All Forum Posts by: Joe Hammel

@Wilson Rodriguez

Welcome! You can learn so much here. I think some of the greatest value is how to analyze deals to maximize wealth, as well as the continuous testimonials of success stories.

Best of Luck to you as well!

@Darius White

Hi Darius! Looks like you've gotten a lot of advice. I didn't see this math done anywhere yet, so I figured I would share how I would look at this.

A $75,000 house right now. C neighborhood. If appreciates at 3% per year for 10 years (assuming it is just closely correlating with inflation aroun 3%) will be worth about $100,000 in 10 years.

So one question to ponder:

Q. Will a location appreciate at faster than inflation?

A. Possibly. Quite a few suburbs are beating inflation right now, so it's possible the number will be somewhat higher. 

However, Just a Theory, but if the Metro Detroit are appreciates faster than inflation, it means the area is growing, and becoming more desirable. So that same "C" location mentioned above that was a $75,000, might have appreciated at 5% per year and be worth $122,000 in 10 years. However, if it was that desirable that it beat inflation rate it could now be a "B" location instead of a "C". Meaning previous homes in "D" location that you might not have considered now, could be "C" location and still worth <$100,000. 

Conclusion:

I always try to just analyze if its a "deal". While prices will most likely creep higher and higher, even just matching inflation, you will most likely be getting the same "inflation raise" at work (just as a general rule). Rents will also be inflating/appreciating so the same house that you would have gotten $1,000 rent/month now might get $1,300/month in 10 years. 

Another question...is will Metro Detroit ever price itself out of being a good "buy and hold" market, like a lot of areas in California....A whole other conversation - but part of what caused that to happen, I would assume is the insane appreciation the make homes more expensive than good rent.. *Opinion* - While I think Metro Detroit will continue to appreciate, I don't see us being that desirable that prices explode like that. Keeping it a good "Buy and Hold" Market for years to come...

@Jennifer Gates 

Yep, we’ve all been there. Just go above and beyond on everyone you meet and strive for the 5 star review.
I believe it’s part of signing up for “premium” that allowed me to add to the signature. You can check under settings - signature, I believe. 

@Jennifer Gates

Hi Jennifer, 

I think some agents do have "lead capture" on their websites, but I really think our websites are mostly for branding. Buyers seem to do most of their "Home search" either on zillow or with an agent through the MLS portal. I consider the website mostly for Affirmation, that I'm an actual agent, maybe have a few testimonials on there, just to show that I'm active and in business. I don't put too much effort into it, because I don't think the consumer gives it too much weight.

So my advice is to just have a nice looking website with a few testimonials and perhaps an "about me" section and perhaps a value proposition. 

Hopefully that helps!

@Nader Hachem

Hi Nader!

I use 7% vacancy, 7% Capex, 7% maint, 10% management.

I've seen 5,5,5,10, for less conservative and 10,10,10,10 for very conservative.

Vacancy: is fairly predictable and it could be wise to chose your market looking for low vacancy. If I know I'm looking at buying a 3 bed 1 bath home in a specific area. I pull loose, lease comps for the past year or 2. If I see that just about everything has leased out in under 30 days, and my house is is very nice condition, and my rent will be set at a competitive rate, I know I won't have much issue renting it out.

CapEx/Maint: If you're buying a house and completely rehabbing it, you know you can use lower estimates. If you're buying someone else's rental because they're "getting out of the business", good chance that house has some deferred maint.

This is why is use 7,7,7,10 and I consider that fairly conservative. If numbers look good there, I might adjust them a little bit to the specific deal.

@Cari Childers

That sounds like a sweet first deal! Nice job buying something that appreciated that much. 

Question 1:

Depends on your goals which strategy.

If your goals are fairly aggressive and trying to scale to as many doors as possible (exponential growth and highest ROI) - you technically would want to cash out refinance and take out every penny you could. Yes, this will hurt cash flow, but the idea is to then leverage that money and go buy 2 more houses to grow your wealth. Each house is multiplying/leverage the money you have into great deals. The idea quantity because even if cash flow isn't great, you are still getting loan paydown, appreciation, and tax benefits.

If your goals are slightly more conservative, Leave $10-$20k in the deal instead of taking it out, as a buffer. This minimizes risk from market downturns or any other unfortunate events.

Conservative goals (buy a few houses, have them paid off, and focus on other things): Take out the min you need to buy the next house.

Question 2:

Yes, if you refinance your rate will go up being, non homestead (if you purchased owner occupied initially). However, for the 1-2% interest rate increase, the math still works out that its beneficial to refinance and take that money and put it into your next multifamily property earning 10%+ ROI.

Question 3:

I'm sure the lender you find will be happy to do both refinance and next property for you. I don't know any good ones in that area. I've had the best luck with regional banks, local credit unions, local Mortgage Lenders. Not the "big guys".

Good Luck!

@Marc Turenne

General rule, the single family will attract perhaps a "better" tenant and could be easier to manage. Also will be easier to find a deal in most market.

The bonus of multiple doors and one roof, with the scalabilty of multi-family is attractive.

If you can find an awesome deal on the multifamily, I'd take it. If not, it shouldn't be too hard to find a good deal on a single family home and just get started on your journey to wealth building!

Property Management really should take care of most of your time/issues. 

@John J.

Welcome! I think trying to listen to as many of the BP podcasts as possible (commute to and from work is perfect). You will hear so many motivating stories of people who used all of the different paths to real estate investing, and started out right where you are. You will probably eventually start favoring one of the methods. Then start reading the "favorite real estate books" that are mentioned.

My best advice for anyone if I had to chose for them.

- Cut your expenses

- Save up some money 

- Buy a house that needs some minor updates, and beats the 1% rule for renting, in a decent area.

Good Luck!

@Ondrej Brown

I see you have a video now, but for a quick glance...

50% Rule 

If a house will rent for $1,000/month. Expect expenses (vacancy, cap x, maint, etc) to cost 50% of that = $500

*This doesn't include mortgage/interest* That is an additional cost.

Let's say Mortgage Payment = $400/month.

$500 (expenses using 50% rule) + $400 (mortgage payment) = $900 cost/month.

$1,000 (income) - $900 (expenses) = $100/month cash flow.

I personally like the 1% rule best for quick estimates. If it beats the 1% rule, and is in a decent location. Good chance it's worth looking at further. 

Hope that Helps!

@KATHY H.

Hi Kathy, 

From what I've seen, there is more ROI to add the bathroom to the basement. Mostly because of costs. Having it upstairs might be a touch more convenient, but as you mentioned, it would be difficult and expensive. It won't make a huge difference to a buyer or an appraiser for your ARV.

You don't have to finish the basement. Perhaps you would want to enclose just the bathroom space. 

I've seen really good ARV in a basement that is unfinished but very clean. I recommend the "clean unfinished" look for MAX ROI: Spray paint ceiling flat black, painted white walls, and epoxy gray/blue floor (or just cement basement paint). This is cheap, quick, and buyers love it.