All Forum Posts by: Hilary Hageman

Sweet.  The property I have my eye on is definitely a B neighborhood.  Extremely safe and desirable schools, close to beachfront, etc.  Figuring rent/asking price only gives 1.1% but is by far the best I've seen in the area so far.  Cash flow of about $100/mo figuring very conservatively.

Thanks, all! We are currently looking at duplexes in our area but are having a hard time not paying "retail" for the desirable ones. Craigslist doesn't have much. Any tips on finding duplexes For Sale By Owner and/or not on the MLS?

Also, I'm finding that the 2% rule regarding rent and purchase price almost never pans out in our area (Southwest Michigan).  It's really tough to find a property above 1%.  Should this be concerning?  How realistic is the 2% rule?

@Marrio Barnes, great information, thanks for sharing!  My husband had a bad experience as a kid mowing the lawn for his parents' failed rental property attempt and was averse to duplexes because he thought he'd be strapped with the lawn care.  I'm looking forward to sharing this with him!

What's the best book specific to managing small multi-families?

I've done a fair amount of research on single-families, but the cash-flow seems so much better with duplex-quads that I'm starting to consider it. 

What is different regarding tenant selection and management?  How do you attract good "home-owner" type tenants to a multi-family? 

A friend of the family died, leaving a large older home that he paid $160K for many years ago.  He left the home to his sons, who aren't the most enterprising individuals (to put it kindly.)  The house has sat vacant for some time and although only $30K is owed on the mortgage, they have become delinquent on the payments because they're too lazy to sell it.  The house itself is a colonial/farmhouse style that would be absolutely gorgeous with a new coat of exterior paint.

Should we try to take on the existing mortgage and flip the house?  We'd obviously get an inspection and a better look at the interior, but the last time family members were inside they said they believed it just needed cosmetics.

I'm a little nervous about flipping because it was never in our "game plan."  We planned to buy and hold, building passive income through our rental properties (our first prospect is currently falling apart in the post-inspection negotiating phase).  What do I need to know about flipping vs. renting a house?  How is rehab different?  How are the costs different? 

@Richard Ball I will definitely check into them, thanks!  

Here's one for laughs:

I called Liberty Mutual to get a quote on the new property and spoke to an associate who sounded confident, but new.  He quoted me $525 per MONTH (!)  I didn't know whether to laugh or choke!  I said, "Holy cow, man.  That's not going to work for me."  He told me to call back later if I changed my mind.

I called a local insurance broker and she quoted me $38.29 per month.  Thaaats more like it.

P.S. I called Liberty Mutual back later just to be sure I had gotten a correct quote and the new guy got it way wrong.  Their policy would actually run me about $75 per month.  But he sure was confident in his numbers!

@Daniel Ryu Awesome blog post.  Definitely looking for any tips on the due diligence process.  Thanks a lot!

@Daniel Ryu, 

I'm from Stevensville, Michigan (about 20 mins South of South Haven).  South Haven's economy is largely based on tourism.  You would do well with a nice downtown vacation rental, but you'll pay a lot for it.  

Year round economy is poor.  The biggest employer in the area is the Palisades Nuclear Power Plant.  I did clinical rotations at their dinky little hospital when I was in college, but they have since shut many of their departments down.  

There's a large population of migrant and farm laborers and unemployed/poor whites that contributes to the low-income status of the area.  As you get out of downtown and into the surrounding rural area (especially farther from the lake), you'll find more depressed sections of town.

Sadly, although SW Michigan is a beautiful place, its job and population growth have been steadily declining for many years.  That's why my husband and I work in Indiana!

@Thomas S. what are some other costs I should anticipate and budget for?  Do you do multi-families?  Like I mentioned above, that is our goal in a few years, but the prospect of dealing with multiple tenants from the get-go scared us off.  We wanted to get some landlording experience under our belt before we took on a multi-family situation.

Also, many of the smaller investors in our area that we've talked to are wary of multi-families.  We live in a fairly rural area where most people own their own homes with a quarter acre lot or more.  The investors we've talked to say they stick to SFHs because "People want to live like homeowners here.  You get a different kind of tenant who's willing to live in a multi-family."

Thanks everyone for the advice!  Our long-term goals involve paying this property off so that our cash-flow drastically improves and then rolling it into a small multi-family property.  We're kind of looking at this as our "landlord academy" property.  

I had run the numbers going in with a 15 year loan and the cash flow was much better.  We put down the offer and I then discovered that the terms would be 10 years.  That's why the monthly payment is so high.  We're all about owning things free and clear, especially when we've used our own home as collateral.  I was just disappointed to see our monthly cash flow dip to about $50 per month.

I'll definitely look into lowering our property taxes.  The previous owner paid $69 for the same home (we paid $48) and I believe their taxes reflect the higher price.

We're about to do our due diligence and have an inspection, including an HVAC inspection on our old furnace.  Is this such a bad deal that we should eat the $1,000 loss of the earnest money and back out?  Should we look for deductions based on the inspection (the home has a few minor repairs that we were able to see immediately).