All Forum Posts by: Sam LLoyd

Sale or rental?

Either way, I think I'd go with the stain, because I think the wood grain look is more elegant. 

The two times I can think of that I would go with paint, would be if the look you are going for... maybe a more modern look... looks better with solid colors like white or black.  Or, if you have a rental with rough tenants... maybe paint would protect them better than stain.

So.... put up a picture of your cabinets, and you'll get a more accurate opinion.  

On the topic of cabinets.... pro tip:  If it's going to be a rental, take a vinyl flooring remnant and line the base cab under the sink to protect the case from the inevitable drip or leaking detergent container.

Hope this helps.

There are many many things to consider to determine if the 5plex is worth the buy.  What is the neighborhood like?  What repairs is it going to need in the near future... or right now.  Is the 5plex better looking or worse than all the other ones in the area?  Do you have financing lined up or enough money to buy it?  Do you have the funds and know-how to take care of any issues that arise?  What do other 5-plexes go for in the area?  

Those are some thoughts to get you started.  Give us more details and we'll give you more ideas and opinions.

I'm looking at an almost identical deal... just double every number.. cost, rent, etc... Also getting about 8.5 CAP. Around here, that's a good deal, however, not good enough for me to chase except that with this particular deal the seller is helping with financing.

I'm not looking forward to managing it, but I need the cash flow right now and it will bring me that.  So, it depends on your goals and your other options.  If your goal is cash flow, and you don't see anything else out there... go for it.  If you're trying for passive income, and/or there are other deals in your market (maybe a 4plex with similar numbers)... I'd hold off, or set your price low enough that you'd have to go for it.  Some deals (and maybe this one), aren't worth doing, even if you get a lower price because even if you had to resell, you'd loose any discount with the cost of transaction.

I've gone back and forth.... most times I end up putting off the hardware installation... and then it never gets done.  Here's what I think.

Door style:  This is the biggest, some doors have a lip specifically for pulling it open, or even a finger grove cut under the panel.  On the other hand, some doors have squared edges, where it would be a pain to pull them open without a pull.

Look: Smooth look?  cotrast?  Ugly brass ones that you can't replace because you'd have to special order pulls with a specific spacing, and they'd be expensive (that's one flip I did).   You have to make the decision as to how much the look will help.

Cost:  That one is simple.... fancy drawer pulls can be very expensive if you add them all up.

So, put all those three together, make you decision, and don't look back, since you'll never be able to quantify it.  What I've done (other than the ugly brass ones).  I've left them off several times since the doors were suited for it and it saved a few bucks.  I've put them on when the door required them and I didn't want tenants to get fingerprints all over white cabinets.

You can find tasteful (and simple) contractor packs at Home Depot and Lowes, as well as Wal-Mart... and probably other stores that I don't have access to here in Alaska.  Good luck with your kitchen.

Let's see.  The guy calls himself a mentor and then suckers you for 60k...  and then you want to work with him again?  I've lost 60k on a real estate deal that had a 'mentor'.... I will not work with anyone from that deal again, or take a chance on anyone other than myself.  Don't bank on this mentor's 'buyers list'!!!

So, where to go? As Bryan pointed out, you need money to tie up a multi, as well as credibility and good deals.  The people who buy multis know how to evaluate, negotiate, and put under contract, so you'd have to be very very good to get a deal for them with margin in it for you.... probably not the best thing to bet on without more experience.

Oh, and that deal I lost money on?  That was long distance, one of the things I'm not go to try again for a while.  So I wouldn't advise that for someone starting out.

If your goal is to have passive income, there are many ways to invest your money.  It sounds like you're looking for a job, which is great, but I'd advise staying close to home with your investing till you have a little OJT and can move on from there.

I was thinking the same thing.  If you need 130k to get the deal, but you need 90k to make it a good deal, which are you going to offer?  You offer the 90k, because if you get it for 130 and that's not a good enough deal at 130, you loose.

I've bid higher (and gotten) two different properties over the years, and I haven't regretted either one, so that's not the point... the point is whether or not it is a good deal, and we'd have to know what the ARV would be, and what other options there are in your market before we could advise you to chase it or not. Also, keep in mind when comparing to other properties that you'll still have to pay for the paint, flooring, and other improvements, and your time may be cheep, but you have to value it when making your decisions.

The number you failed to mention was how much you have into it.  If you own it free and clear, you have to make the decision as to where best to keep your money.  Do you want 100k in a maintenance hog, or do you want to have  50% of a really nice 200k property, or 25% or two 200k properties.

The other piece of information you have to find is what returns you could get on your money if you bought something else.  I spent almost a year getting my hands on a 4plex, there were several times that I thought it would be a pain and I should buy something else, but everything else I looked at made this a good deal. So now I'm stuck with a maintenance hog, but when I start to hate it, I just have to think back to why I bought it, and what else is out there.

So, what else is out there?  I think that's the biggest question... and yes, you can find renters to live in a place that won't well, so a property like yours may not sell for market value, but it could rent for market value.

This is a fun topic for me, since this is where I was several years ago.  First:  Your income is not $600/month.  I moved out of a condo situation with almost the same numbers, and only recently have been breaking even.... there is maintenance, vacancies, and other costs. So maybe your income is closer to $400... but you can tell the bank it's $600.

Second:  If you are going to rent out the condo, get it rented by November or December... that way it will show up on your 2016 tax returns as a source of income.

As far as counting the income.... I've been told both things as to weather it will be counted or not, so I'm guessing it depends on which lender/broker lets it count, you might have to go to a mortgage broker to find a lender that will count the income from the house you area leaving.

3rd. Refinance? My thought is no, don't refinance. At this stage of the game, cashflow is king, and if you refinance and it puts you back into PMI, you'll kill your cashflow. In my opinion, it would be better to save up for the 2nd property since you really don't have to save up that much to owner occupy.... pick up a second job if you have to.

Last thought:  Condo's often do not make the best rentals.  Two conclusions:  Are you sure you want to keep the condo, or is there a better place to put that money?  Also, what are you planning to buy next?  A duplex is a great way to go, and you can count the income from the duplex when you are qualifying for the loan.  I think it's common for people to buy a house/condo they want to live in, and then treat it as a rental later, even though they never would have bought it for a rental.... Like my first house that I still have..... so look hard at the condo compared to other investments when deciding to keep it as a rental.

I hope these thoughts help.

Personal experience:  First investment was with a friend and had property management.  Lost tens of thousands, and set me back several years... very bad experience.  As was mentioned, budget for PM (otherwise it is not a good deal), but do the work yourself.  This forum has many aids and ideas on how to manage while working a full time job... and in the end, it does not take that many hours.  I've been doing this for 10 years, and I've never had a call in the middle of the night.  That being said, it's not for everyone, but if you've budgeted for it, you always have the option of handing things over to a PM.  Even if you screw up placing a tenant, and want to be rid of it.... just hire an eviction service and move on.  

I think Rita is saying that the property would be an 10 CAP at current price: So NOI would be 25k.... if the purchase was 250k if she then sold at the market 8 CAP, she would Get 312k....