All Forum Posts by: Steve T.

Thanks Karen, I will give that a shot.

Well, yes - I've researched my area, I don't think retail investors like myself are going to find a place with much better numbers than this one. I cannot manage, I just can't - I work fairly long hours as a lawyer and it is not an efficient use of my time. The building being so old doesn't scare me much - there are a ton of them here in Spokane - but I doubt there's a whole lot I could do to spruce the place up.

One other thing is I'll be on the hook for water/garbage/sewer. I wonder about these guidelines like the 50% rule, I don't see how that can apply equally to situations where landlords pay water/garbage/sewer and situations where they don't.

I suppose making an offer for 90k couldn't hurt. They can always say no, and I can watch and see if the property sells and if so for how much. Or ... maybe they say yes.

Ok - just taking back of the envelope type calculations, 50% of 1740 is 870, P&I on 90k @ 4.5% is 460, 870-460 = 410. That's pretty close, no?

Maybe if I could get it for $110 I'd be in the ballpark?

Hi all,

Just looking for some feedback. I am in Spokane, it's a small enough city that it can be tough to find opportunities. There is a fourplex that just went under contract for $120k, gross rents $1740. Apparently the buyer backed out at the last minute after the inspection.

1740/120,000 == 1.45% of purchase price in rents, that is as good as I have seen in Spokane. The place is old (built 1901) but all units are separately metered and apparently currently have tenants on month-to-month leases.

Assuming I get a look at this place and the inspection issues are cosmetic, what do you think? I could wait around until I die looking for a 4 unit building at 2% rent to price in Spokane. I could also really use some passive income because I have tax losses on a SFH that I can't take out of my regular income because of AGI limitations.

I really appreciate any help, thanks so much.

Steve

Hi there,

Looking for a good property management company in Spokane. Or, just someone who wants to talk a little bit about real estate investing in the area.

Thanks!
Steve

So here's another question then. Say I can get a 15 y/o house that is ready to rent, nothing needs immediate attention for 100k. 30 year deal, 6%, P&I is 600, say I can rent it for 1300. Using the 50% rule, I get:

1300 monthly income - 600 P&I - 600 expenses = 100 cash flow.

Same exact house, same exact price, but it's brand new. Equation is the same - on paper, I am looking at the same deal. But, with the older house, I am looking at a new roof in 5-15 years, water heater and HVAC work any time, etc. In the new house, I've probably got 10 years of runway where expenses are way less than 600 per month, I can save that money for future expenses.

How do I account for the value of new or relatively new construction vs. older construction? In my area, there are a lot of 100 year old homes, a lot of 10 year old homes, and some 2 year old homes for sale. Is there a way to modify the 50% rule of thumb to account for this?

Thanks all. I can safely say that joining the forum was worth it for just your four responses.

So I guess the next question is this. I could consider going out of my home market to pick up a property. Do you see single family rentals in decent neighborhoods where rents are 1.5% or even 2% of the purchase price? Or is that something that typically means you are buying into a bad neighborhood?

Hi all,

Looking into purchasing an investment property. In my home market, I can get into a little 2 BR SFH for about 60-70k that should rent for $650-700 or so per month.

Here's what I don't get. Using the 50% rule, there is $350 left over every month for P&I and cash flow. P&I at 5% and 30 years on 65k is $350. There's just nothing left over for cash flow.

So, bottom line, I guess these are bad deals? Some of them really aren't in bad shape or in bad neighborhoods. What I really don't get is this - a lot of these houses are selling for 50-60% of what they sold for 2 or three years ago. It seems crazy to me that prices could have fallen that much and still not present a real opportunity for investors, but I guess not?

A related question. When I run the numbers on properties, the ones that seem to fit from a cash flow perspective are always beaters in bad neighborhoods. Am I better off just accepting that to get some cash flow I need to be a slum lord?

As a final note - I have a pretty good day job and I will absolutely use property management if I decide to do this.

With all that, any thoughts/advice?

Thanks,
Steve