All Forum Posts by: Gareth Fisher

If there was work outside of the scope of work.  Then the contractor is able to charge a premium if you gave them the go ahead to do the work.  That's where we make our money.   In the future make sure you agree upon a price before they take on the extra work.  If there charging you more for work that was agreed upon, I would put my foot down.  Contractors fight over money for a living so it depends on the contractor.  He may be honest or he may be throwing his weight around hard to say with out knowing more details.

The biggest thing I would do is look at your different markets with in an hr from your home.  You will be surprised how much they can vary.  Pau attention to taxes, this will be the biggest expense you will incur.  Be conservative on the amount you plan to rent it for.  I agree typically the value is in the bones of the house or in another words the ones with a little TLC needed.  The homes that are all a fixed are often over priced due to all the renovations.  They are shooting for top dollar.  If ur patient you can often find one in between.

Your there client they should be kissing your butt.  Find a young motivated agent that is willing to work.

I prefer buying my new, I have had the best luck with Lowes.

I agree, I ended up deciding on trying to sell it first.  If it doesn't sell, then I will cash out refi but leave about 5 to 10k into the property to insure I have a little room.  Thanks for the discussion.

On this particular property.... 

Its a 3br 1 bath Townhome in a rural setting, Estate Sale As is I am under contract @ 65k The comps are a little tricky, but I would estimate the ARV to be about 110. New roof,50% of the windows are updated, New furnace, electric is satisfactory. I would need to do about 15 to 20k in updating, patching, paint, flooring, etc to get it rent ready.

So I'm looking at having 85k to 90k tied up.  Rent is a little tricky but I think I could swing 950 due to its nice yard and garage + off street parking.  Nearby walking trails etc.

I do to tend to estimate fairly conservative in my construction budgets as I am a contractor.  I have been working on getting my costs down, but its seems that nothing is cheap these days.

My concern with that argument is what good is a portfolio of 20 sfr if there not producing good returns.   

To further complicate the issue, I can afford to leave 10k in my next property, and still have plenty of capital to continue to invest. I'm just not sure if I have to leave 10k in it to make the numbers work, if its a deal worth pursuing? Even though my ROI would be very good.

Long time lurker, first time poster.

I have noticed with this BRRR model. That with many properties if I leave 10kish into a property. Many of the properties I have been analyzing will meet cash flow standards. However if I take all my invested capital out, they will most likely cash flow since I'm self managing but only marginally. 50 to 100 a month.

However If I'm leaving money in the property doesn't this defeat the overall purpose of the model?  I expect to continue to see lots or appreciation in the next 5 years in many of the markets in my area, so I feel that my opportunity costs should be factored, so the idea of leaving capital behind when the bank is willing to lend me money.  Is something I should be considering, but lack the experience and the knowledge to make such advanced calculations.

On the other hand I obv don't want a portfolio of lousy performing sfrs.   

To me it boils down to this,  I can leave no money in which is still a good roi and make a little, or leave some money in and have a stronger performing rental property.    There seems to be strong arguments for both sides.  

If I was analyzing the property, and I'm no expert.  I would include your rent as well.   Just to see how the numbers work out.

As far as breaking down this particular deal.  We need more info.

Taxes are a big factor.   You didn't include that information.

The overall condition of the property matters as well.  A newer property I would expect lower maint.

An older property I would expect more.  Given that your estimating the value of the property to be 230.   Your getting it at 215.  That is barely 10% below market rate.  I try to hit more like 30 to 50%  So I personally would lean pass because of that reason alone.  

That being said if your busy with school, and have a lot going on,  it may be better to just settle for a fair priced property that will need minimal oversight.