All Forum Posts by: Jesse T.

Good point about expense ratios being lower a higher price points.  However things like vacancy and real estate commissions will be proportional to rent.

I was going to say that the 50% expenses is probably too conservative, but my main point was  rent > mortgage/taxes/insurance does not lead to positive cash flow.

From a quick scan of Zillow it looks like Leesburg has townhouses that sell around 250K and rent around 1500-1700/month.   

At first glance you seem to be close to cash flow with a 20 or 25% down payment.  However you typical will only have 50% of rent available for taxes and mortgage payment.  This means you need roughly a 50% down payment to keep the mortgage payment low enough.

You may get slightly better ratios out west in areas like Winchester, but little in this area would hit the 1% rule of thumb.

With your current property it sounds like just sticking with your current situation in terms of loan etc is the best bet.  With the tenant the costs should be relatively reasonable.  The current rates are generally over 4% even with a 20% down payment.

FHA is for owner occupied residences. You would have to make a relatively long distance move to have 2 FHA loans:

https://www.fha.com/fha_article?id=574

The NOVA area is pretty tough for income earning properties, unless you are making a huge down payment.  I would start focusing on networking with investors and building up a down payment vs. trying to buy as soon as possible and ending up with properties that don't make money.

There is an investors group - Capital REI that includes a range of investors/interested investors. @Roger Lin is one of the organizers of the group.

This is a slow time for the rental market, but when it was first listed and/or the last vacancy should have been a busier time.

Are comparable properties getting rented?

What did it take to get the property rented last time?  Why did the tenants leave?  That this is the second time there has been an issue I think price has to be part of the problem.  How much traffic is the listing getting?  

I agree with other comments that in general listing yourself is a better bet than using an agent.  However I think at this point you are probably better off getting your property more attractive and your agent more active in marketing.  Another thing for future reference is at the very least you want to list your property before it is vacant.

@Behrooz K. and @Russell Naylor - how do you guys feel about the performance of your investments with fundrise?

Are you looking at a particular block or one in general?

Are there similar deals that have been completed recently?  The agent on one of those deals might be a good place to start.  This seems like a situation where a great agent would more than earn their commission.

 The overall economy is likely to improve.  Real Estate in a broad sense is likely to under-perform other areas of the economy.  

A simple scenario is the building of new class A properties to meet rental demand.  That pushes the current A properties down to the B+/B level.  So where will that leave the B-/C multi-families?  That isn't great for class A owners, but unless they are highly leveraged the biggest impact is on their exit vs. having a monthly crunch.

Just a gut feeling, but I think class A is a lot of "parking lot" money vs. higher leverage in the B-/C categories. 

In general it seems high, but it seems like a reasonable level if the seller is expecting a cash buyer.  It especially seems reasonable if the seller is offering a discounted price in exchange for a cash transaction.

If you are having success with SFH investments this may not be the most advantageous time to shift into a Multi-Family investment. In general it would seem a combination of cheap financing, high rents and low alternative returns would be pushing values close to a relative peak. While the unwinding of this will be painful to some individual owners - I think the overall impact to the economy and even other sectors on Real Estate will be more limited. The huge difference between multi-family and the past real estate bubble is the amount of equity required. While a 15 to 20% decline in prices is bad for investors - it isn't a disaster for the banks if the owners have 25 to 30% equity in the property.

If you are going to shift your portfolio based on overall trends, I would look to end up primarily with properties that have a retail buyer exit strategy. If you are locked in with cheap financing and can survive a decrease in rents, SFH investment properties should do ok.

That is definitely useful advice for future offers.

Hopefully the seller does respond with a release.  They may have just been annoyed/angry and seen an chance with the large amount earnest money to get some money from you.

A couple options to consider if you don't get a release:

Is there an adjusted price where the deal still makes sense for you?

How much is the hassle worth?  Maybe don't offer this initially, but it might be the easiest resolution.