All Forum Posts by: Jay Dean

Also watch out for estivation a that prohibit renting. Additionally, ask the neighbors about assessments in recent years for big ticket items.

I am interested in meeting people (ideally an agent) in the Lawrence KU area. I am interested in the possibility of buying a rental with at least three bedrooms. This will effectively be a house hack. I plan to travel to the area in mid October.

I have only done cash out loans so far but they will only offer 70% of what it appraises for. I purchase mine with cash and then get money back as needed to leverage. If I buy under appraisal, I can effectively get more than 70% of my initial investment back.

Consider getting her to sign a document agreeing to forfeit the deposit and terminate the lease. Also, consider a "cash for keys" approach to get her out asap. Some tenants will move out in a few days for something as little as $100. The important thing is to get her out and get someone new in there asap. Is the unit still in good shape? If she has damaged the property, you may have. To pursue that with an attorney.

Why wouldn't you just get him to loan you the money at a set rate of return? Rate of return and safety of the investment are what will matter to him. You need to retain control of the deal if you are going to manage it. You could always give him a lien if he is worried about you selling without making him whole. Find a real estate attorney and buy him lunch. Ask him how to structure the deal.

I feel like making an all cash offer gives me better position at the offer table. I have beat out higher offers because I could cash close in a few days. I can always refinance later if I want to leverage.

There should be legal documents that spell out the restrictions for the property. Get your hands on those before doing anything. The current owner might be a good resource but don't assume he is telling the truth.

I am curious to know how people run the math on a "facelift" for a buy and hold rental.

In my case it is a $55,000.00 property.  Considering up to $5,000.00 in upgrades.  This is assuming that I am going big.  Nice counters, new tile, and other higher cost upgrades.

Rent without upgrades $835.00.  With upgrades $885.00 possibly more.

My simple math says it will take me 8.3 years to get my upgrade investment back.  Of course, I will also be able to sell for more as well.

Your thoughts?

Bradley - In a lot of ways, you and I are on the same page.  I get why leverage works on the upside but agree there is a higher risk.

My thought / plan is this - Buy using all cash.  Better buying position / negotiating tool.  My first opportunity was with a seller that had two previous buyers fall through because they could not get financing.  When I found the deal, she had been on the market over 75 days and was ready to sell.  She settled for well below asking.

Once you have bought using cash, rented, and establish a baseline of say 6 months, consider talking to a commercial banker about a "50% cash out" loan.  Use this opportunity to get at least one more unit, increase your total income stream, and create a tax write off (interest) without over extending yourself.  If you never leverage more than 50% and have a rainy day fund set aside, you should still be very stable while earning more.

Originally posted by @James Messa:

@Jay Dean

I can help you find 4 SFR instead of one townhouse if your interested.

Estimated average cash flow per/month per door $400

 I am looking to invest and grow the money that I have, not to take out loans for four times what I have.