All Forum Posts by: Jason Barnett

If I'm trying to get a quick read on a house then I will ask for the selling price and the rents. Monthly Rent * 100 = my Maximum offer and if the property is more expensive than this then I don't bother. Of course I'm aiming for positive cash flow which may / may not be possible in your area.

In any case after I use the Rule of 100 above to screen properties I start looking at the ROI. What's the Net Operating Income divided by the purchase price of the property? I always want more than 10% (because I could just buy stocks) and obviously the higher the better.

Originally posted by "RedStar":

7k - purchase
1k - closing
6k - repairs

14k - total invested

$6600 - annual gross rental income
$600 - management fees
$1000 - any unforseen repairs
$600 - property taxes

$4400 - estimated net income

You forgot insurance and vacancies. Insurance should be very reasonable for a house that price, but do you know what the vacancy rates are like in the area? So maybe your cash flow will only be $3500 per year. All that said, you could go without rent for 6 months and still have a little cash flow. 6 months!

$4000 Cash Flow / $14K = 25% and that's excellent. Find more deals like that. :mrgreen:

Watch your rehab expense... if it stays as low as promised verbally then you will be in great shape. Congratulations!

Originally posted by "rye":

4. How to reach section8 tenants? I have not figured that out.Any ideas?

In my area this is actually really simple. The section 8 office has bulletin boards with housing rentals and best of all it's free to list your property! So I always list there if I'm willing to rent the unit to section 8. Ask the receptionist when you call their main line and you should be set.

I just thought of something else to add. I actually bought my first investment property with the help of a realtor. I was extremely green and I wanted a helping hand. For example, here are some of the things my realtor told me that influenced my decision making at the time:

Multi-units tend to have higher vacancy rates than single family houses.

This neighborhood provides better cash flow than these other neighborhoods." (this was shown to me as Rent vs. Purchase price or GRM)

The reason this neighborhood gives better cash flow than others because it's a bigger headache with lower quality tenants.

There are a lot of Section 8 tenants in this area which is both good and bad (along with discussion of Section 8 )

Great discussion here!

I would say that as an investor I'm not expecting you to cover every single possibility, I only want you to concern yourself with what's probable. If most of the people selling in your market thinks that the market is going to become a stinker (or a gold mine) for whatever reason then tell me. The following are tidbits that I know about from my area that would interest another investor:

"There is a developer that wants to build low-income apartments in some nearby farm fields. The local residents aren't too happy about it so I doubt you're going to have luck applying for a permit to do the same thing. Look for land somewhere else."

"There was a highly publicized gun shooting recently and people want to move out of this neighborhood. You really don't want to buy in there unless you can afford to wait for some extra time on the market."

"Delphi is going bankrupt and a lot of those workers live in this area. Overall this neighborhood is doing so you should be able to find some good buying opportunities here."

"The university is building new housing in this neighborhood. If you're interested in commercial real estate then you should take a look and get in early."

Do you see the difference? In all of the statements above I'm not promising anything, yet I'm adding a lot of valuable inside knowledge about the market that you didn't already know.

You don't have to say what will happen and you don't have to say what won't happen. But as a good realtor you should be able to give the inside scoop on what local people are saying. Think of yourself as a highly specialized king (or queen) of real estate gossip. :lol:

Very nice indeed! To be honest I was leery when you said you could sell for that much appreciation given current market conditions (especially rent vs. buy), but if you're actually getting that kind of return then you're at least sane for renting that low. :lol:

Well if it's so proprietary that most of us couldn't (or shouldn't) do it why bring it up at all? This is a public forum meant to spread knowledge of Real Estate. So if you've got something to share then spill the beans :lol:

Yes that's good appreciation. In that case I would sell the one you already have for 1.5 times what you paid for it. If you've held for 3 years and you have 14-15% appreciation then you should be able to get that much out of it. If that's really how much you can get then I'd say your strategy to buy and hold in your area will work great!

Originally posted by "seasley":

Definitely invest in real estate. Ypu just need the right place and a truthful professional to guide you. An example would be to learn about the lucrative market in the Great Smoky Mountains.

Look at www.investmounts.com

It takes a lot more than a truthful professional. In order to be profitable you've got to know how and where you as an investor will add the most value. You can hire out some of the work, but if you hire out all of the work to other people then you're going to really cut in to your bottom line.

That's an excellent point and I hope a realtor responds to it. I realize that we're discussing an issue that's larger than a single deal (liability for Realtors), but there has got to be a happy medium. You might be super-knowledgeable, but if you don't share that knowledge with me then you're adding zero value to the deal.