All Forum Posts by: Jeff Formeller

@Axel Ragnarsson First of all, congrats on all your success. I have been searching and reading on this site for about a year now, but am finally ready to make something happen for myself, so I applaud your success so far! Being 24, you're living proof that a plan can work with execution.

I was hoping you could provide some insight into what strategies worked best for you in terms of finding/generating leads to acquire the two triplexes you own. That seems to be a hurdle that I am having trouble crossing myself, so any advice/tips would be appreciated!

My understanding of walk score as it relates to the Chicago market is that it represents how close certain things within walking distance from the property, specifically public transit like rail lines, bus stations, etc. The higher the score, the easier it is to get to the desired location. So if you have a 70/100, that seems like it is within a reasonable distance to walk from the property to everything. You can verify this by looking at a map view of where the property is located and where, in relation to the property, are the bus and train stops.

 I think you hit the nail on the head, obviously everyone is going to have different opinions but given the low interest rate environment we are in, as long as you are getting positive cash flow I think you should use leverage to your advantage until you get to a point where you'd like to take a break and start potentially using all of the cash flow your receiving to pay down one mortgage at a time. This way, you will have multiple streams already coming in and will be able to make larger payments at a time on each of the mortgages. Just my two cents, but this is how I envision my business plan working a couple of years down the road. Congrats on beginning a successful RE venture!

@David Begley 

I think projects like this are awesome because you get to start with a completely clean slate, the after pics look amazing! Great job! Could you provide a little more insight into the deal? What was the toughest part of the rehab, what was your biggest positive and negative about the project before you started?

@Curt Davis@Bill Jacobsen @Troy Young I inputed my numbers used into the template that J. Scott uploaded for rental property analysis, and came up with cashflow of $172/mo., Cash ROI of 7.96% and 15.23% total ROI. This takes into consideration the following assumptions as far as expenses goes:

• Property Taxes: $2500
• Insurance: 800 (annual)
• Maintenance and Repairs: $1200 (annual)
• Utilities: $0 (paid by tenant)
• Advertising & Administrative: $300 (annual)
• Property Management: $0 (self-managed)
• PMI: $909 annually
• HOA: $125/mo.

$130k all in with price and improvements, I would charge rent of $1400/mo. when I decide to move out after a year. This also takes into consideration the assumptions as stated in the original post above. Once the LTV gets under 80%, obviously PMI would go away as well.

Planning on doing an owner-occupy with either a conventional or FHA loan for a condo in a 3-4 unit building. Great school district, close to the city downtown area, very close to train station leading into Chicago.

1. Asking $179,900 (way over priced)
2. Offer: $115k (comps suggest similar properties have sold for $111k and $127k)
3. Down payment: $8,000
4. Taxes: $3000; HOA: $125/mo
5. Improvements needed: ~$15k (flooring, paint, cabinets, appliances)
6. Vacancy: 1400 (one months rent)
7. Maintenance/repairs: $100/mo (budgeting for $1200 annually)
8. Potential Rent: $1300-$1500/mo
9. Utilities: would be paid by potential tenant
10. Insurance / Private Mortgage Insurance: $1500 combined (would hopefully refinance after repairs to get LTV of under 80%)
11. Would self-manage to add to cashflow.

Please let me know if I am missing something or if my numbers seem off. Thanks for your help in advance!

@Sandra Holt 

That's actually a perfect amount of detail, thanks for sharing! I will have to check out the post you mentioned by @Andraise Scott 

Awesome job @Sandra Holt , I have the goal of locking down my first investment property this year, but who knows I might run into the same confidence you have and try to make it two! Could you give some insight into how you approached your first two rentals? Did you buy as an owner/occupy?

Thanks for all the information everyone. I believe after talking to my agent that there is indeed an issue with the plumbing and also the electrical, so I may look into it further and see if it is possible to get it the property discounted enough to where it would make sense financially to pursue.

I have been searching around for a couple months in attempt to find my first rental property to buy, and have found a foreclosure that I think has a lot of potential. However, the listing says:

"Water and heating system will not be activated for inspections and appraisals"

I am sure that this question is posted somewhere in the forums, but I was not able to locate it and wanted to see if this was common, and/or if this should be a concern?

My initial thought process is that:

A. I would have to pay to have these turned on myself for inspection/appraisal, or

B. There is something wrong with one or the other, or both.

Any insight? I am new to investing and this would be a great learning experience to hear some answers. Thanks!