All Forum Posts by: Derrick E.

In reference to the CHEAP properties that are throwing off HUGE cash flow. .. that's all well and good on paper. I have seen time and again, at least here in Kansas City, that the out of state investor bought the cheap property with high rents. Went great for a while.

However, the tenant stopped paying, was evicted, moved out in the middle of the night . . . something.

Then the huge cash flow stopped. During the move out the tenant left the house a mess so a make ready needed to be done, sometimes a pretty hefty repair job. And somewhere along the line, while waiting for the make ready or the new tenant, vandals rip and strip the vacant property and now, the $1500 make ready is a $3,000 to $10,000 renovation . . .

So on your cheap properties with high revenues - PLEASE PLEASE PLEASE bank that rental income because maybe not next week or next month, but sometime in the next year or two, you may have to replace the copper plumbing, copper wiring, AC Condenser unit - anything that had copper in it and also need to replaced and everything damaged in the process needs to be fixed.

You are absolutely correct and it's why it's risky for an OOS investor. My guess is that someone sold them a house in a bad section of town.

I don't buy houses on those streets. There are some houses that you literally couldn't give me because of the street it's on, but a few streets over there might be a house that sold for $50,000 just five years ago and i can now buy it for $15,000.

I also do most of my repairs myself and live within an hour of each property so I can keep an eye on it myself, meet the prospective tenants myself etc.

3 Votes

Originally posted by @Aaron Mazzrillo:

When the above poster claims he is "parking his money" he doesn't know it, but he means permanently. I don't care what those Midwest houses appraise for. Just cuz some guy with a clipboard and fancy paperwork tells you the house is worth $65K doesn't mean you'll find a buyer ready, willing and able to pull the trigger on that deal and when the dust settles, that sales price is likely to be much lower than fancy clipboard guy claims it should be. That house will be on the market, vacant, along with lots of other on the market, vacant, houses all looking for the same low income, subprime buyer who is most likely more happy being a renter. I've got two of those awesome deals left in my holdings. Awesome deals I did when I didn't know what I was doing. Now they are anchors producing crappy returns and I almost can't give them away. As they say; when you lie down with dogs, you get up with fleas.

If I only had $40K to work with, I'd find a proven flipper in a market very close to me and I'd lend him/her the money secured by real estate, using escrow and getting a lender's title policy. I've done lots of these exact small loans when I was starting out and they were the only early on deals that paid off very well again and again.

This part is true. If you are buying with the hopes of selling in a few years then I would be very careful about investing in the Midwest.

I'm not planning to sell for at least another 25 years. I'm young and I'm buying for cash flow, and I'm buying so cheap it doesn't matter as my investments pay for themselves in two years max.

2 Votes

Originally posted by @Jonathan R.:

You can buy all in investment rental properties in the Midwest for 40K all day long in C class areas. I bought a 2 bedroom 1 bath home with a detached two car garage for 18k. I spent 14k to rehab it and it is rented for $675 a month. People will sell virtually turnkey in the Midwest for 40k. It's a great place to park your money.

Absolutely. The first house I bought was a 1,500 square foot house with fenced in yard on corner lot. Directly across the street from a day care center.

I paid $30,000 for the house. I spent $400 having some new rails installed and $125 to service the HVAC, that's it.

I now have it rented for $800/month. I originally listed it for $900/month, and had multiple showings and 3 ppl who wanted it. After further research on the applicants I decided to lower the price and see what happened. People were beating down my door for this house. Had multiple applicants and was able to choose the best one.

3 Votes

Originally posted by @Christian Sifuentes:

Derek E. where are you buying properties?

Charleston, WV

Huntington, WV

Ashland, KY

All of these locations are within 2 hours of Columbus, Cincinnati, and Lexington.

They are low income houses but for the area it is not the worst areas by any means.

I just happened to be local to the area and didn't have a ton of money to spend. I just bought a house for $7,000 and it needs less than $2,000 in repairs to get it to market rent. Market rent is $772/month. I always go a little cheaper than rentometer so I can get more applicants and choose the better applicant. I will probably rent it for $725 range.

It's the type of place where you need to know the area. One street could be nice and then next street over is a war zone.

I just spend most of my time throwing out lowball offers and see who wants to sell. My personal rule is it needs to be $15,000 or less and hasn't to rent for a minimum of $600/month.

7 Votes

First thing you need to do is determine if you are going to move or stay on Long Island.

I don't know but I would imagine it would be hard to flip from out of state, especially starting out, unless you were there doing it yourself.

So first thing I would do is decide whichever strategy you want to invest in.

0 Votes

I'm not you so I'm answering this from my perspective. I had around $60,000 to invest.

I bought 3 cheap/low income houses paying cash. I'm bringing in $1,650/month and own the properties free and clear. Used that money and just put a 4th one under contract that will close those week which will bring my monthly income to $2,350/month. Once again I own everything free and clear. Already have my 5th one lined up as well. Just going to wait another month to save up another $2,000 that I can use towards repairs on the 5th house.

32 Votes

Wiring, plumbing, structural problems, old windows, does it have HVAC?

I buy a lot of older homes and those are usually the first questions I ask.

1 Vote

You could also look at it as you are saving $336/month if you were to be renting the same place.

I would do it as long as it's a good location and you think it will appreciate.

0 Votes

is this a rental property or a main residence? Just wondering why you would buy something that you didn't have the many to fix?

1 Vote

I pay for and pick up all the materials for my contractors. All they have to do is show up to the job site. I've been pretty lucky so far. If someone is lazy, I eat the cost of replacing them immediately. I think in the long run it is worth it to go ahead and start building a relationship with the next man up.

1 Vote

All Forum Posts by: Derrick E.

Derrick E. has started 27 posts and replied 877 times.

Post: Have $40,000. Where would you put it for the best return??

Post: Have $40,000. Where would you put it for the best return??

Post: Have $40,000. Where would you put it for the best return??

Post: Have $40,000. Where would you put it for the best return??

Post: Where to invest, New York is out of the question!

Post: Have $40,000. Where would you put it for the best return??

Post: Greatest issues of old properties?

Post: Duplex Analysis is it worth it???

Post: bought a house now have no money to fix?!

Post: Contractors don't complete their job!!!