All Forum Posts by: Jacob Sampson

Also, to your last question.  For sure, most people are using leverage to purchase.  The only people I know who do everything cash are smaller local investors that really only need 2-10 properties for retirement.  And even those likely started out with mortgages, they have just paid them off and now have the cash to purchase outright.

I agree with @Dax Desai.  You can do it without debt it's just going to be sloooooww.

That being said, what is your goal? Does 1 SFH fully paid off allow you to meet your goal? If so, go for it.

I think the initial answer to your question is a question, or group of questions.

Are you comfortable remodeling and flipping?

Are you OK with being a landlord?

What sort of ROI/ passive income are you looking to generate?

Do what you know and love.  If you know cars and are able to estimate costs for repair and price you could sell them for, then there is probably money there for you to make.

If you want truly passive income then building up a large stock portfolio might be the way to go.

I prefer SFH buy and hold and in my market I can get reasonable homes for 50k. So, were I you, I would save for the next 15 months and then by my first SFH. Then, rinse and repeat. To be fair, I am a fearful person, so I also invest in the stock market in case my rentals turd out on me.

@Michael Giuffre

Those are definitely my own numbers, for my area.  At the same time, cash flow is cash flow no matter where you're at.  That isn't much cash flow and at the same time you aren't buying down principle all that quickly.

I think you want to structure deals so that if all goes well, it's REALLY good.  If a few things go wrong you have lower than expected cash flow, and if several major things go wrong you break even.  You want it to be a catastrophe before you are at risk of losing a tone of money.

To me, this deal isn't quite there yet.  To be fare, looking back 11 years ago, I would never do my first 3 deals, now.

I prefer texting for general discussion.  Anything legal like 3 day pay notices or lease violation notices I mail or hang a note on the door.  I would do whatever legally has to be done for those types of communication.

One of the benefits of a SFH is that if it's a mistake you have a much larger pool of buyers to sell to. If the 20 unit is a mistake, you could hold that for years.

For a beginner, if your going to make a mistake, make it a small one.  You likely wouldn't recover from a 20 unit mistake.

I know this is old and you may have already done the deal but I like to hear myself type.  I agree with what has been stated above.  $85k is the MAX I would go on that property.  You buy for cash flow, appreciation, if it comes, is icing.  Plus, if this is a long term hold property, then what happens in the next 1 to 5 years doesn't matter.  Cash flow matters.

I do monthly rent * 60 to get a ball park.  If I am near there then I will delve into the numbers in greater detail.  Having a current tenant to me is neutral.  It could be good it could be bad.  Here is the equation I use:

I want at least a 12% CoC return with the property on a 15 year note. I want that return while being able to use a 30% vacancy and maintenance rate. So for your deal I would say this.

$1350 * .7 (this removes 30% for vac$main) = $945. $945 is what I have left to spend on PITI on a 15 year note and provide my 12%CoC return. If those numbers work then I am pretty interested.

What is the purchase price you have come to at this point?

Also, I think your vacancy and maintenance %'s are low for a long term hold.

For me, I max out at $75k-$80k as a purchase price on a 15 year note.