All Forum Posts by: Georges A.

@Sharon Tzib well said :) I think I sounded more dramatic that I meant to ;)

let me rephrase:

"but I am still debating if investing out of state is right for me. Because when looking at the property management costs for a multifamily, the numbers are always 70%+ of the income (looked at several properties). With condos, it's not that bad and falls within the 30-40% range.

My dilemma is, with the current cash that I have, whether to invest out of state in condos and make 12% total ROI but actually getting 2 properties (each 12% ROI , $140 positive cashflow monthly) vs. invest in a condo nearby (can't afford MFs in where I live - Boston) and get around 12% ROI and $220 cashflow). Of course although close, buying 2 properties with the cash sounds more appealing however I won't have control over the maintenance costs and could actually make up the difference by fixing things myself."

@Jon Holdman I definitely agree with you that I wouldn't want to do this long term is it would be a tough task. However, I am a first time REI and I think I could learn a lot by self managing my first property where my unavoidable mistakes will probably be less expensive.

thoughts?

Sharon, I agree, but I am still debating if investing out of state is right for me. Because if I lived close by I could go and fix it myself for free. I wouldn't have to pay a fee every time a tenant moves out (i'll make them pay the application fee), and I would save that 10% PM fee as well.

My dilemma is (a) invest out of state in areas where numbers make sense but when I do the due diligence, a lot of expenses could have been avoided if I managed it myself which isn't possible or (b) invest where I currently live where the prices are inflated and the numbers don't make any sense unless I put a very large chunk down.

@Ali Boone but the property management costs KILL your profits no?

I have been looking for out of state investing for a few months now and whenever I do the due diligence on the property, the property management is always the reason of the property not cash flowing. Every minor problem the tenants have, they charge like $50 to go check it out, and another $100 to say tighten a pipe that was leaking. How can you maintain a positive cashflow with all these recurring expenses that if you weren't investing out of state you could have fixed them yourself for free?

@Daniel Ryu These were really rough calculations using the 50% rule, I use the same sheet (a little modified) but I only crunch down the real numbers when i'm in the final step of my due diligence right before submitting an offer.

The purpose of my post wasn't to ask if this is a good deal or not but more of asking if I am being realistic with my numbers or not because I am having some trouble finding a cashflow investment property.

@Paul Timmins This is exactly what I had in mind when first started. Find a 4plex with at least 2 bedrooms/ unit, rent it out by the room and get 8 rents a month. I will offer them EVERYTHING included (and factor it in their rents). I have seen many students pay outageous rents for that. However, what really kills you is the high turnover! Students come and go, and for out of state investing , the PM will probably charge you a fee every time someone moves in/out which kills that extra profit you made. If I was the landlord myself, I would do that w/o hesitation. Great idea!

well said @Joel Owens . Your input is greatly appreciated. I think that's the direction where I am headed as well.

@Mark Ferguson I agree with you 100% that's my magic number as well. And yes I am taking an investment loan (30 yrs / 25% down)

@Jordan Thibodeau but that seems the case with most of the apts I am looking for, it seems ppl in that area are selling after renewing the leases in order to show that they have no vacancy. I am an out of state investor that will get a property mgmt company to manage the property for me.

@Dawn Anastasi sorry I'll edit it, I meant 1% rule, it does NOT pass the 2% thanks for the correction

Hey guys, I am a new REI looking to invest in my first out of state investment property. Been on the BP forums for a few months trying to grasp as much as I can and over a year now doing daily research about real estate. It's time to start making some offers! My plan is to buy a property every year until I achieve financial freedom.

Been looking in the Hampton Roads area in VA and have my eyes set on this property which we'll call Waldo II ;)

Here are the details:

Property type: 4Plex

List Price: 190,000

Income:

Unit 1: 500 Lease (1/2014 - Dec/2014)

Unit 2: 595 Lease (5/2013 - April /2014)

Unit 3: 595 Lease (7/2012 - July/2014)

Unit 4: 700 (Section 8) (Oct/2011 - Oct 2014)

My out of state Realtor took a look at one of the units and showed me a video and it looked in great shape. They have a policy that they wouldn't show the other units (although promising they're identical in quality) because they don't want to disturb the tenants until they have a ratified contract. If there's anything we don't like about the other units after seeing it, we can withdraw the offer. Of course I'll have that as a contingency in my offer and won't take the seller's word for it

Pass 50% rule of thumb? YES - should cashflow around +$200

Pass 1% and 2% rule? YES

Rehab budget: 10k

Closing cost estimation: $9500

After running the numbers. I am inclined to pass on it as it does not meet my personal goal of total ROI > 14% (my numbers show 9.14%) and a Cash on cash > 10% (currently 6.2%) and these numbers were calculated on the fact that they accept my low ball offer of 170k!

I think what's killing me in the apts < 200k that I've been checking is the low rentals they have and leases that aren't due till the end of the year which makes it impossible for me to get in , renovate a little, and charge higher rents. Do I have really high standards ? because I keep reading on the forums that +200 cashflow is worth considering, but for me anything that low isn't worth my time! Am I being realistic?

PS: My plan as I have heard it on the podcasts is to install water meters and have the tenant pay their own water. How do ppl feel about that?

Attached are the last 3 yrs of property mgmt statements:

But as a starting REI I think I don't have many options correct? I am tempted to starte with a good RE umbrella insurance but reading articles like the this one creep me out:

http://www.biggerpockets.com/renewsblog/2009/03/18/asset-protection-misconception-insurance-isnt/

@Ali Boone I am a big fan of your posts. Glad to get your input on this one.

You definitely want to ask them if they are investors themselves, or have some actual knowledge of investment properties. >>>>> well this is a 2 edged sword no? There's a high chance they'll take the best deals for themselves. But I agree that would be a plus to have a REI mentality that many realtors don't have.

What markets are you looking in? >>>>> I just started looking in VA. The numbers make more sense over there for buy&hold investors than where I currently live (Boston, MA).