All Forum Posts by: James Thierbach

 The simple breakdown of renting at the top of the market vs the bottom (even though both values sound low to me) is super helpful. I agree with the thought process. It's coincidental that you should mention Chris Clothier as I have had my eye on REINation. I think it's possibly a good way for me to start, but my goal is not to be as hands off as possible. My biggest concern with going the TK route isn't that I would be paying retail price and profiting less (which seems to be most people's concern). My concern is that I may not learn as much as I would if I get in there and do it myself, make my own mistakes, etc. Either way, you gave me great insight. Thank you.

 Thank you for the reply. I've definitely set my eye on cash flow to begin with. I have a small business that gives me stable income and requires less than 20 hrs/week of my time. Ideally I'd like to build up enough cash flow in managed rentals to replace the business income so I can sell it off or hire someone to manage it and no longer have an active role. From that point I would want to switch gears toward appreciation so I have retirement goals. I also feel like now isn't the best time to be making appreciation plays, but people much smarter than me would disagree.

 I definitely agree with your insight as to the type of Tennant that would be paying $500/mo. However, everyone talks about OH being the cash flow capital of the world and all these properties seem to be $500-$800/mo. Is there a big difference in the kind of tennant that would pay $800? To me (in my bubble of $2K min. rents) it sounds like the same thing. 

 This is the EXACT type of insight I was hoping to find. I figured someone would know something about this area. Thank you.

Originally posted by @Dani Beit-Or:

I ran this through my fin. model (see below) and used the #s you have provided. 

Based on your number I'd say that in my opinion and experience, based on the #s only, this is a good one. 

I know nothing about the area so I cannot provide an opinion on that aspect.

With that said I think it is possible you may have missed few things:

1. Leasing fee

2. Even if all the units are occupied I'd assume some immediate investment would be needed for some repairs/improvements/fixing liability issue/etc. - did you budget for it?

3. Did you include mortgage cost and closing costs in the amount of $$$ needed?

4. Did you make sure property taxes are correct? I hear OH taxes are very high

5. 6% int. rate? That sounds a bit high to what's available in the market palce. 

--> best suggestion I can give you is to put an offer in at what makes sense to you. 

 I did include $6K for closing costs and $10K renovation in the calculation that I forgot to mention. Took the property tax straight from the listing and added a bit to it. I assume I can get better than 6% but Brandon Turner's most recent deal analysis video said 4.875, so I just added 1 percent to his number to be conservative. Ideally, for my first property, I want to run it all with worst case scenario numbers and if it still looks decent then hopefully it should turn out okay.

Thank you for the insight!

I'm looking to purchase my first rental property by the end of the year and I've been scoping out out-of-state opportunities (I live in So Cal). I've seen a lot of people mention Toledo for cashflow, so I started looking MF in the area and I found this property:

1338 Brooke Park Drive Toledo, OH 43612 (8 Units - 2 Bed/1 Bath each) $280K

I ran a rental property analysis on BP and filled out (conservatively) everything I knew how to (I don't know the area very well). 

25% down, 30 year 6%, $4K monthly income ($500/unit), $3500 property taxes, $5000 annual insurance (shot in the dark, this is one of the things I have the hardest time estimating), 7% repairs/maintenance, 8% capex, 5% vacancy, 9% property management. I know I probably need to pay water and sewage as well, but honestly have no idea what to put for that. As the numbers stand, I come up with the following return:

$873/mo cashflow, 13.8% CoC ROI, cash needed - $76K.

Those numbers look great to me as a newbie, but seeing as the property has just been sitting on the MLS for the past 4.5 months, I'm assuming it's not a fantastic deal. So I was hoping some of you may be interested in analyzing it with me and we can discuss what makes it a good/bad deal. Thank you.

Short Background: P2 and I are 30 years old; she has a stable government job and I have a successful small business that was fortunately not overly impacted by Covid. We have managed to save up about $150,000 over the past few years and are looking to use the bulk of it toward our first REI. We currently rent substantially under market value, so our living expenses have been low, even though we've been paying off someone else's mortgage instead of our own.

Oh yea…. And we live in So Cal.

Our first idea was to house-hack a 2/3/4-plex in an area that we would like to live OR in an area that we’re not as fond of but is guaranteed to appreciate over time (like LA area). However, it seems virtually impossible to have positive cashflow in these areas and when we eventually leave the property, it won’t be worth it to have break-even or negative cashflow even if the property is likely to appreciate over time.

Next concept was to invest in a more affordable burgeoning market like Cleveland, but we have no interest in moving their, so it would simply be an out-of-state rental property.

P2 has received a COE for a VA loan, so that adds another wrinkle; I don't know if it would be a good idea to lock up the VA loan for a cheap $50K-$200K property in Cleveland (or whatever other lower value market we decide on) and no longer have the availability to use it for a primary residence.

Would it make sense to just continue renting for our own living expenses while still purchasing rental properties out of state just because my rent is so cheap? Or is that a waste of money? Should I focus on a primary residence before focusing on rental properties?

I feel like I have a good idea of the strategies I’m interested in; but I’m really struggling with the first REAL step of buying that first property. Any advice or insight would be greatly appreciated.