All Forum Posts by: John W Sheffer Jr

@Hunter L. , For what it's worth, I used 5% vac rate, 10% prop rate, 10% prop repair, and 19.64% cap ex which seems high compared to what I see around BP. As far as the 4% general rule, I feel like that is far too low. I would only need 5k which just seems off. With that said, I appreciate your help and am glad to see that I'm being "pretty conservative". Your comments make me feel better about my current situation. Thank you!

@Charles Worth, While this isn't yet a investment property, I do plan on turning it into one in the future. I have spoke with my mortgage broker who advised me about the use of a HELOC. The only personal issue I have with that is, I wanted to adhere to a "pay in cash and don't use credit to fix possible repairs" type of mentality. I really want to try and not take out loans for things other than properties. Fingers crossed that I can.

Thanks.

Hi @Dmitriy Fomichenko ,

Thank you for that information. After re-reading my initial post I believe I may have come across sounding like a scammer who was trying to put one over on employees. That is not the case. I was merely trying to think of out of the box solutions for someone who may have an issue like this. 

According to who? Where did this information come from?

Hello all,

So, I have created a spreadsheet for the home that I currently live in and am considering leaving and renting out as opposed to selling. The spreadsheet includes the mortgage, insurance, prop tax, school tax, lawn care, snow removal, vacancy rate, property repair, property maintenance, cap ex and the rent income. With all of that combined, I would have a -68 dollars cash flow but, because I have basically removed the need for any major expenses the actual savings that will go into a bank account for cap ex, property maintenance and property management would go into a savings account and would be slightly under 7k per year. Just to make it clear, I have rehabbed the house to like new ie, new windows, doors and siding 2015, new driveway 2014, new roof 2013, new appliances 2013, new furnace 2016, new composite deck 2015 west side of house and 2011 east side of house, etc all in an effort to mitigate future expenses. 

So my question is this, is my cash flow really -68?

Should every penny of the 7k for each year be held in an account until it is needed? 

Is there an amount at which you say, "okay, I have enough money saved to address the major issues of this rental property."

My thoughts were that I would already have a "rainy day fund" of 10k in the bank prior to even renting out my house. I have to admit though that after doing the property analysis I feel a little deflated. Here I thought I would be bringing in 7k a year and once I had enough to cover my most expensive capital expenditures or roughly 20k I would be able to take any money after that and reinvest into my next property. Does anyone have any thoughts on this? Am I missing something? I don't want to pad my numbers to give myself the illusion that I can make this work. 

Any advice on this would be greatly appreciated.

Thank you!

Hi @Rajeev Kotyan, I don't personally have any intentions of doing this. It basically got me to outside the box creative thinking. I know of a large contractor in my area (drywall, framer, finisher) who used to sub-out his own employees (board hangers) to his own company. He paid them per room on large residential buildings in stead of paying them an hourly rate. It was I imagine very lucrative for all parties involved. I recall talking to a couple of the hangers and they claimed to bring home as much 3k in 4 days. I know that they don't do this anymore because of the liability insurance issues though. The above example is sort of what got me thinking in this direction and I guess I wondered if this might have been one more of the benefits for the owner of the company. Anyway, I just wondered if there wasn't a creative work around for this which you have answered. I should mention, I wasn't suggesting that the employees would not be eligible for a 401k through the sub contracted company. It was just if this would be a way for an owner to put away more money into an asset. 

Hi @Bryan O., I wonder then if a work around to having employees would be to sub-out your second company with employees. In other words, have the soloK for the parent company which takes in the income and then subs out the work to it's second company thereby eliminating the employee problem. 

Hi Justin. Welcome to BP. It sounds like a great goal you are planning for yourself.

@Paul Timmins 

Thanks for the helpful welcome Paul. I'm not a paid fireman, I do it voluntarily to help out in my community. I'm glad you tipped me off to the BP Ultimate Beginner's Guide. I missed that when I was wandering about the site when I first joined. I have already bought both J. Scott books and they should be here tomorrow. I'm excited to dive into them. 

@Jerry Ciesielski

@Jerry Ciesielski

Hi Jerry, Thank you for the welcome. While looking around the site I found the keyword tool and think it's great! I have several keywords up and running for me. 

Out of curiosity, what exactly is a "Foreclosure Specialist"? Do you actually handle foreclosing on property or do you purchase foreclosures yourself?

@Ramon Fyffe

@Ramon Fyffe

Thanks Ramon! I have my keywords all set up although, I'm not 100% sure I'm prepared to network with local investors. I am trying to educate myself as best I can so that I don't go out and give people a poor impression of myself with lack of knowledge. 

@Mike Hurney

@Mike Hurney

Thank you Mike! I thought it might be a good strategy although, after running the Cap Ex numbers I'm not so sure. The Cap Ex I came up with is almost 20% and gives me a negative cash flow. I need to reevaluate some of my information and see if I'm missing something.

Hello everyone! My name is John Sheffer. I am from Eden NY, a small town about a half an hour south of Buffalo NY. I have no experience in real estate investing but am eager to learn. I have been working in the construction industry as a bricklayer for the past 19 years. My father who, has been in business for 35 years owns the company. It has been a blessing for me in many ways. One of the biggest ways is being able to question other trades on job sites about work I am doing on my own home. I really enjoy the feeling of accomplishment, and pride for the work that I do. With that said, I don’t think that my quality of life will be very good if I continue to abuse my body the way that I do and I want to be able to enjoy my retirement. That is a big part of why for several years now I have been lazily contemplating getting into the business of rental properties. I have noticed how so many of the companies that we do work for have rental properties and have taken note of how their wealth has grown.

So, what has finally kicked me in the butt to no longer “lazily contemplate”?

My wife and I have had our first child (he is two now) and we are outgrowing our house. Although I never aspired to be a rental property owner for SFRs after putting the numbers together I thought that maybe our house could be the starting point for us. That thought made me do what so many others out there do. Go to Google. Google then brought me to Brandon Turners book “ The Book on Rental Property Investing” (listening to it for the third time), which lead to the BP podcast, which lead me to “Rich Dad, Poor Dad” which has fired me up. Right now my thirst for knowledge has not been quenched. I have been downloading books and listening to podcasts like crazy. I hope to gain knowledge and wisdom from all here that are wiling to share and eventually I hope to be one of the many success stories here on BP.

Cheers! John