All Forum Posts by: Jerry Thompson

Hey again everyone... the thread lives! I'm working on another event for this month (hopefully), just having an issue finding a venue big enough. Appreciate all of your enthusiasm, last event was great so I'm hoping to keep it going! 

Feel free to shoot me a message if you have other questions and best of luck with all your endeavors :)

Hey everyone.. did NOT know you had a time limit to edit a post. Just locked down an event location:

Oakwood Apartments Conference Room:

2901 Cityplace W Blvd

Dallas, TX 75204

I'll provide the coffee, just bring your energy and business cards! Shoot me a message if you have any questions!

Happy 2018 everyone!

I've been busy getting myself set for the new year, and analyzing properties and I finally made the first event of the year!

https://www.biggerpockets.com/forums/521/topics/52...

For all those that have been helping keep this thread alive, thank you.. and please come out to meet everyone. Energy level is high, so bring it with you (and a business card of course!).

Cheers!

Hey all..

First meeting of the year, happy 2018! If you're a young (at heart!)/newbie investor.. come connect over some coffee and others in a similar situation. It will be a great environment to meet people in similar stages of their REI careers and maybe even learn something!

Questions? Just ask!

Nothing planned yet... jeez this thread has continued to grow. Look out for something in January, would love to have everyone meet each other!

Hey.. stay tuned in the new year ya'll.. would love to meet everyone! :)

Thanks @Andrew Herrig ! And you're right, the taxes are a bit low for this one. It's a transitioning area so a lot of investors have added rooms/bathrooms/sqft that aren't in the tax roll yet. I did some sensitivity analysis.. and taxes don't have as big of an impact on cashflow as purchase price, loan rate, and rent so I make a note of where I think taxes are behind on my list of properties just for awareness [ie: property is a 4/2 but last evaluated as a 2/1]. 

@Kenneth McKeown @Account Closed - nothing to get excited about here, I'm not finding any deals at that price! This is basically how I know how much to offer on a house. All of these properties are livable with granite countertops I just have no regard for the list price lol, this is how I'm finding my offer number. The price for this may have been $120k or something and I put in my offer at $80k. Dallas is crowded and competitive right now, but I'm solely focused on the purchase price that works for me to cashflow. A SFR appreciation play is more risk that I can understand at the moment.

I've gone through a few variations of this, trying to understand analysis, so I really appreciate the feedback. This will be my final model for now and it may turn out that 1.3% meets my needs, making my offers more competitive. Even though I'm trying to do this 90 Day Challenge, need to move anyway, and am super excited about real estate.. I'd rather not have a property than a bad deal :)

FWIW @Jhonatan Espinosa, the equation Mike included was not quite right, wanted to make sure it was clear in case you were confused. 

The "percent rule" takes the purchase price and helps you determine the needed income to cashflow. Somewhere between 1-2% is considered ideal, although it can be higher, and lower than 1% is typically not advised.

$50,000 (purchase price) x .02 (2% rule) = $1000 (income needed to cashflow)

On the flip side, dividing the estimated income by your desired percent rule will give you a rough idea of your max purchase price:

$800 (income) / .02 (2% rule) = $40,000 (max purchase price)

Once you get an idea of the rents or income plays in your market, your offers become sort of automatic. Per that last example, every area with a rent estimate of $800 will result in a max purchase price of $40,000 if you want a 2% deal.

 I'm in Dallas trying to find a 1.5% deal. After doing some analysis to get my ideal cashflow number, that's about what I found it took in the areas I've been looking to hit my cashflow goal. Again, every market is a bit different.

Hey Everyone! I'm running the numbers on my first property in the Dallas area and figured I'd try and get some feedback on my approach and numbers. This will be a house hack, with 10% down and I'll rent a room in the house to offset some of the debt service. I'm running my numbers on renting out the full home when I leave (in about a year) so until then, I'll be building equity and making small improvements to the home. I don't have any budget for rehab at the moment so these homes are in livable shape now. Goal is to cashflow at least $100 on this first property after move out. I've been determining my offer price by looking at rental comps in the area and dividing that number by 0.015. Essentially I'm trying to make each offer a 1.5% deal for me- would definitely like some advice to see if that is a good way to approach it. I'm not counting on appreciation at all even though the areas I'm looking in are growing. The locations I've chosen are ideal for getting to work in under a half hour with traffic so I'm not planning on moving to the sticks where good deals may be easier to find :)

I've been using the BP rental calculator to help so here it goes:

Purchase Price: $80k

Rental Income: $1,200

Rehab: $0

Taxes: $1k

DownPayment: $8k

Loan Amount: $72k

Rate: 4%

Term: 30 yr, fixed

Utilities: $0 (renter will pay)

Insurance: $125

Vacancy: 7%

Repairs: 10%

CapEx: 10%

Property Management: 10% (will manage myself but that could change one day)

**Monthly Expense: ˜$1000

**Monthly Cashflow: ˜$200

COCROI: 18% (would have to be recalculated for any improvements I make to the home)

Would love to hear if there are any numbers/details I'm not including!

Hope I'm doing this right. As I keep doing analysis I'll see if it makes sense to change that 1.5% expectation if my other expense assumptions seem solid. Rents are also an estimate so I'm being cautious. My focus is to definitely cashflow after I move out. 

side note: a small multi family would be ideal but they market here is hot and I have no rehab budget.

Cheers and thanks!

Thanks for all the support and feedback you guys! I've been busy analyzing deals, understanding comps, and shopping around for lenders. I found out I'm eligible for down payment assistance as well so I'm going to try to take advantage of that. My credit score is helping greatly. So far I've found 3% down payment assistance on a 30 year note at 4.5% fixed rate.

Also.. the way I see it, rental comps completely dictate purchase price for cashflow, right? I think running a few deals through the BP calculator helped me see that. I can't pay $300k for a SFR if the comp is only $1,200. It was kind of my round about way of understanding the 1% rule.. I've actually been working it backwards:

$1200 (rental comp) / .015 (1.5% rule aka cashflow positive in my market) = $80,000 (max purchase price)

As an avid listener of the podcast, I'm finding dozens of mini steps in between the big events of a purchase. So much to learn :)

@Shannon Beatty - will definitely reach out about foreclosures, I'm seeing the limitations of conventional financing even for on-market properties

@Kenneth McKeown - Would be great to meet up and just chat. I'm taking the slow and boring road to investing. A property a year, or faster. If I stay in the DFW market hopefully that will be good to pick up a great deal each year and build a foundation for financial independence. I'm an early retirement guy, it's time I got started!

@Chris Jensen - YES! No deal is better than a bad deal.. I think I'm being conservative, (underestimating rental rates and adding in costs like future property management even though I'll be managing it myself for now) but I will definitely post my "deals"  on the analysis forum to get feedback and see what I've missed. Just found a realtor/investor and waiting on comps as we speak. 

@Andrew Herrig Thank you, trying to leverage what I can! Will keep sharing the progress. It's been a learning curve for sure.