All Forum Posts by: Jeff S.

A place of mine was vacant for a couple months for $895 and it was worth it. After lowering it to $850 it rented. Don't know why.

Do you have your salesman hat on? If you were a real estate sales person you are looking for a signature or a cash deposit, as in right now. Create a little excitement.

A month isn't actually very long but it is long enough. Do you have a vacancy problem in your area? Lots of investors? Check the competition. $50 under market would help if need be.

This rule has to do with price and income only. The monthly rent should be 2% of the purchase price. The $100,000 duplex should gross $2,000 per mo.

1% rule $100,000 duplex should gross $1,000 per mo- $500 per unit rent.

Hoang,

You are a great student. Your prices are different to me and this 50 times formula is not something I have heard of.

Real quickly using 50% for expenses we have $1700 per month income times 50% for a net income before debt service of $850 per month. You will subtract your $784 per month PI pymt leaving only $66 cash flow.

You are amortizing the loan over 15 yrs which, IMO, is hard to do. Most on here will prefer 30 yrs even if the payoff is with a balloon in 15.

With a 30 yr schedule you have PI of $569 giving you cash flow of $281. This gives you cushion and if you aquire a number of properties you will need this. Besides it looks better financially if anyone else is looking at your ability to repay a loan they are considering.

The 50% estimate of expenses may be higher than what you do if you self-manage but a good number just the same.

The 2% rule is awesome. The 1% is as good as I have heard around here and that was some time ago. You would be looking between those ranges with this property.

David knows your area. Listen to him about finding something good. Sometimes tired landlords can make good sellers. They can afford to like you and maybe give you one that needs work he/she doesn't want to do, and price it accordingly.

Interesting stuff, amazing prices, keep us posted. Maybe bigger units? Owner contracts might be your next questioning.

Jon, it sounds like you are thinking being a professional property manager is not such a great idea.

I am not totally understanding your arithmetic. These prices are so low compared to my neck of the woods. Our duplexes are at least 250 to 300k.

I would take the annual rent time 1/2 and divide that by the purchase price to see what kind of cash on cash return you could expect. Keep in mind that rents could be inflated.

In the duplex you have $1700 mo times 12 months times 50% for net of $10,200 divided by the purchase price of $125k giving you a cash on cash return of 8.16%. Some would call that a cap rate. 8.16% more than covers your interest expense. Just use this as a comparison. There may be better deals out there.

As far as 5 units being commercial, I think they are already considering you commercial with the terms they are offering you.

Also, rather than giving the bank 2 houses for each loan woudn't you be better off pulling as much as possible out of one rental and spreading it across your other new purchases leaving 4 unencumbered? Just a thought, or 2, .02 cents.

Isn't Stevens-Ness an ok way to go? It is all pretty much taken care of there. Fill in some blanks and attach an earnest money agreement.

Is that a legal contract that requires an attorney in your state? Not so here but could always say subject to your attorney's approval.

I have a friend who asked an attorney how much to draft one and he wanted $600. Yikes.

Wondering how many people plan to sell everything at some point and just kick back, or will you keep your property forever?

Have seen people retire on rental sales only to later have to go back to work because of inflation. Selling and retiring has been an option for a while. Guess I am in love with my places with equity and income, easy going tenants.

It seems people with lots of property that I have known never stop and continue for life. Seems cool to me, just being able to pull a living out of it is the challenge.

The only way I can see being a full-time investor is by finding another city to do it in. I have looked at other cities and think eventually I will need to do this.

Don't see a way to do this while working the job I have but know people on here that do that. I am amazed at that.

Have you thought about apartments? You could maybe get your 5 units in one building.

Can you use your cash flow for your down payments and try to keep the borrowing on your purchases only?

You are in such a strong position right now. If you don't borrow against your current rentals you will continue to look very strong. In that each building supports itself and cash flow providing down is a healthy way to go.

Keep in mind my ideas are on the conservative side and you should look at what everyone says and decide what you want.

Wow, you have come a long way. So it sounds like you will be able to get 5 more homes. Nice work.

My question to you is, do you know if your area is going up in value at this time or down. If it is going down I would slow down and work with less leverage. If they are going up then leverage (borrowing) is your friend.