All Forum Posts by: James Lucero

Hi BP,
I'm looking at a house that I've been eyeing for a few days. It's a total gut job but I believe it's priced accordingly - I'm going with a contractor today to get some numbers since the area it's in houses have sold for over double. My question is, if this is a deal that makes sense I do not have a lot of cash on hand - what type of lending would I be able to get or should I look for to buy and renovate this property. While I do not have a lot of cash I have a property that has appreciated more than 80% from when I originally bought it a few years ago - would this help me offset the low cash in the POV of an investor? Thank you

Hi BP,

I have one other investment property in NJ but moved to the LV about a year ago for work. I was wondering if there's anyone here from the the area that has experience with house hacking to pick their brain a bit. Thank you 

Quote from @Theresa Harris:

How much is the rent?  While $500 is a lot, if current rent is $2500 or $800 also makes a difference.  Also where is the house located-ie what are the current rules about rent increases?

Current rent is $850 and the house is for sale for $170k, property taxes are $2,623/yr. This is in Allentown, PA I was reading about the rent increases and from what I saw it cannot be raised more than 10% in 12-month period. 

Hi all, 
I'm looking at some single family properties in the area and there is one for sale that says the current tenants are paying $500 below market value. I've read a lot if posts about the difficulty of vacating a tenant, how would one go about raising the rent for said tenant? (House price reflects value with the extra $500 that are currently not being charged.) TIA

Hi all,

New to the Allentown area, does anyone have any recommendations for a reliable GC that I could build a relationship and is reliable in finishing projects in a timely manner? I’m in the market to do my first flip on a SF, I have another property in NJ but it’s a buy and hold. Thank you

Originally posted by @Michael Wentzel:

@James Lucero

Many investors do talk about targeting $150 to $200 per door after all expenses. But like @Jon K. said, there are too many variables to say what the income off a single-family property should be.

I would run your numbers.

Monthly Rent minus all of your expenses...

Property Taxes

Insurance

Utilities (often you don't pay any of them for a single family)

HOA (hopefully you don't have one)

Repairs (many take around 8% of rent)

Capital Expenditures (many take around 8% of rent)

Vacancy (many take around 8% of rent)

Property Management (around 10% of rent)

Mortgage payment (principal and interest)

If you are a still making $200 in cash flow per month after all of that, you are doing well. The best part of real estate is that you should hopefully be making more than just cash flow. You'll also be building wealth through paying down your principal balance on your loan, hopefully some appreciation and usually paying a relatively low tax rate on this income.

Mike

Mike my numbers are as follows:

Taxes and Landlords insurance are included in the mortgage payment of $2,658.00

All utilities and yardwork will be done by tenant

No HOA

Renting it for $3,300 - I probably wont be touching this cashflow as I'm moving somewhere cheaper and i'll leave the money in the bank in case of repairs etc.

I’ve been a part of the forum for a few years now. Deviated from pursuing this and ended up buying a house here in North NJ, is there an avg return on single family rentals? I was planning on just selling the property, the past year or so my area has gone up in value if I sold the property I would’ve probably walked away with 100k after fees etc. I only bought if 3.5 years ago and invested 20k to spruce it up.

This last weekend as I was getting ready to call the realtor and tell her we were ready to put it on the market but then I couldn’t think of what I would do with that money right now, returns on my portfolio are around 7% but I wouldn’t be putting it all into the market and didn’t want to be making no interest off my money.

Long story short I posted it for rent this last weekend, thought I'd give it a shot. This was Saturday morning, by the afternoon I had gotten 12-15 people that wanted to view the house. I set up various appointments the next day every person that came wanted to put a deposit down. It ended up getting into a bidding war (I had only priced to make my mortgage payment and a $295/month profit. It ended up in a little bidding war and I ended up renting it where I'm walking away with $642 profit monthly and it'll increase by $271 when my PMI falls off in less than $10K.

I know I have to budget for repairs and unforeseen issues but furnace and Ac is all new I expect minimal problems and the tenants is taking care of all the maintenance like the lawn and small things. So is that a normal margin for profit? I think I remember reading years back the the avg return per unit was around $200 but didn’t know if that was just for multi family. Thanks

@Steve Wilcox  thanks for the advice I was actually wondering about how to deal with the banks in that regard without having a lot of inquires affecting my credit. Really appreciate it. 

Thanks for all the information, a lot to take in but I'm thankful for all the input.

@Steve Wilcox I quit my 9-5 job, I am still making money as a consultant for a company so I still have W-2 income. I thought of that as well and definitely wouldn't want to be in that situation and trying to start this project.

@Dustin Rose Thank you for the words of encouragement. I see it as a sink or swim situation because I quit my primary job and won't be making as much money as before but still have enough income to fund this project. The places I'm looking at range from 270k-320k, most of the units I am looking at have 100% occupancy and are generating anywhere from 40-60k NOI (before I factor in what my est. mortgage payment would be). I know by taking an FHA loan, if understand it correctly I have to live in one of the units and it cannot be more than a fourplex. It seems like the deals that generate more cash flow in this area are 5+ units so I don't know if it's a good idea to go with a traditional loan or not. So I started getting confused and hesitant again.

@Michael Henry   Thanks Michael for that insightful information it definitely helps clarify some points that I was very unsure about.

A while back I posted my ideas about partnering up with my fathers company to create some equity by renting out units to the employees. Fast forward almost a year later and I took people advice and I'm not doing it. I am however purchasing my first multi-family 3 or 4 unit after a lot of research, listening to the podcasts, and reading what has worked and what hasn't for most people. I have decided that my area for now is going to be Newark, New Jersey. I grew up in the suburbs in northern NJ (Montclair, Essex fells area) but I was hesitant to invest in Newark knowing very little about it except for the negative misconceptions it had attached to it. To see how bad it actually was I decided to go and rent in Newark first in a 'not so great' area I was there for about 5 months. Place was actually fine it was more of the noise that made me want to move. Now I live in the downtown area in a great 34 fl high rise close to Rutgers University and Essex county community college. I feel like this helped me see the rents in different places ( I think I viewed around 10 apartments) in the general downtown area before I moved. I recently just quit my job so it's a sink or swim kind of situation right now. I went to school for finance but did not find myself working in that field so bear with me please on some of the questions :) Questions: 1. I will be living in a unit I know the other rents will cover the mortgage of the place but if need be how would I take money to pay myself let's say for groceries or something like that do I put myself in payroll? ( hopefully it won't get to that point I have enough savings that I should be fine for now) 2. When you get security deposits from tenants do you just leave those in the general operating account for your properties or do you put it in a separate account? 3. I know the 50/50 rule is a conservative way to look at the situation but let's say I have the property for a year and nothing went wrong and I have money sitting in my LLC/S corp whatever it may be. Can I/ should I reinvest that money for other properties or should I use it to pay down more of the mortgage? 4. I read a lot about people using private investors for an 8-12% profit, does this work for rental properties as well or only flips? Specially if I'm planning to buy and hold, how would an investor see that kind of return on his money. 5. I keep reading about the meet up in summit and I don't know if I'm using the search feature wrong but I can't seem to find any information on it. Would someone please let me know how or what thread I can find this information on? I have learned an invaluable amount of information in this forum and I hope to keep learning more from all of you and hope to get to meet some of you in the future. Best of luck with all your endeavors!