilots/flight attendants who want into our next property.  

Deal #1: 3/1 SFR in suburb of Detroit
Acquisition (including rehab): $57000
Current estimated value: $68000

Down payment: $0 – VA Loan
Gross Rent: $18960
Vacancy (5%): $948
Expenses (including annual debt service) +Capex: $9398

NOI: $8614
Annual Cash Flow: $8616

Cap rate: 15%

Deal #2: 3/1 SFR in suburb of Detroit

Acquisition (including rehab): $40369 - purchased all cash

Current estimated value: $61000

Gross Rent: $18240
Vacancy (5%): $912

Expenses +Capex: $5820

NOI: $11508
Annual Debt Service: $0

Annual Cash Flow: $11508

Cap rate: 28.5%

Count me in!

Congrats!!!  I said goodbye to cube life about a year ago and have loved every minute of the freedom.   All the best to you on your journey!

@Russell Brazilwow, you're right I was using the term market value incorrectly.  For some reason, 2 bedrooms in this Bldg haven't sold above $400k - likely due to previous co-op red tape.  The main reason I'm tempted to sell now as I could really use the capital for other investments and managing a co-op in NYC is a pain...

Glad I asked for advice on here as I'm thinking it would be unwise to sell at this time.  The long-term gain here likely outweighs the short-term gain.  

Ok, thanks for the input - you're right that the appreciation is likely larger than the add'l cash flow I'd get on the new properties, it's just tough b/c those investments would help my monthly bottom line significantly right NOW.  Patience is a virtue I'm working on.  I should also mention that I'm now out of state, so there is the hassle of flying to NYC to manage things whenever there is an issue.

But seriously, this property is below market value even for Harlem.  I'd be selling for ~$400k a 2 bd/1 bath with park views in a doorman bldg w gated parking.  It's a short walk to multiple train lines. Similar 2 bds are selling for $100-$300k more in other buildings nearby. 

This bldg has stayed under-valued because it is a co-op that used to have a lot of crazy restrictions. As those restrictions go away, the value goes up...but HOA/maintenance fees could also spike and if I keep it I will have to replace the appliances in the next year or two. Torn.

Hey everyone,

This is my first post, though I've been reading this blog, MMM, and Afford Anything for a quite a while now.

Here's the situation: I purchased a lovely property in south Harlem when I was 24, lived there a couple of years, moved away and have been renting it out ever since. I make a profit of $900/mos after expenses on this unit and expect to make $1000/mos starting in Aug.  A broker who lives in my building has been after me to sell. He knows someone who wants my unit. If I sell now, I'd make a profit of ~$240k after expenses. This is tempting as I really want to buy another investment property or two and need additional capital to do so. The $100k investment I'm eyeing would yield about $3k/mos in rental income after expenses. I'd put the remaining $140k into other investments.

I'm very tempted to sell/cash out now to pursue these other investments, BUT the area in Harlem where the rental in question is located is still vastly under-valued relative to the rest of Manhattan. There is a possibility that if I hold onto the place for another 5-10 years that I could make $400-800k in profit...sounds crazy but totally realistic if uptown values ever get closer to downtown ones. It's a really amazing location that is just starting to perk up. But, the unit has several appliances on it's last leg, HOA/maintenance could go up significantly, and/or the area could stagnate or decline if there is another big market crash. I'm also bending building rental rules, so there is always a risk that they will force me to stop renting my unit (unlikely after 9 years, but a possibility)

My question: Do I sell now (tho still well below market value for Manhattan), take my $240,000 profit and secure the other properties that I know will be solid cash cows now OR hold onto this investment property until Harlem catches up (hopefully) to the rest of the market - which could be another 10 years but $400+ in profit? 

Would greatly appreciate any input/wisdom!