All Forum Posts by: Jeremy D.

@Rob K. I hope i get it at $40k. That doesn't concern me. What concerned me was whether or not the escalator clause was legit. It still seems sketchy though!

@William T. Yeah I know what you mean about there not being much room for profit if the rehab costs were off at all. I buy and hold so I'm not as concerned about flipping the property to make a profit. I wouldn't mind buying this property for $40k, putting even $60k into it, then having it as a long term rental since all of the plumbing, roof, mechanicals, electric would be new- the ongoing maintenance costs would be lower than other properties priced similarly. To me at the end of the day it's still a 2 unit that will produce $250/door/month in cash flow.

Deals are drying up in my area so even these ones are becoming hard to find!

Market value after renovations will be about 110k.

Thanks for the clarification that this is legit and is considered an Escalator Clause.

Why not always include this clause in an offer when there are multiple bids present? I usually offer the most I am willing to pay...but if I word that as an Escalator Clause then there's a chance to pay less than the max?

I'm fine with the deal at $40k. It's a duplex, decent area, will rent for $1800/mo total. It needs about $50k of reno, then there will be about $4k of closing costs and prepaids. I'm just wondering how the selling bank would perceive my offer with that kind of clause in it.

I'm making an offer on a foreclosure listed for $26k. There are 5 offers on the property including mine. My agent suggested that I offer $26k, but put in a clause that i'm willing to go $1k over the next highest and best offer up to $40k and for the seller to provide the next highest offer as proof, if i win. This seems sketchy to me. Anyone come across this before?

I finally completed the eviction of a tenant I inherited when i purchased a duplex. She trashed the apartment and the repairs are costing about $5k consisting of $2k carpet, $1.5k doors, drywall, etc, $1.5k paint.

I know i need to capitalize the carpet and depreciate it, but am I required to capitalize the new doors, drywall repairs, and painting the entire apartment as well? Or can all of this be expensed? They are significant repairs (capitalize), but they return the property to rentable status (expense)?

Thanks

Jeremy

My insurance agent just informed me that the insurance co is switching a couple of my policies from RC to ACV coverage due to the age of the buildings (they're about 100 yrs old). I'm interested in what experienced investors would do in the following example:

I bought the 2 unit property for $100k in 2009. Market value right now is $120k. Mortgage balance is $70k. The insurance company says replacement value is $330k.

My thought is that it does not make sense to get an ACV policy at $330k. If the property burned down i'd be fine clearing the lot and trying to sell that. So, my thought is to do an ACV policy at about $130k ($120k market value plus a little to clear the lot if the property was destroyed).

Thoughts?

@Peter WIlder I'm from Grand Rapids too. Started investing in RE there in 2008 with a duplex. Now have 31 units at an 11.6% cap rate on average. Mostly in Heritage Hill. Also, RE values in the city are up 12% year over year and rents/occupancy are strong. Not a bad place to invest in my opinion. If you ever want to talk about REI in the area let me know.

I'm wondering what people are experiencing and forecasting in their areas in terms of rental unit supply and demand? In my area (yours too i'm sure) rental demand has been hot since 2007-2008, mainly due to the financial crisis but also due to what i see as an urban revival- more affluent people moving into urban areas than before. I am seeing a lot of new apartment construction in my area and a lot of amateur landlords are getting into the business because of depressed property prices and strong rent levels.

Right now the rental market is still hot, and i expect it to be hot for the next couple of years. There is just so much more demand right now than supply that it's a great time to be a landlord. I've raised rents 3% year over year while property taxes (one of my largest operating expenses) have dropped 4.5% due to the residual effect of the crisis.

2015+ is where it gets a little more uncertain. There are so many apartments being built that I am thinking supply will balance out with demand and rent increases might be flat, but property values will likely be increasing.

This leads into another question. Property prices in my area of Michigan are up 13% year over year, so I am expecting a large tax increase next year. However, back in the mid-90's a law was passed in Michigan limiting property tax increases to the rate of inflation. Throughout the credit crisis property values (and property taxes) decreased ~40%. However- looking forward property prices are rising pretty quickly but I believe tax increases will be limited to inflation of 2-3% per year. Does anyone have thoughts on this?

Hi everyone-

I just relocated to Cincinnati and am interested in learning more about the real estate investment market here. I moved down here from Michigan about 2 months ago and have become bored, so I decided to start looking at RE opportunities in the area for something to do.

If anyone is here in Cincinnati and interested in getting together sometime to talk and share RE experiences let me know. I have quite a few properties up in MI which i purchased through various means (short sale, foreclosure, normal sale, etc), rehabbed and am now renting. So if you'd like to share experiences and let me buy you a beer i'd appreciate it!

Thanks
Jeremy