All Forum Posts by: Jason L.

Kin Insurance has the cheapest rates I have found (they're a tech company that cuts out the salesmen and then passes the savings down) and they do business in Florida. The downside is that they are pickier about which houses they will and won't insure. For instance, they insure one of my houses in Tampa but then wouldn't insure another unless I agreed to get the electric rewired. Worth checking them out anyway just to see if they'll quote yours.

Wouldn't say I have rules per se. To be honest, I kind of fell a**-backwards into making that one work as well as it did considering how much went wrong. I probably won't find numbers like that one again, so if I forced myself to anchor all future deals to that one then I'd probably be sitting out way too long. If it sounds good to you, then I wouldn't get too hung up on "rules".

3/1 SFH bought in 2015...

Purchase Price: $66k (privately financed through a relative)

Renovations: $23k (I paid this myself. It was at least $10k more than what I had budgeted. Chalk that up to having no idea what you are doing)

Initial Rent: $1125

Insurance: $1675 (Lol. Don't ever ask your parents how to buy insurance for an investment property because they'll panic and want you to get a bunch of stuff you don't need. I've gotten this number down 4 years straight, and it's now about $700)

Taxes: $850 (it's up to $1250 now).

Maintenance: ~$700 (like I said, I spent $23k that first year that I bought it, but I have averaged $700/year in the 4 years since. It will probably need a new HVAC soon though)

Management: $0 (I placed the tenant myself back when I was local, but I have moved 200 miles away since. Lucky the tenant has stayed because I plan to outsource the management if he ever leaves. 10% + fees is pretty standard for this area).

Vacancy: $0 (Technically it took me 3 months to get a tenant in from the day I bought it, but he's now in year 5 of his tenancy. Pretty lucky for the reason I mentioned above).

From a budget perspective, I still budget 12% for PM and 8% for vacancy. So from a pro forma perspective:

Gross Rents: $13,500

Gross Rents (net of Vacancy Budget): $12,420

Actual Expenses: -$3,225

Budgeted PM (12%): -$1,490

Total Budgeted Expenses: -$4,715

NOI = $7,705

Financing: -$2640

CoC: 5k/23k = 22%

Note: I've taken all the cash flow (and some other funds) to pay back the principal on the loan from my relative. So technically my CoC% has dramatically gone down since. However, I only owe them $10k from the original $66k, and the house is worth $135k from the original $89k all in price.

I am flying into Greensboro next weekend (12/14) to look at rental properties. Does anybody have any recommendations (or who to avoid) for property management? Please PM me. Thanks.

I own a couple of units in the Tampa Bay area in Florida (I am a long distance investor, as I live across the state), and I recently took out a $95k HELOC against one of them. I've been trying to think about how to deploy this money. I'd love to just buy something in cash with it (gives me leverage as a buyer and wouldn't need to pay closing costs on a mortgage), but with all of the appreciation Tampa Bay has seen the last few years I'm skeptical I'll find anything that isn't a total dumpster fire. I can think of 3 realistic options on proceeding:

1) Put up a little extra money out of pocket to buy something in the Tampa area. Would prefer not to but it's not a nonstarter.

2) Consider other areas where houses are cheaper to make this work in cash. Would hit my specs on price and buying cash without needing to put up any personal money, but I don't really have a ton of good ideas on where and I lose any economies of scale I have by not continuing to invest in the same region.

3) Use the HELOC to fund a down payment instead of buying entirely in cash. I can buy something larger (probably another duplex), but if I'm funding a down payment with interest then wouldn't this basically be the equivalent of being 100% financed?

Any opinions or alternative ideas?

Space Coast Credit Union does HELOCs on investment properties.The one I opened with them was either 70 or 75% LTV (don't remember to be honest but I think 70) and 3/4 point above prime, which was a better quote than PenFed gave me (full point above).

I had Kwikset Smart Keys installed on 2 of my units last month. The lock itself cost $16 on Amazon and then it took my handyman maybe a half hour or so to install. Total cost: $40/lock.

Your lease should read that the roommates are "joint and severally liable", aka "if one screws up, then you all screw up." So you would have to evict both (although I'd certainly try to reach a deal with the good tenant before proceeding since he might be able to get ahead of the situation with the bad tenant).

In general, as most have stated, I'd make it clear that I expect one payment from the both of them and it's up to them to personally deal with splitting their rent share.

If the goal is to find one where you guys can live for free, then you might struggle. If you're willing to put some sweat equity into it, then you will have an easier time. In general, 2-4 unit inventory is low (especially outside of the worst parts of St Pete) and competition is high.

Example: I bought a 2-unit in a good part of St Pete about a year-and-a-half ago. Just to get an idea on the competition, I got it 1st day on the market, had to go $2000 over asking price, and paid in cash. I've also had to put something like $33k in maintenance into the house over the last year just to make it livable. One unit rents for $1300 and the other for $850 (minus me paying utilities).

Realistically, 2 people couldn't live in my back unit (it's a small 400 SF detached studio) so if this were you and your wife, then you'd certainly have to occupy the $1300 unit. The $850 from the back unit would more or less offset your mortgage. So you'd still be out of pocket on all other expenses, utilities, insurance, maintenance, etc. (not to mention mortgage insurance if you are using FHA). Still a better deal than buying a SFH and not collecting the $850, but a nonstarter if your goal was to live for free.

 There have been some good responses to my post, but I think your latter point was the one that made me think the most. You're totally right that their story felt more like "he was a victim, this was BS" than it did "he made a mistake and he's worked very hard to move past it". I honestly think somewhere in their story is the latter, but when I re-read the email they sent me I'm seeing a lot more of the former. Not the best first impression.