All Forum Posts by: Eric Vermeire

Thanks everyone for you feedback. It has been helpful.

Yep, I am basically looking for feedback. My asking price per property makes sense for an owner occupant, but for an investor, not so much.

Originally posted by Richard Warren:

I’ve been dealing with rental properties for 18+ years and would pass on the 1% “deals†every time.

I saw some of your older posts in which you mentioned you would consider 1.75%. That would put me at an asking price of $457,000 ($8,000 / 0.0175) Hmmmm....

I will be raising the rent on one property by 20% soon, $1,000 - $1,200, but raising rents is always a bit risky, so I didn't want to calculate that. Say, that rents were raised by 12.5% across the board. That would be $9,000/month in rent. So 1.75% would be $514,000 ($9,000 / 0.175) Still lower than what I am looking for.

So, I could double the rents to $16,000/month, which assuming inflation of 3% a year will happen in 72/3 (24 years) from now. Then my $1 million asking price would be more reasonable to all you savvy investors.

Originally posted by Bryan Alenky:

what happens if 4 tenants bug out and leave?? you seem to have confidence in these tenants...would you guarantee teh rental income for the first 2 years??

There is always the risk in tenants moving out. I can show statements on all 10 properties going back 3-5 years that show steady rents. The property managers are definitely worth the fees they charge. NOTE: I have some property managers that are charging less than 6% a month. I am confident in future rents. If you bring me an offer around $1 million, I would consider a rent guarantee clause to close the deal.

7 of the 10 homes are in Eastern Washington which has 300+ days of sunshine and electricity is cheap (lots of hydro power). 5 cents average per kilowatt hour.

I guess what I am saying is that these rentals are in a desirable location for most people. Job market is decent as well.

I forgot about the security deposits. All the properties are managed by property managers, so they hold the deposits. The typical deposit is the same as rent, so figure about $8,000 in security deposits.

The "free house" is in the fact that I am discounting the "value" of the 10 properties by about 10% which amounts to the average of value of the 10 homes ($110,000 each)

This is below the 1% rule, but the advantage is that the homes are online now. No deferred maintenance and no 50% to the property managers to place tenants.

I have 10 single-family residences in Washington that I was toying with the idea of selling them all. Why you ask? well I would like to use the cash for other things. So, I was hoping for some advice on my marketing ideas? They are below:.

1) Make $16,000 in the first month
- The way this works is that since rents are paid upfront, the new owner is entitled to the rents on day 1 of closing and then all the rents at the end of the month. Since gross rents for all ten properties is $8,000 per month, you get the idea.

2) Free home!
- Since I am offering a substantial discount on all 10 homes, which amounts to the value of 1 of the homes. Basically a free house.

3) 8.3% ROI
The 10% is calculated because the new owner would get 13 "months", remember the 1st day of rents for option #1, which works out to be $8,000 * 13 = $104,000 in gross rents - $16,500 property taxes = $87,500 in first year income. Divide that by my asking price of $1.05 million and viola 8.3% ROI

Ideas/Comments/Suggestions???

Thanks for the welcome messages.

I currently have 10 single-family residences that I acquired mainly during the years of 2003 - 2008. They were all HUD foreclosures properties. I got them all at 40-60% of market value except for maybe 1. I have had about 95% occupancy over the years and I definitely owe that to the property managers. They always seem to have a list of renters waiting.

I use Quicken Rental Property Manager 2.0 software to track all the income/expense and every year when I do my taxes, I am surprised at how all the expenses add up. The one thing I have learned, that I think all the rental proponents don't mention is that you need to figure 30%-40% of rents go towards expenses which excludes a home loan note payment. You must assume the worst and carry some reserve cash, because unexpected expenses are inevitable and they will kill you!

My buddy, JJDawg, insisted that I register on BP. He told me that some of the best real estate investors in the country are members of this site. Based on his recommendation, I have high hopes for this site and its community of members.

First a little about me. I was born and raised in the greater Seattle-metro area and my father is a real estate agent and investor. My mother is a local politician. Being that my father has been a real estate agent most of my life, I am well versed in the business of residential real estate. But, my profession is software engineering thanks to my Mother. She worked as a programmer for Boeing back in the early 80's. She introduced me to the world of computers and I have been hooked ever since. I have been working at Scout.com since the beginning. Some of you are probably familiar, but for those who are not, we are a network of sports sites, which a niche focus on highschool football and basketball recruiting.

On the side, I have dabbled in real estate investing. I have mainly looked for great HUD home buys in the Washington State area that make for great rentals. As it turns out, I have learned that renting homes isn't all about collecting rent checks and laughing all the way to the bank. Most of the time, it is asking the question of where did that expense come from and I wish I didn't have a loan note to make payments towards.

Anyway, enough about me, I am going to browse the forums.