All Forum Posts by: Josh Young

@Yangyang Jin all of the concerns you listed are valid, you need to either take this rental listing over yourself or find a professional property manager to help you.  Also, buy an air freshener (glade plug-in).

@Carlos Handler it sounds like you need to trade in some of your equity for cash flow, this will probably require reducing some of the leverage that you have and buying in a different market. You might consider doing a 1031 exchange and selling a couple of your properties that are cash flowing the least amount and buy in a market that is more conducive to cash flow. With that being said I would be careful not to just chase cash flow but instead find a mix of appreciation and cash flow, but at lower leverage. I like Casa Grande, AZ for this, we have new builds that are around $300k and will rent for around $1750/month. You will have basically no cap ex or maintenance expense and will be able to raise rents by the time any of these expenses start. We have super low property taxes and insurance (about $2k/year combine), and we have landlord friendly laws. The builders offer credits to buy the rate down, or they offer a discount if paying cash, so these make sense. Rents and property values will continue to increase here as our population is increasing and good paying jobs continue to move to this area. If you pay all cash this is a 5% CoC return in year one.

@Michael Weidler it's all about the numbers, you should work with an investor friendly agent in your market (one that is also an investor themselves), they will be able to help you. Just looking at comps on Zillow this is what I came up with. If you put 20% down your PITI payment will be around $1300/month, if you added a 2nd bedroom you might get $1700/month in rent, so you might break even on cash flow after repairs/maint, cap ex, vacancy, and management. But it's a 100 year old house, so rehab, repairs/maint, and cap ex might be significantly more expensive. If you can't add the 2nd bedroom it might only rent for $1400/month, so that would be negative cash flow for sure. Most properties that you find will require at least 30-40% down payment and/or buying the interest rate down to get positive cash flow.

Personally I like the strategy of buying a new primary residence to move into and keeping your current home as a rental, that's what my wife and I have done and it has worked out great. Here is a post I did on it: https://www.biggerpockets.com/forums/61/topics/1096979-how-i...

@Kristina Krich if you want a market with a population growing at 6% annually I would recommend new builds in Casa Grande, AZ. These cost $290-320k and rent for $1700-1900, put 30% down and it will cash flow break even in year one, you will also have to spend about $8-12k per property in landscape, appliances, fans, blinds. We have super low property taxes and insurance (combine about $2k per year), and we are a landlord friendly state. You will have basically no cap ex or maintenance expense and will be able to raise rents by the time any of these expenses start. The builders offer credits to buy the rate down, so these make sense. Rents and property values will continue to increase here as our population is increasing and good paying jobs continue to move to this area. Full disclosure, I help investors with this exact strategy and I manage the properties for them as well, so I make it super easy.

@Doug Henderson I have not invested in a syndication yet, but when I do I plan to start with Open Door Capital https://odcfund.com/ This is Brandon Turner's fund, if you don't know him he was a host of the BP podcast for years.

@Chris DeSoto great breakdown! Buying a new primary residence to move into and turning your current house into a rental is the easiest way to build your portfolio, low down payments and the best available interest rates.  

I would not renovate the current house before you turn it into a rental if the rehab would cost $100k and would only bring in an extra $300 per month. You have good leverage on it now with about 65% LTV and a super low interest rate, so your principle pay down is strong and you are going to be net cash flow positive even after repairs/maint, cap ex, vacancy, and management. In 7-10 years you can do the rehab right before you decide to sell or cash out refi.

Buy the new primary residence with a conventional loan 5% down payment. Maybe in a few years if rates drop and/or values go up you can do a rate and term refinance to get rid of the PMI and/or lower the rate.

Save your cash and repeat this same thing again in a couple years. Here is a post I made on how I did a very similar thing: https://www.biggerpockets.com/forums/61/topics/1096979-how-i...

@Marcus Auerbach did everything on the report change or just the top line number?

@Michele Velazquez there is no such thing as too low, at some point you will be low enough on the rent to attract a quality applicant. You are better off shooting a little low on pricing at the beginning and raising rent on the renewal or turnover when you have more time to find a tenant so your vacancy isn't affected. Maximizing the rental rate in year one shouldn't be your goal, your goal should be quickly filling the vacancy with a quality applicant, real estate investing is a long game.

@Lara Thatcher if you do accept them as a tenant it would be smart to add a clause to your lease requiring them to have and provide proof of renters insurance and make them name you as additional insured on the policy.  This is generally a good practice anyway, but I would highly recommend it if your insurance policy is not going to cover you.

I see you just posted it on Zillow too, that's smart, but your PM should be doing that, that's what you pay them for. They should also tell you that based on the comps on Zillow it should rent for $1900 per month, maybe $2000, but I would list at $1900 to make sure you get it filled quickly, every month of vacancy is equal to an 8% reduction in annual revenue. A lot of tenants have small pets too, so I would consider small dogs and cats for an extra $25 per month. Your pics and description look okay, they could be better and you could spell out your terms a little more, but I think price is the biggest factor for why you haven't had any applicants yet.