All Forum Posts by: Account Closed

Is this a duplex? It appears that your estimated expenses are too low.

I can't see getting insurance for $336 per year. I think insurance will be no less than $600 to $700.

You have property taxes at $768 per year. I don't know of many areas where taxes are less than 1.2% and that comes to $1200 per year.

Your repair estimate is too low at $960 per year. That would be a great cost in a perfect world, but water heaters break and the national average is $1,000 to replace a heater. Furnaces, garbage disposer, drains, sewers, roof, etc. all go on the blink sooner of later and $80 per month will never cover the cost for repairs.

If this is a multi-unit building it probably has only 1 water meter and you will pay for the water for both units.

What about sewer use fees, trash removal, gardening, etc.

What is the neighborhood like? Will you be able to find good tenants with stable income?

The property grosses $19,200 per year. Add realistic expenses and add 10% for the unknown and see how the numbers look. The big money made in real estate is not from collecting rents and paying down the mortgage in 30 years. The big money is made by buying properties for less than they are worth, or buy properties you can rehab and make them worth a lot more and from good appreciation.

I foreclosed on a property about 20 years ago, paid a foreclosure company about $350 and they handled the entire thing all the way through to the auction.

How are you going to foreclose on a house you don't own? If the owner did not pay his property taxes I am thinking that only the county can send his property to an auction and I believe he can be about 5 years late on his taxes before the county does. I am not an expert, but I think there is a difference between a foreclosure by a bank and a tax auction by the county.

The numbers look terrible for a rental properties. I would not purchase a property with a negative cash flow unless I thought the property was going to appreciate by some wild number, or I could increase the rents, significantly.

I don't know what property values are in the neighborhood, but when looking at the picture and the other houses in the neighborhood it looks like the price is fairly high and the homes in the neighborhood don't have much curb appeal.

I've been wrong many times and maybe the homes will double in value in a few years. But, if the homes do appreciate in value you will still be stuck with a negative cash flow unless you sell the home and upgrade to a better property with the cash. But, then you will pay a capital gains tax if it is a rental property.

A $400 negative cash flow is $4800 per year. In 10 years you are out $48,000. How will you make up the difference and turn a profit with very little appreciation.

When I invest my money properties have to make immediate profits by purchasing at  below market prices, purchasing properties that will appreciate, purchase properties I can rehab to increase their value and purchase properties where I can increase the rents, significantly. You can't do that with a negative cash flow and a property that may not appreciate. No crossing your fingers!

Investing boils down to analyzing each property. Regardless of the city, there will always be a great deal.

My experience with Massachusetts is the properties don't appreciate fast enough and evicting tenants has been a nightmare. But, crunch the numbers and maybe you will find a gem. The big money is not made from purchasing properties, collecting rents and paying down the mortgage. The big money is made when properties appreciate in value and multi-unit properties are the best. The more units, the better the ROI.

I never buy through online auctions because they are not really auctions. Online auctions are nothing like a live auction and they should be illegal since after you win a bid the banks frequently reject your bid and continue to take offers on the properties. The banks can tie up your money and frequently you will never get the property. Most of the properties will be sold before the auction. Read the reviews on the internet before you lose your money. When you do not jump through the bank's hoops like a circus dog and you do not get the property the auction company will not give you back your deposit. You can run into all sorts of title problems and it can be several months before you get the title for your property.

There is a video on youtube about how to get properties at live auctions through auction.com.Search BLPREI. I purchased 24 properties at auction.com live auctions and never had a snag.

I would definitely contact a few general contractors, crack repair companies and electricians. You always have the right to request that the seller pay for repairs. You may be shocked when you find out how much it costs to excavate foundation walls and seal them from the outside. 

The problem I see is' it is very easy to purchase a property in its current condition and sometimes impossible to unload the property to savvy buyers.

Most auctions require you to pay cash as soon as you win the bid. Some auctions will give you a few days, but you have to pay a deposit of about $5,000 and you will lose your deposit if you don't pay the cash.

So...what hard money lender is going to give you cash to speculate at auctions. The only way you will be able to get a hard money loan prior to going to an auction is you will need to give the lender some security i.e. a Trust Deed to property you own and the property will need to have enough equity to cover the entire cost of the loan plus interest and other fees.

What you are talking about doing sound very dangerous. Many people lose money buying at auctions and there are hundreds of reasons. You need to do a lot of internet research regarding the pros and cons of purchasing properties at auctions. We don't live in an ideal world!

Once you win a bid at an auction you can sell the property the same day, without speaking with the tenant, if you can find someone to purchase the property from you. 

Never heard of a Cash Multiplier. Do you mean Gross Multiplier?

A landlord selling a building rarely wants the buyer to talk to the tenants because when tenants know the building is for sale there is the potential that they will move out. Also, since you don't own the building you don't have the right to interrogate the tenants.

As for the wiring. I do electrical work and Romex wiring is not legal when it is exposed. Maybe, it was legal when it was installed, but I doubt it. All wiring outside a wall has to be inside a metal conduit pipe. You can't even use metal flex pipe outside a wall. That electric work is not the original and was done by a hack.

As for greeting the tenant, you knock on their door and introduce yourself as the new landlord. You want to bring their leases with you and confirm the information and security deposits. Then, you should write them a letter explaining your policies regarding what improvements you are going to do, your rent collecting policies and your policies regarding when rents are late.

For the electric wiring, you need to get estimates to bring it up to code and then request a deduction from the price of the property. Otherwise, if you take out any permits an inspector may nail you and then you will wish you got the money from the seller.