All Forum Posts by: Jake Johnson

Hey there-

I am an investor looking for good people and/or agents familiar with the Spokane market who can help me isolate great multi-family properties and possibly single family as well. I am naturally looking for someone who has real estate investments themselves; who can help me find a great deal.

Thank you BP community.

Jake Johnson

All-

Who are your favorite property management companies in Cleveland, Canton areas whom you've had long relationships with?

Kevin -

I like your thinking and I totally agree. Yes I had a water heater and hvac system go out... I include these in repairs in my CAPEX number which I usually set at about 7% on a property I know to be in very good order like this one was. I hold units for longer term. I watch cost pretty closely but again I am dependent on a team somewhere else that I put my trust in. I put this out there just so people with even less experience who are told to jump on a property that has $250 or more in cashflow etc.. I think that is a disservice in general and people should do deeper analytics up front and assure that the number they arrive at for cashflow expectation is not a false expectation.

What I have learned is this.

Note: I am still a rookie and only in the single digits for doors owned.

Big factors that quickly erase cashflow and that may put sizable monthly cashflow even into the negative:

Not budgeting in all the placement fees, renewal fees and percentages, certification costs (mandated by the municipality)

Many management companies do a very good job taking care of properties including one of mine. They are great at being responsive to tenants.. BUT this comes at a fairly high cost. In one of my properties, I ran numbers and in the first year, these costs put my repair costs on an already well maintained property at 29% of my gross rental income! Granted this will hopefully come down in the second and third year… Then the many placement and certification fees, etc. amounted to an additional 5+% on top of my contracted monthly management fee/% costs. Your income and cashflow may be heavily impacted by the condition/age of the property as well as the socioeconomic class of tenants you have and so on…

The Ultimate Guide to Grading Cleveland Neighborhoods - is fantastic.

Andrew, Patrick and James. Thank you for your time, insight and references...very helpful... Following on your information.

Hey all - I have been eyeing Cleveland. I am invested in two other geographic areas. Anyone have some good experience with boots on the ground there, who can share market insights, best areas for long term single family holds (I am focusing on cashflow). I am seeing very mixed takes on the market there. I am happy to share knowledge and experience or something similar in return.

Thank you

Jake Johnson

First I think there are tons of helpful insights here from many of you here who are smart investors. My humble two cents from experience (5 doors): All the so called real estate investment websites and people out there telling you "if a property cashflows $250 or more a per month - go for it," or anything similar - is terrible advise and a recipe for negative cashflow. The formula one uses to determine if there is cashflow; must include vacancy rates and cap investments that are always higher than you think especially on any aged property. Although there are many factors to analyze for each property and market... I do like the $1000 cashlfow minimum margin, which can even turn to negative cashflow quickly as well. Stick with a minimum or 10% cap investment and minimum vacancy rate or at least 1 month year - all to be safe. You can cruise along like I did, with one of my properties with no vacancy for 3-4 years and no missed rent. But then a bunch catch up repairs pop-up and some vacancies, and taxes adjust after you bought it, etc.. and all the sudden your margin is lost, zero or negative once you revisit your numbers and amortize things over the last 4 years etc.. So it is all about doing very thorough analysis up front on all aspects of the acquisition. In my example, I had the good fortune of the property being over the period of big appreciation in the last several years and so, I am coming out great on ROI... Going forward though I think we cannot assume the same long term appreciation rates we have been seeing...

Does anyone have experience using Air DNA, mashvisor or other similar software subscription based services, to analyze short or long term rental propositions of potential property investments? I am trying to determine if these are worth their subscriptions and do they give you accurate and relative data that you can rely on, in analyzing potential or existing properties? It looks like you pay an annual or monthly subscription. 

Thanks for any help!

Jake