All Forum Posts by: Jeff Sechrest

Usually buttons don't just fall off of anything unless they're faulty or manhandled. If the repairman said it's from fingernails then it's from fingernails. I personally feel if there's room in your budget to fix it, then do it. Small price to pay to close the deal.

There's a BP podcast with the author of a book called "Never Split the Difference". Dont remember the episode # though. Amazing insight into negotiations. Great podcast but I haven't read the book but its next on my list.

repairs...

Anything that can break probably will so if you move forward with this mentality you'll be fine. My earlier post can be summed up like this. The sooner you build a slush fund for anything that could go wrong the better off you'll be. If you put 5k or some amount you deem necessary, in an account and keep it there for a rainy day, that's the concept.

Once you have that fund built up 2 things happen for you and the property. You no longer have to worry with an "emergency" coming up you aren't prepared for and your cash flow goes up because your fund is funded.

Ezekiel,

Have you put an offer in on the property yet?

If no, then stop talking to the realtor who gave you all that useless information. 

If you're truly looking for a private residence and plan on renting it out. This isn't the property for you.

I don't mean to be so direct here but read on. This could save your future.

Even if you manage to buy a newly built home and you plan on renting it out now or 2, 3, 4 or more years down the road. Everything in and around that property has a useful life. So from day 1 that investment requires maintenance and money to be set aside for future use.

So below is a few big ticket items I've had to pay for out of the repair and capex dollars on one of my single family properties built in ***2013***.

There were plenty of the smaller charges as well. Simple things like ac filters each month and the mailbox and post demolished by the UPS truck in front of my eyes.

Keep reading, there is a point to this.

AC coil for 3 ton unit.                   $1200

Garage door.                                 $600

Stove/ oven combo.                     $350       

7' by 10' deck.                                $800

House pressurwashing twice @ $250

Carpet.                                            $800

Paint/ wall repairs.                        $600

Total of $4600.

We had an eviction and yes there was a court ordered judgement but that's hard  to pay when the former tenant is now living in the state prison. Stranger things have happened folks. Turns out proper screening only shows what people have done in the past, not the future.

Ok so some simple math using the generic percentages I see often on deal analysis help posts and the $1250 rental price referenced on the original posting.

10% capex @ $125 per month

5% repairs @ $62.50 per month

Equals $187.50 per month squirrelled away each month.

That's 25 months with the canned percentages. Easily absorbed if you have multiple rentals but how about on an E-5's pay or an O-3's? Not so easy right. This story is more common than you think. Well maybe not the prison part but the $4600 part for sure.

OohRah

If there are any month to month leases or no leases at all, no time like the present. 

Now, maybe not everywhere but in the couple markets we're in. If there's an existing lease, it's binding. A local real estate lawyer can answer this over a free lunch.

Don't give them another thought.

If they're noncompliant now, they'll alway be.

Let them be some other shmo's problem. 

Picture the backlash if it became public knowledge this "partner" was a serious and documented threat to society. You might be filling an entire apartment complex next month.

Eli,

Multifamily properties are a great choice for cash flow if you can find one and make the numbers work. The beauty is allowing one or two tenants pay your bills while you work a job to fund the next one. 

However, if you're able to live with your parents while building an amazing foundation for your future. March on buddy. Just remember to keep your wonderful family happy. That's a huge gift brother, so don't take it for granted.

So about your credit score or lack of. I'm not a financial planner or adviser but if I had to do it again. I would find a secured credit card with the lowest interest rate as possible. You'll have to essentially give them a couple hundred dollars as "collateral" and you're set. Look for the lowest fee as possible or one with no fee at all. 

The goal here is to show you're responsible with your finances. Don't max it out and then pay it off. Carry a small balance and pay the minimum bill plus a little extra each month. Yes this will cause you to spend a little money on interest but the goal is to make you look like a money managing superhero. Don't close credit accounts unless you absolutely have to and remember the earlier mention of debt to income. The basic idea is to show a responsible history. Not a huge balance run up and pay down. Keep that up and you'll look amazing in no time. 

Do yourself a favor and put the subject of building the perfect credit score for buying real estate on your research and reading list. 

And you specifically asked Joe Hines this one but my current area is three parallel streets in a close by town and each road is about 1/4 mile long. So literally 112 houses to look at. 

You have to know your area. First off you should ask yourself why would someone want to live in this specific city or town then why on this street, then why on this end of the street and then why in this house.

There has to be a draw to the area you buy a rental in. Usually people don't simply say I'll live here because it's pretty. They choose the area because of good schools, because the home is close to the Walmart, mall, hospital... something like that.

I know this story is a little different than your concern but the outcome should be the same.

A few years ago we leased to a new tenant and she was adamant on not having our extremely trusted handyman back in her unit. The tenants reasoning was, "He made her feel uncomfortable". Obviously if something were to happen we could be held liable in our litigious society. So we approached the handyman about allowing us to fully vet him. At first he was completely offended and we thought, oh no there might be something here. A week passed and he came to see me and agreed to do it. This gentlemen still handles all of our issues in that city.

Morel of this story is we almost lost a huge asset to our business over this but in the end we know it was the responsible thing to do. 

No, this doesn't protect anyone but we now know he isn't a convicted_____________. You fill in the box.

And he's an excellent driver.

Mine as well and I happen to like the cold floor in the mornings. Kinda like a shot of espresso.

So Heather,

If we work these numbers backwards, use $800 rents and use conventional financing I'm currently getting through a credit union, which may not be what you get. You may be able to find better. Mine being 15 year, 4%, 2.5 point fee and refinance after 2 months and cash out only my input at 3.7% 20 year, another credit union. You're looking at around 30k loan for those rents to work but that'll put the cash flow around $100 to $150 per month. That's assuming 10% management, 5% vacancy, 5% repairs, 5% capex, mortgage, tax and $1700 per year insurance and assuming you put 20% down so no PMI