All Forum Posts by: Jonny Lambert

@Ned Carey can you expound on your last statement?

"You can't use the 2% rule to compare a financed deal vs an all cash deal. It is a form of gross rent multiplier that does not take financing into account."

@Mike D'Arrigo Great advice about first defining if the area is go or no. However, I believe I heard in a BP podcast that the macro picture of a market is more important that the micro picture for investment properties as they are valued on income and not comps. Is there no opportunity to be had in a less than ideal area?

The first set of numbers are not my numbers. They are the numbers listed with the 'deal.'

The second set of numbers is where I used 60% of income to cover expenses thus being more conservative than the 50% rule I have learned here on BP.

I am looking to purchase at least two cash flowing rentals for long term holding by June of this year. However, I live abroad and thus have no 'local' market or team in place. This has led me to turn key investments. I ran across this one and wanted to know what the BP community thinks about it as an exercise for being able to analyze 'deals' like this moving forward.

* * *

A triplex property in Philadelphia

Purchase price: $127,500 (not a foreclosure, normal sale)

Property info: 3 bedroom, 3 bathroom, 2,2790 square feet (3 floors, triplex)

Monthly rent collected: $1,950

Guaranteed for year 1. One year home warranty (could someone explain what that might mean?). A 15 year roof warranty.

Monthly expenses

Property taxes: $105

Insurance: $80

Property management fees: $195

Monthly expenses (conservatively estimated)

Vacancy (7%): $137

Repairs (5%): $98

Total Monthly Expenses- $614

Net Income = Income – Expenses = $1336

This makes the cap rate a stunning 12.5% and if I were to put down a normal 20% down payment a COC return of 62%!!

Not in this world right?

So I applied the 60% rule (the 50% rule with my twist for turn keys as I want to make sure I do not get burned).

$1,950 * .6 = $1,170

Leaving $780 for mortgage payments. Assuming a $500 mortgage this would give a solid 13% COC return.

* * *

What say you? What am I missing?

If the fear is not being able rent again at those prices, how did the PM get those leases in the first place?

Looking forward to the feedback!

My lofty goal is to have one million dollars of annual passive income before I turn 40 (I am 31 now). Now I just have to figure out how ;)

I live in Argentina, travel to the US only twice a year, but have plans to move back in three years. So I am exploring turnkeys, partnership, hard money lending, etc...

Wish I could make it to the RE meetup. You'll have to fill me in!

Hi Rick:

Welcome! I introduced myself just yesterday here on BP and am too looking to start investing in Denver/Colorado.

I will be sure to pass along any information I come across that may be of use to either of us.

Have you been to investfourmore.com by Mark Ferguson? He is based in North Colorado and has offered some great material for me.

@Bill S. <--- Thanks for that.

So if I understand you, you mean if you had a liberty to choose any market you would invest time in researching the best potential/ideal market before investing in the market where you are going to end up living?

Does this mean that one is somewhat 'tied' to their local market?

And just so I get a reference point, what is considered small potatoes?

@Brant Richardson I'm sorry I wasn't clear, I am looking to invest in the US.

Thanks for the tips. How does refinancing a home that I own outright work? Is that like taking out a line of credit?

New to BP and I found this topic very useful one year later!

#Loving BiggerPockets!

Hello Everyone:

I am new to BP but am loving the culture that I am encountering.

My question is what strategies would you employ if you had 300k of cash to invest?

Background: I own and operate a successful business with good cash flow, I have roughly 20 hours a week to spend on investing and good to great credit. I live in Buenos Aires and as such can not visit properties or have face-to-faces with seller or loan officers, etc...

My thought until now has been to leverage my cash acquiring conventional financing on four SFRs. However, I keep reading how difficult it can be -- especially for a first-time investor -- to find a DEAL so I do not want to start with a strategy that is dependent on finding several of them a year.

Perhaps is would be easier to secure a great DEAL offering an entire cash purchase?

Looking forward to your responses.

@Bill S. Thank you for your time and your insight. I was not planning on being able to accomplish my goals in only one market, however all that I have read here on BP and other blogs is consistent in recommending immersing oneself into one specific market and acquiring intimate knowledge of that market. To that end my question to you would be how much does it matter where one starts if in the end one only needs two or three deals per year to get started? If it matters a great deal then perhaps I should return to the step of first choosing a market.

A follow-up question is in terms of maintenance, logistics, taxes etc... how does having properties outside of your home state work?

Nice to meet you @Jon Klaus and @Dawn Anastasi!