All Forum Posts by: Eric Mitchell

Thanks for the tip @Robin Emery, I don't know where I got the $90.00/month for insurance from but I double checked my monthly amount and it's only $40.00.

On another note, I take it from your post that you live in St George, can you expound on how you manage your out of state properties. Are you able to find 1% properties in Las Vegas? 

Hey @Amy Kendall, 

Holding back on raising rent is a combination of a soft heart and good renters. This may be a lame excuse but I don't want to rock the boat and risk losing a good renter. You make a good point about a PM, I don't have to be the bad guy and they will supposedly keep it rented for me. I'm a pretty handy guy so I was planning on doing repairs myself but I'm sure the PM would work with me on that too huh? I'm still green when it comes to PM's. Would you have any guidance on how much a "quality" PM should run me? Given a reasonable priced PM, I would agree that I'd be better off. Any tips on finding a quality company?

Thank you @Jordan Houston and @Jaiden Olsen. To answer some of your questions above, yes, my terminology is bad, I own one side of a duplex and it is renting for $1,350/month. I did explore a nightly rental option but unfortunately city policy will not allow it in this neighborhood. Infact, before purchasing this property, I had a condo up at sports village which does allow nightly rentals. I ended up selling this place because I could not manage it alone and had to hire a PM at 30% of revenues. This was not sustainable income and I started going in the hole and decided to sell. 

Jordan, I appreciate you correcting me on my cash flow calculations. I have a habit of ignoring repairs, maintenance, vacancy and cap x. This is why I'm reading the "beginners" guide:) Hopefully I can learn what I need to know before purchasing my next property. 

Speaking of my next property, there has been a couple mentions of buying out of state. Why does that scare me? What advice (books, articles, etc) would you suggest for me to get educated enough to feel comfortable with out of state investing? I'm not afraid to buy something out of state, in fact, I agree that Utah (especially St George) is not practical for someone who cannot pay cash for a property. I just want to get comfortable that my out of state investment will be safe. I know once I understand how to analyze properties correctly it will become less scary but I'm sure there are a bunch of rules and regulations I would need to become familiar with; just not sure where to start... Thanks again for all the helpful info!!

Thanks for the quick responses. Forgive me for my naivete but I am very new to real estate investing and was reading through the "Beginners Guide to Real Estate Investing" and came across this rule. I'm a little embarrassed to admit this but since I've disclosed that I'm a newbie, I'll tell anyway. I'd love to have more advice from the group on this though. About a year ago, I bought a half duplex built in the late 90's for $205,000 with $50K down. It's currently renting for $1,350.00 (rent could go up as much as $1,600). 

My monthly expenses are:

$75.00 Tax (which is in escrow)
$90.00 Insurance
$800 mortgage
$100.00 HOA

Total expenses about $1,065

With that said, I'm pretty sure the recommendation would be to bail and look for something with much better cash flow. Would you still recommend going outside Utah for a beginner? I'll be honest that I'm a little nervous about doing that. However if I had a good property management company I could see many of my concerns alleviated. 

Bottom line is I should have read this guide before making this purchase. Fortunately for now, I have not lost my shorts on it "yet". I'm actually getting about 6% ROI at the moment. I realize this could all change with a heat pump or AC unit going out. I have about 4K in reserve just in case something like that happens. My realtor purchased a home warranty which is good for another few months.

I have a question about the 2 percent rule. This rule seems good but a little unrealistic. I'm sure this is possible in some parts of the country but here in southern Utah that seems a bit high. Does anyone have properties in St George, Utah where you are able to get this kind of rent? I'm looking at 3 bed 2 bath single family homes where prices range from 200K to 250K. This means I will need to collect $4,000 - $5,000 in rent which is unheard of here. There are a few homes in the $100K range but they are renting for around $800 - $900 which is well below the 2 percent rule.