All Forum Posts by: Jeff Costa

1) Water/Sewer/Garbage are usually paid by the landlord. Why do you have these set to zero?
2) Why a 29-year AMORT, not 30 years?
3) Repairs costs are zero? Probably not realistic. I budget $10K for initial repairs to get to rent ready.
4) Why would you buy this property with a negative cash flow (50% rule).

Do you have to pull the cabinets down to repaint them, or do you repaint in place? Trying to understand the order of operations to do this: detach doors, sand, prime, repaint boxes. Repeat for doors and add updated hardware. Is that mostly correct? Any idea what an average cost might be for this work (yes, I know it depends on number of cabinets).

@Ryan Halford Or "Jake and effing Gino" as I call them! All kidding aside, they have a wealth of knowledge.

@Jennifer S. I would be interested in joining.

This is just the opinion of an Internet stranger, but starting out your REI journey with a non-cashflowing townhome feels a bit FOMO. The fact that you are not accounting for expenses is also problematic. Do you know what the reserves are for the condo community (as that could also impact your expenses)?

Condos are the first properties to lose value and last to recover in a market cycle. The HOA are often harder on investors, and can limit your operations.

You might be better served buying a duplex to house-hack that is cash-flow positive with an FHA loan. It might not be as sexy, but it gets you started Your first REI experience should not be cash-flow negative, as it might be your last. 

Are you still in the due diligence period and getting cold feet? Or are you firmly under contract and must perform? I'm going to assume the former.

The answer is: it depends on what your goals are. If cashflow is what you are after (based on your comments), you may be cash-flow negative for some time. If you can stomach that (paying INTO the property each month), then move forward. If you are buying for appreciation over longer periods of time, then you must, by definition, be comfortable with negative cash flow. In both scenarios you seem to have purchased a liability in the short-term. In the long term, rents go up and so does appreciation, which helps offset the negative cash flow.

Has anyone ever seen this on a listing: "No photos/video/facetime or home inspections without sellers permission"?  I get why seller might not want to allow inspections/contractors before getting under contract. But why force a DocuSign agreement just to take photos? It certainly screams RED FLAG, but why would a seller do this?  Why would the seller want to hold copyright? Has anyone ever encountered this before?

Be sure to check local municipality to ensure the rehabbed property value does not trigger a property tax reassessment. A 30-year fixed today is 7.2 + 50 basis points for 7.8%. As Tim mentioned above, I would increase to the rate to 8% to be conservative on your pro-forma.

I put together a comprehensive list of questions you can ask any PM. Grab a copy of the Google doc here: https://docs.google.com/docume...

Rates are 7.2 today, but you also have to add 50 basis points to that number, as this is a rental property. So your rate should be estimated at 7.7 on a pro-forma; if you do better on rates, that is upside to you, but assume worst case. Your insurance at $6/month seems unrealistically low; get a quote from a local agent to plug a real number in there. I see you added management fees even though you stated you would self-manage. Its good practice to do so, even if you self-manage, but 3% is far too low. Use 10% to be conservative.

Also, I am hearing emotion in your voice, and a bit of FOMO. You should fall in love with the numbers, not the property. It may be scarce, but as the saying goes: "There is always another bus."  Try to take the emotion out of your decision-making process. A good tactic is to ask yourself: "What am I pretending not to see?"

Hope this helps and good luck!

@Jeremy H. Would love some detail around how you split your time between W2 and REP? Did you clone yourself (smile)?