All Forum Posts by: John Leavelle

@Account Closed

Thank your husband for his service.

A couple of other things to think about.  Will the properties have any Rehab needs?  You also need to account for minor repairs/maintenance that will occur.  I would recommend a minimum of 5% (depending on age and condition of the property).

Since you plan on using a VA loan (no down payment) your mortgage payments will be higher. Therefore, it is important you find great deals to make your cash flow goals.

Good Luck.  :)

@Jonathan Perez

I would not discourage you from doing a house hack to get the low interest rate and low down payment.  But, yes putting a larger down payment will decrease your mortgage payment.  The bigger issue is the purchase price.  Is it List or can you offer at a lower price?  Have you completed your comps analysis to determine a Fair Market Value?

Also I am confused on your tax info:

Trash included in taxes ($250/year) - $20/month ---- Is this for Trash only?

I called the tax office and this is what I got for taxes. Of course taxes vary but right now this is what we've got.

$472(occupied)/ year = $40/month

$1770 (unoccupied)/ year = $150/month

What do you mean Occupied/Unoccupied?  Taxes are based on the Land and improved areas (Duplex).  You should be able to see what was paid for 2015 and Due for 2016.

Still not sure what your total expense estimates are (excluding Mortgage). It looks like only 25% of GSI (not including your confusing tax/trash info). Vacancy must be accounted for (especially if you only have one unit rented). I would use 10% ($128 mo.). Also, include normal repair/maintenance expense in your analysis. It is a standard expense all investors will use. Use 5% ($64) just to be safe. That will get you to 40% Expense (except tax/trash).

You eventually will move out and rent the other side I'm sure. You want it to Cash Flow at that time. So you must plan for all possible expenses. Build your cash reserves to prepare for those unexpected expenses. If none happen then you have a better ROI in the end. Eventually you may sell the property to another investor. They will be using the same metrics to evaluated the deal.

Good Luck!  :)

@Jonathan Perez

Are you planning on house hacking?  If not, your down payment and interest rate are incorrect. You will need a 20% down payment and probably an interest rate over 4%.  If you are house hacking then you need to cut your rental income in half.

Also you did not include Vacancy or repair/maintenance expenses in your analysis. Those two items alone would probably negate your projected Cash Flow (using your current numbers).

Obviously if you did put a bigger down payment, then, your mortgage payments would be less.

As far as your question of "Is this good ?" - $150 per month ($75 unit) Cash Flow.  For me that would be no.  My goal is a minimum of $100 per unit a purchase and $200 after Rehab and stabilized.

Is that the list price or your offer price? Is that the current market rent rates or are they low?

Hope this helps.  :)

@Porsche Thompson

Good plan.  You should work on getting high interest debt eliminated.  That is what we did before really jumping into Real Estate Investing.  Credit cards are now paid in full monthly.   Unless it is a deferred interest purchase.  Our long term goal is similar to your's. Build enough monthly passive income to retire from W-2 job.  Being eager is understandable.  

Have you developed a plan on how you want to proceed?  Type of properties and price ranges?  Finance options?  Exit strategies?  If you have not you need to.  During your research and education start finding strategies that will work for you.

Nice cash flow. Are you deducting anything for maintenance/repairs, CapEx, or Property Management? If not you should be now and will need to plan for them in the future when you move out.

You can still keep looking. If you find a great deal you can try finding creative financing to get the deal done. Seller finance, Private Lender, Partnership, or any combination. Have you looked at the BRRRR (Buy, Rehab, Rent, Refinance, and Repeat) strategy? If you haven't look it up on this website. Keep the drive and you'll be fine. :)

Howdy @Porsche Thompson

From a fellow Vet I would like to thank you for your service (and/or your husband).

Any recommendation would need to be based on you answering a few questions.

1.  What is your long term goals - Buy and Hold (Passive Income) properties?  How may units or how much per month?

2.  How much debt tolerance do you have?  Low, Medium, High?  Sounds like your husband may not have much tolerance.  It is important to keep the peace in the family/partnership.  So you need to work out what is acceptable.

3.  Will your current property Cash Flow when fully Rented?

As @Will Chamberlin you need to build CapEx reserves to cover the current property. Did you include an amount per month in your analysis? As a suggestion you might use any money you receive from your upcoming tax return to build your reserves quicker (or of course pay down personal debt).

As far as how soon I purchased my next property.  I purchased my first 3 within 6 months of each other.  2 at one time.  But, They were all distressed properties and I used Private Lender money (a friend) for all. 

@Jimmy L.

The neighborhoods you are looking at (near downtown) are in high demand for rental properties.  You really need a local agent to keep an eye out for you if you want those areas.  Good cash flowing properties are available all over SATX.  As others have said you just have to be patient.  You looking for $300 - $400 cash flow per unit or overall?

Howdy @Julian John

To me you are sending out conflicting goals. Appreciation Flip? Buy and Hold (Passive Income)? BRRRR (Buy, Rehab, Rent, Refi, Repeat) strategy?

First, a "Turn-key" property is not suited for BRRRR. It must be purchased at a discount, it should require significant repairs/upgrading, and must be able to recoup most of your acquisition/rehab/closing/holding costs when you refinance. This has none of those possibilities.

Second, you state you want to Buy and Hold.  Then your primary goal is Cash Flow and not appreciation (that is just cream on top).  So you must make sure it can get you a decent cash flow.  Just from the little info you have provided it doesn't appear to do that.

Lastly, if your main goal is appreciation, is 5-7% ROI really what you want? I would pass on this deal.

@Michael Esselman

It seems to me you need to verify you can even get 4 conventional loans concurrently or consecutively from your lender(s).  Why not go in the middle and try a Portfolio Loan.  Do not quote me, but, I think you can arrange terms so each property can be sold/refinanced later if desired.  As long as you have separate titles for each.  It would be like you refinancing 4 hard money loans into one portfolio.  I think it would be worth a try.  Call your local banks and Credit Unions to see if they can do it.  I know @Brandon Turner has mentioned using Portfolio Lenders a lot.  Hope this helps.  :)

@Alexander Alguire

Make sure your agent provides you current info on comps (recently sold properties similar to the one your interested in).  Also, have them run a rental market analysis for that neighborhood.  Find out how the current rent rate compares to the market rates.  Are they low, high, or average.  That way you will know if you have room to raise the rents.

As far as your plan to buy, update a tad, hold for a few years, then sell for equity gain.  I would not count on that too much.  Here are a couple of reasons why.  First, it is a multi family rental property.  They are purchased primarily for passive Cash Flow income.  Any equity gained is considered a plus, but, not counted on.  Second, you are wanting to put minimum money down to purchase.  If you are lucky and equity increases the average of 3% a year your gains will be minimal.

To improve your odds of more  equity profit you would need to force equity to increase.  You do that by buying a property at a discount, do some rehab to bring it up to date, and then sell at market value.  If you only need to do a tad of rehab I doubt that would qualify.

Are you planning to live in one of the units (house hack)?  If not, you cannot use the 203K loan.  Hope this helps.  :)

@Carlos Casanueva

What type of properties are you looking for? Multi family (2, 3, 4-Plex or larger) or SFR? Flips or Buy and Hold Rental?

What amounts are you wanting from Private Lender?

Give me some Deposit amounts and I will give you a couple of examples of ways you might structure your deals.  Who pays for closing and holding costs?