All Forum Posts by: Doug Shapiro

Hi @Jacob Seki,

It is tough to invest in real estate on a $6k/year salary.  With that said, you still have options. 

1) Speak with some local banks/credit unions to see how much money you could borrow to purchase a place and what % down payment they require.  Here are some Illinois first-time home buyer programs.

2) Build your credit now so that it is as close to perfect as possible.

3) Build your wealth.  You can do this 3 ways - decrease spending, increase income, or both.  

4) Set goals and stick to them. Goals will help with saving, investing, and keep you focused for what you want to accomplish.  

Hi @Melissa Man,

What are the details of the property?  Feel free to use one of the calculators on this site and then ask others to help analyze the deal.  

Unless you are looking to buy and then sell quickly, market crashes shouldn't be a big factor into your property investment decisions. Markets always fluctuate and no one truly knows when a market will crash.  The good thing about buy and hold is that you aren't selling, so when the market does go down you shouldn't worry.  

Of course there are exceptions to this, but the great thing about real estate is that it tends to retain value nicely over time. And if you are taking a loan, then breaking even each year is actually a win for you because your principal balance is being paid by someone else.   

Hi @Jan Kutrzeba,

Those numbers look good to me.  I say go for it .

Thanks.

Hi @Marcel Galega,

I think your CapEx is a little low (it is a SFH right?). The roof, appliances, driveway, etc. will need to be replaced in time, and the CapEx is used to estimate those long-term replacement costs.

I personally would double or triple that number.  Once you do that then the deal is most likely a pass if you were investing from a cash flow perspective. 

Hi @Guy Francois,

My advice is to speak with an attorney to see what your legal options are at this point.  Depending on that conversation, I hope you can easily terminate the contract (may have to eat some/all of the cost), and hire a good contractor.  The problem with working with bad contractors is that they can delay indefinitely. Furthermore, if they are inebriated then the quality of work may be terrible and unsafe. 

Hi @Ray Chambers,

That is strange. Unless there is something specified in the contract/agreement you signed with the property management company, that money is yours/your responsibility. 

I'm guessing that perhaps you owe the property management company a fee, and that fee could come out of the 1st month's rent?   Also, security deposits should be handled very carefully (not co-mingled with personal accounts)-so this could be a reason why they want to hold on to it?  

If I were you I would read through the agreement you made with them carefully, and then have a chat with them. 

Hi @Daniel Soovajian,

I agree with your assessment of the deal.  Not great, but not bad either.  Since it is in an up and coming area, that is good for potential appreciation over time.  

I don't think its a bad idea to get your feet wet with this deal (as long as you are comfortable with everything).  This experience will probably help you a lot once you have the additional cash a year from now. 

Hi @Destiny Prince,

That deal looks decent. I say go for it unless you have any better options.      

Hi @Allen Lopez,

Read through the contract you signed with the agent carefully to see if there is anything you can do.  Unfortunately if you signed an exclusive right to sell with the agent, then it probably says that even if you procure a buyer on your own you will owe the listing agent the 6%.  

Out of principle, it doesn't seem right that you would owe an agent 6% for a buyer you found (also I'm assuming the buyer doesn't have a real estate agent?).  Maybe you can have a discussion with your agent to pose a hypothetical like "Hello agent, I have some extra time on my hands and wanted to get your thoughts on this.  I want to reach out to friends and acquaintances to see if anyone is interested in buying my property. If I find a buyer on my own can the commission fee be reduced to X%?"  

Hi @Jason Snider,

That was a hard read - paragraphs would really help with readability.  

I'm not familiar with Michigan department of buildings and getting approvals as well as commercial appraisals. With that said, my initial thought is that Option 1 is the best.  You won't have to spend anything and the return will cover your costs.  

For Option 3, are you sure that the total renovation to split the 1 bedroom into another 1 bedroom will only cost $10-$12k?  How confident are you about the commercial appraisal coming in at $X above the residential appraisal?  Assuming you know how easy/difficult it is to get approval from the Michigan DOB and how much that will cost?  

Thanks!