All Forum Posts by: Josh Adams

@Frank Szymanski If you go the painting route don’t mess with oil based paints if you’re not an expert. I am no painting expert but I have painted cabinets twice: at our previous home and at our current home. The former with oil based the latter with high quality semi-gloss. I understand the traditional guidance on using oil based for high traffic areas like kitchens for durability and cleaning but oil based painting experience was just not worth it. It’s extremely hard to work with, clean up, and it stinks. The quality of water based primers and paints today will stand up as long as your prep work is thoroughly done. You’re probably looking at sanding, priming, and three coats of a high quality semi gloss or gloss paint.

You have gotten a lot of great advice. Some observations from a small-time Cincinnati guy: 

- You allocate no money for property management. Even if you plan on managing yourself, you should still include management even if only at something like 8%. This is a real cost of your time and if you plan to scale, you want to build this in to your numbers so you can do that in the future. Some may disagree with me on this but this is something I learned as I've gone along. 

- Your budget for capex and maintenance are too low, in my experience. You should add another 5%. Also, they are technically separate and you should setup a capex account just for those funds. 

- You need to be cautious with your taxes. Hamilton County will be reassessing taxes next year and implementing the new rate in 2021. I believe my timeline is correct but someone else may correct me. This means that if your ARV is accurate and they see other properties in the area selling for that, your taxes will go up 15 months after you buy the property. For example, if the new market value is $130K they will assess at $45K in Ohio (35%). Depending on the tax district you are in you will pay around 85 mills give or take (depends on school/tax district). Therefore your taxes would be at $3,867 per year. Even if they only gave a market value of $100k and your local mill rate was 80 your taxes would still go up to $2,800. This is about double what you forecast. There is no guarantee they will assess you at this but Hamilton County is not stupid and with real estate values going through the roof you can bet the county is coming for their pound of flesh. As a matter of fact, we are coincidentally waiting until 2021 to buy our next property for personal reasons but this will also allow me to wait and see how the assessments shake out next year. I think it will have the combined effect of making rents go up slightly and real estate prices go down slightly because it's going bite into a bigger share of the monthly budget homeowners and landlords can afford. Just my .02.

- What about water? In my experience the water in the Cincinnati Water Works district has to be in the owners name. Therefore this is an expense to you unless you can raise your rents about $50/mo (depends on tenant water usage obviously). 

- Bottom line, I think you're paying too much for the property. You actually never state what your friend originally paid for the property but I suspect he paid about the right price, or maybe I overlooked that. From what I can see in the Cincinnati area, SFRs cannot cost your more than $80-90K in order to make money unless you're in a prime neighborhood like Oakley where you can command big time rents but you're only forecasting <$1,000. Of course there are exceptions and I'm sure people will jump on me but that is how I see the numbers. 

Good luck to you. This is in no way trying to discourage you, quite the opposite. Just be very conservative with your numbers. Like Warren Buffet says, investing is a no-strike called game. You don't lose money for missing a few good investments therefore wait for your desired pitch. 

@Michael Vu PM Me.

@Ryan Rush I still don’t understand what you mean by insurance was going to drop you over your roof? The worst they would do is say they are not covering the roof not drop the whole policy. But that only means you’re on the hook for your roof which they weren’t paying for anyway, so why pay to replace the whole thing now? Most insurance companies are moving to actual cash value anyway at least in my area due to frivolous hail claims. Best of luck but I still disagree with you buying a new roof unless it was literally falling in.

@Nick Farrell The S&P 500 is up around 18% over the past 23 months. However there have been some huge dips during that time period including one Q4 of 2018. Depending on fees, Investment choice in your portfolio, and timing of your transactions, you may have had a bit of bad luck or it may be, as you say, a bad FA. Ask someone you trust with financial knowledge to review your portfolio to see why you are underperforming the market.

@Joey Allison What kind of cash flow would you pickup by eliminating those debts? I sense you care about cash flow. Therefore eliminating as many debts as possible would increase your cash flow a certain amount AND give you piece of mind. I would definitely pay off the cars though. The other money, more of a business analysis decision on your part.

@Nathan Langdon Think about it from her perspective. What is a rent raise $ amount that is just low enough not to be worth her time and money to move? If you are confident in the market at 900 or 950 then there is nowhere she can go to get the same apartment for less money. Therefore why would she spend time and money on moving her home to save $25 or $0 per month. She may choose to move out of spite but that probability is much lower however possible. Pull the bandaid and raise the full amount. You may get some grumbling and a bad attitude for a month but it will pass. If you have to turn it over, you are setting yourself up better long term.

@Alan Zee yes the property market in Cincinnati has heated up tremendously. We picked up two 4 units last year - one for 94k (4 1br) and one for 160k (3 2br, 1 3br) I'm C areas. These deals were the best I could find in terms of COC, Cap rate, and IRR. And I'll even admit the second property was borderline. People are either not accounting for ALL operating expenses and will take a cash flow haircut due to ignorance or unrealistic optimism or just want to slumlord it, are banking on appreciation, or are buying as a house hack but again are not thinking about the property cash flow on its own down the road when they move out. I analyzed around 100 listings and this is the conclusion I came to. I believe there are still some fixer upper deals or off market deals out there but they have to be scrutinized very carefully for true ARV. This is why we decided to just save for a couple years and make our next property a 12+ unit multi family because on the commercial side the NOI of the building will dictate the value and not market exuberance.

@Cameron Riley

Credit Check

Background Check

Eviction Check (none within 10 years)

will call employer and must have job at least 6 months.

DTI not greater than 60% including rent

Gross Income must be 3x rent

I have eight units in a C area and I still hit all of those requirements. I’d rather have a unit sit for four weeks than rent to a problem tenant. You will have much less stress.

@David Jackson as someone mentioned Docusign or some similar software is the only way to go. I only submit docusign offers and only respond to docusign counteroffers. That way everyone is locked in once they send it back and I sign. IMO You shouldn’t even be negotiating without a formal contract offer sent so that their reply is a legally binding signature. Just a waste of time and efforts otherwise. I’m probably one of the least experience REIs in this forum but with my other business experience I was adamant about this point from the beginning of my journey.