All Forum Posts by: Peter Schuyler

My rental has been occupied since Feb, with no real issues. The Property Management Company is doing well at this point, I have had many new "managers" along the way as people get promoted to other roles, etc. That is par for the course, but something to be aware of.

One item I did not think of until recently, is if your Turnkey Provider is flipping your house and getting new appliances, water heaters, HVAC, maybe a new roof, it is good to collect the warranty info, maybe even the color swatches/flooring for paint if you decide to self manage or move to another PM company. It is easy to forget those items over time. Many of the TK providers have the same colors, flooring, etc, but I'm guessing over time, buy different stock items, and they keep all the warranty paperwork to my knowledge.

1 Vote

I have not had that luck yet, it took 6 months to fill my first unit, thats a half a year of vacancy, which over the next fews years will hurt that average as you would expect.

Pete

Originally posted by @Kevin Grove:

Originally posted by @Peter Schuyler:

"They also advertise 4% vacancy in the Proforma, but the PM handbook states the average vacancy is 45 days across their portfolio which is 12%. That is quite a difference."

Yes, if the average stay is 12 months and the average vacancy duration is 45 days, then you would enter 12% vacancy into your Proforma.

But many good turnkey operators have a 36-month average stay. In that case, the you would enter 4.1% vacancy into your Proforma.

Vacancy formula: 45-day average vacancy duration / 365 days in a year / 3-year average stay = 4.1% vacancy

0 Votes

Hello

Thanks for being willing to host different questions. My wife and I have been investing in Real Estate as a way to supplement our retirement savings long term. SInce we both have decent jobs, our income is over the limit to take the normal tax breaks its seems to offset our income taxes. What tricks do you tell yoru clients who have to "bank" paper losses over time, the "paper" losses have now added up to a point where it seems like maybe we should sell some of the holdsings in makets where some of the real estate has appreciated and not worry about all the 1031 exchange stuff since the cpaital gains will be offset.

Your thoughts?

Pete

Originally posted by @Nicholas Aiola:

Hey, guys!

I've been on BP for about 7 months now and I have quickly learned two things:

There is no better place than BP to talk real estate
The wealth of information on BP is immeasurable

I've read and learned quite a lot while scrolling through this site, and figured I'd create an open forum to (hopefully) offer some help and advice back to the BP community.

I'm a CPA in New York with a passion for real estate and I'd be happy to answer any tax questions I can!

0 Votes

Originally posted by @Scott Elkins:

I agree 1% rent/purchase ratio is hard, and anything over 7% Cach ROI seems hard to find. I also worry about vacancy in this area given the social/economics. In Montrose there are some patio homes renting to more mature renters but the Cash flow ROI is not there, more of a cash purchase, 1031 type of setup.

@Teri S. says:: Scott - the 7-8% range is "average good". To get much higher you generally have to buy something where you add the value (adding units / bedrooms) or you are buying a dated property that has a good cap rate - but will experience high maintenance or capital expenditures. I've seen some 10% properties...

scott says: I agree 1% is really hard to find( ie same as a 12% cap rate basically for all the newer investors out there.) We can find 8.5% (=71% of the 1%) and even those do not pop up very often. In my opinion, 7-7.5-8 is "average good",and anything above 8.1 is approaching really GOOD. with 10% being GREAT.

We have over 25 rentals and only a handful are truly a 1% deal, usually you have to buy them distressed or ones that need a lot of rehab. a turnkey 1% will probably never happen, there is just too much demand and marketing. What is much more normal as teri states is buy a 7-8% one and "add value" with storage units/rent and increase the rents or add W/D or parking or expand the sq footage. with the "value add" you can get closer to 10-12% ROI/Cap rate

0 Votes

We ended up lowering the rent to $895, and it rented pretty quick.

I ended up with three months of no income and a $60 a month drop for 18 months.

The rent comps showed high of course in the summer and suggested $950 was correct, as we entered Fall it did not work.

The PM side of Reedy is trying to work with me, but the income loss is math that makes this investment a failure on paper for 2018.

2018, a loss of $2850, around 10% of the initial investment
2019 a loss of $660 in income, CoC return will be around 3% if there is no more vacancy.
The 11.4% CoC return and 4% vacancy for this turnkey did not work out.

In 18 months, I will try to get a market rate again, hopefully, it goes up then. If not this investment will be less than inflation and consider a failure in the short term.

The only item of due diligence I could not do easily was to talk to past and current investors. Reedy does not endorse other investors talking to each other of course. There are some members on Bigger Pockets that own properties that I'm trying to reach.

0 Votes

I wish I could say everything is going well, it has now been 148 days since first marketed, I have owned the property since Sep 28th, with no qualified applicants. Security deposits seem to be the Achilles heel for some reason. We have offered two incentives, the area might demand lower rent this time of year.

I'm not impressed with this Market at this point, or it might just be the PM, hard to tell. But the end result is this investment is now losing money, Sorry Warren Buffet, I broke the cardinal rule. Its way to early to dump and run.

I have noticed Reedy has other listings with as long dates or even longer that could be a marketing tactic or the truth (simple Zillow search shows this). They will not share any other investor details for privacy reasons, even though I was willing to share mine with other investors/owners.

0 Votes

Hello Lavent, send you a PM

Originally posted by @Levent Caglar:

Thanks for the input.

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I have learned do not trust anyone's elses Proforma, do your own numbers and make sure you do not under estimate the 50% rules, my experience tends to show 50-60% expenses, but maybe I just suck at management. LoL.

Originally posted by @Miranda Simon:

If there was one golden nugget; one tip, you could give that would aid in the long term success of a new real estate investor, what would it be?

3 Votes

I followed up with Calvin, seems like a legit guy, very knowledgable

Originally posted by @Phillip Bicker:

I highly recommend Calvin Lennberg who is a CFP and owns Advanced Investments in Denver/Castle Rock. He is an extremely knowledgeable financial planner, but he also holds his Colorado Real Estate License and understands/advises in real estate acquisition as part of your overall portfolio. I'll PM you his contact info (as I cannot post here).

0 Votes

Denver, Colorado

Originally posted by @Brian Orr:

@Peter Schuyler i actually just cam across cozy and I think that's the way I'm going to go! Thank you!!

This is another great resource for free from Cozy.co

https://www.landlordology.com/

2 Votes

All Forum Posts by: Peter Schuyler

Peter Schuyler has started 18 posts and replied 208 times.

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