All Forum Posts by: Hank A.

It doesn't matter so much how to decide to handle the common areas and common expenses, what matters more is that you have a formal written agreement in place to go back to when the need arises. Right now you are friends and on good terms, you cannot guarantee that will always be the case. You, or your friend, could later sell the property, or get a partner, or get married, or any number of things could happen that change the relationship. So come to an agreement on how you will jointly handle maintenance, repairs, expenses, and profits (coin laundry?) in the common areas, write it down, sign it, and keep a copy each. You don't want to complicate this now? This is the best way to keep things simple in the future. Without this agreement, things will get complicated at some point in the future when you think your friend should pay for repairing the washer because his/her tenant broke it and he/she thinks it should be 50-50 because it's a common area. Even a verbal agreement is not good enough, because memories fade selectively and ownership could change.

(365/72) x Immediate ROI to convert your immediate ROI (72 days) into a yearly value (365 days).

If you are buying this place for yourself that is one thing. If you plan to rent it out, consider liability issues that may be caused by this secret room and its ladder. You may want to seal it.

Would you be able to charge higher rent for the fourplex, compared to similar properties, considering it came with off-street parking? That might help you decide.

Compare your college loan interest rate to potential returns from investing. Say your loan is at 4%, and you can earn 10% through investments. Use the profits from the investment to pay off some of that college loan. The math will ensure that you will come out ahead. Just be sure to do the math right, and include contingencies in your expected rate of return on the investment.

Your skin in the game is 13.5K down plus about 3K closing plus 4.5K repairs = about 21K

Your cash on cash return is 850 x 10 (not 12, to allow for vacancy and expenses) = 8500 / 21000, which is more than 40%. If there are no major capital expenses coming up, this sounds like a pretty good deal. All the best.

If I were you, I would definitely NOT sell this property, and I would probably fire the new financial adviser. Say you bought your rental with 25% down (the numbers are better if your down % was lower), your down payment plus closing was just under 100K. Let's say 100K roughly. Your current cash on cash return is 12K per year which works out to 12%, probably better than the average investor's stock market yield, and this will increase as rent increases every year. The building is new and in good condition so you are not expecting major cap expenses anytime soon. So why would you want to give this up for a lesser yield?

You have about 407K equity in the rental (current price minus outstanding loan), which is money sitting there doing nothing for you. I would look into doing a cash-out refinance to pull out most of that equity and use that towards acquiring more real estate, or if you have to diversify put that into the stock market, or even do both. Your mortgage will increase a little bit, but that will be more than offset by the returns you make on the investment from the cash-out money.

If you are serious about this property, get your own independent appraisal, for both sales and rents in that area. The appraisal will probably cost you a few hundred dollars, but should be worth the money in either backing you up on a deal that makes sense or saving you from pursuing a deal that does not make sense and losing more money in the long term. Perhaps you can even use it to negotiate down the asking price.

This might sound counter-intuitive, but it has worked out beautifully for me: don't have a physical filing system at all. I keep all my documents, invoices, bills, leases, everything scanned and saved in digital format on my computer, and cloud-backed up to a service that allows me to access all my files over a smart phone app or on the web from anywhere anytime. This has helped me look up and provide documents to lenders etc at a moments' notice from anywhere, not just from one physical location. Invest in a good scanner, scan every physical document you get, then shred it. If possible, request and sign up for electronic versions of documents. Just about the only physical documents I do keep are leases with original tenant signatures. Everything else is electronic.

Looking for a CPA / tax planner / accountant in the Dallas Fort Worth area with real estate investing focus. I know there are some good ones in other cities, looking to work with a local professional that I can meet if necessary.