All Forum Posts by: Eddie Werner

What do you think you could sell it for?  If it's cash flowing $800/month in your pocket I would keep it.  Your primary residence rate is very low so as long at that's a fixed loan I would keep it, money is cheap.

My mindset is focused on long term wealth creation so I like the cashflow.  If you don't want to be involved in rentals you may want to look at selling......but that's up to you and your goals, comfort level, etc.

To help save money I saw an interesting challenge online called the 52 week savings challenge.  Starting on week 1 (now is a good time to start being a new year) you put away $52.  Since there are 52 weeks in a year each week the saving's amount goes down by a dollar.....so week 2 $51.....so on and so on.  As the end of the challenge approaches you are down to only saving a couple dollars a week.  At the end of the year you have about $1,300 in savings from doing this challenge.  I think its a fun way to save money and this amount can fund a first wholesale mailer, etc.

I would stay away from condos.  You never know what the association will do.  You might cash flow well for a year or two then they hit you with a new fee that wipes out your earnings.  

I would recommend looking for a comparable property that does not have a HOA fee.....cushions your cash flow and no surprises.

I would have asked this before you bought but it meets the 2% rule so I would have considered it.

What utilities do you pay?  I would make sure the tenants are responsible for them and if you need to separate electric or water I would def do it.  May have cost up front but it will pay for itself in no time.

Your comps and rent make it a 1% property.  I would pass.  Personally not a fan of 1% properties when 2% are fairly easy to find in PA

The taxes kill this deal for me.  I don't invest in properties where two months of rent don't cover the yearly taxes.  Example: If yearly taxes are $1,400 then I need to be able to get at least $700/month in rent.  That's the most I will go.  Depending on your area this may be achievable.

Your rent collected and yearly taxes show that 3.5 months of rent will be needed to pay the yearly taxes.  That is just too much for me personally when you consider all the other expense variables.  You mentioned this is potentially your first deal.  Don't jump because you are emotionally tied (I think everyone is to their first potential deal).  Just move on and wait until all the numbers work.  There will be many more properties to buy.

I am not a tax professional but I will share what I know.

If you pay anyone over $600 throughout the year they will need a 1099.  I ask everyone I work with to fill out a W9 so it is on file come tax time.  

70k for a 6 unit?  I am not familiar with your market but I would recommend comparing this to other multifamilies that sold in the same area to see if anything sticks out as not being right.  Price seems low unless it is just a really depressed area.

Personally, I would never buy a property where I am set up to pay any utilities, especially cable!

You need to consider a lot of other variables like taxes, insurance, property management, repairs/maintenance/capex, etc.

Do a little more digging and analysis before you move forward.

There are so many variables here you can't have one hard and fast number.  It really depends on the tenants you put in your rental. 

Do they have pets?

Do they wear shoes in the house?

Do they fill their coffee mugs to the top and then walk around the house spilling it every where?

If you are lucky you can get the carpet professionally cleaned or just replace the carpet in the high traffic area that needs it the most.  I have been thinking about going to laminate just so it lasts longer. 

Thanks for all the input.  I appreciate it.