All Forum Posts by: Justin Owens

@Paisley H. the 1% rule is a rule of thumb. One that I use personally as well but it isn't the only consideration. If this is your first purchase you could ask around to see what units of that age are costing in maintenance and capex in that area to get some more realistic figures. 

I would also definitely include a management figure-again check to see what the local going rate is. I self-manage as well, but I include it because self-managing should save me money; I don't want to work at self-managing just to break even. Also, at some point I'll probably grow tired of self managing and I will need that figure to cover having someone manage it.

Multi families don't appreciate as SFR's do and you are correct there is a smaller market on the sell side. Cash flow is more important on multis. Is there any appreciation you can force in this deal? Any place to lower expenses or increase rents/income?

@Luke Calhoun it depends on the locality. In my area they aren't building affordable housing where the rent numbers cover all of the expenses. Rent is less than 1% of the purchase price, sometimes significantly so. Maybe in your part of Austin it does make sense? 

Also, buying a new build, even if the numbers work I am guessing there is no discount and one would pay full market price. Few investors would pay full retail price for a home. Just my 2 cents. I have purchased a new home that I lived in on speculation in 2005ish as prices were skyrocketing but it was an appreciation play not long term hold.

All the best

Welcome @Cody Barrett We just got back into town from UT, ID, WY, MT, and WA and it was such a nice break from the heat. But the monsoons have started and provide some relief here on out for the summer. We just closed on our 3rd deal in the East Valley last week and this one is a full gut rehab, gonna be interesting!

I got 2 refi's from a mortgage broker last week. Delayed financing is possible before a 12 or even 6 month seasoning but you are limited to the lesser of the purchase price (plus closing costs on the buy) or 75% of the appraised value (less closing fees for the refi). At least that is how ours was set up. It took me some shopping around find a broker who knew how to get it done. Banks and credit unions didn't have such favorable terms. And the loans we got didn't work for a true BRRR with a lot of rehab but for us we only put 5k into one property and nothing into the other.

@Phillip Vaughan

Nice job @Benjamin Riehle! We just picked up a dilapidated home in downtown Chandler las week we hope to completely rehab to add value. Depending on the numbers it may be a BRRR or a flip.

@Dylan B.

If you buy a property you generally have to honor the existing lease until its termination date.  From there you can go month to month or provide a 30 day notice prior to the end of the lease and have them move out when the lease expires. Leases don't expire just because the ownership changes hands.

Deposits SHOULD be transferred to you but sometimes they don't. If they don't you are still liable for them so know what they are. The downside is you won't know what the condition was when they moved in. So if you haven't done so yet, once you close schedule a time for a full walk though of each unit to document their condition and you can take any abnormal wear and tear or damage off from that point.

I would request copies of all the leases so you know when they terminate, the deposits, and other key facts of the lease. If the landlord has any background files or screening paperwork I'd request that too.

If tenants don't meet your requirements and their lease has expired I would look issue them notice (in AZ it's 30 days) that they need to move out. Be kind and upfront with them and hopefully you won't need to evict them.

Best of luck!

@Bill Exeter is the expert on this and I look forward to his enlightment. My gut would be no because it was never rented or leased to tenants even though your intent was to do so. 

Hello @Alexander B. 

It really depends on your goals and where you choose to invest. I only have residential which can be more work than commercial but people will always need a place to live. I have more potential buyers for a single family home as compared to commercial property so theoretically it should be easier to sell.

On the pros side for commercial you have longer term leases and less calls from tenants especially if it is a triple net lease.

@James Olinda Flagstaff - What a great place to be in June!! Is your property in or near Flag? 

RV'ing sounds pretty awesome - shoulda done it when the family was small now I am waiting for the tail end of things as they are moving on and out. We still camp in our toy hauler and are doing an RV trip in a rented Class C in a couple weeks but the month or two on the road just isn't feasible with my employment and the kids schedules but some day . . .

Welcome!

I am refi'ing two BRRR properties at 5.25% should close next week.