All Forum Posts by: Andrew Martel

Good evening BP.

This past week I've had a great time looking at a couple of properties as my first real estate investment. I'm just looking to ping the scenario off of some folks because I've been running the numbers for days and am driving myself nuts!

Here's the situation. I have 3 duplex units to choose from, all on the same street, all the same design/sq ft. Each of them is 2bd 1bath 750sq ft/ unit. There are two for 48K and one for 59k. The 2 for 48K need roof and interior work, I'm estimating 15K for rehab. the 59K needs new windows and interior work/updating. Comps in the area for is ~79K, rent averages between 590-650/unit. The area is located very close to a nice mall hospital, public park and medical school. I've been pre-approved for my lending already, and the bank is good with me financing renovations. Taxes for the unit are 2265/yr.

I spoke with some of the other renters in the area, and they all said they were happy with the location and never had any issues with break ins, or crime.

That all being said, I think that my nerves are just unsteady about keeping the home rented. I think that, so long as the house is rented, the numbers work out just fine. Being that this is my first rental, is that a normal feeling? What advice do you guys have to mitigate the risk?

As always I appreciate you guys.

-Drew

I appreciate the feedback! @Kevin Cook , I completely agree with you on the business plan side of things and getting some experience under my belt. I'm very excited to dive in and get my feet wet.

If you don't mind, could you dive a little deeper into the explanation of how you might "plan" for something like REI. I can run numbers on homes all day and write our goals and how I might get there, but is there more I should be considering?

I'm currently considering a "practice round" here in my current location. Something low cost, that won't break the bank but I could turn around and profit from (buy, rehab, hold). What do you think?

@Chris L. Thanks for the advice! I am planning on renting this home, rentals here are awesome and aren't on the market very long. I'm hoping ot keep it for another 5-10 years then sell (we'll see). When you're talking strategy, I really like the idea of buy and hold. Buying low and renting out puts cash flow in my pocket and gives me some built in equity. As far as the types of homes that I'm looking to buy, I don't know if i have that solidified yet. SFR's seem like a good idea and to me look like they may be easily managable. Ultimately I would like to be in a situation where I could get out of the military and use investing as my primary mode of income. Could you elaborate some more on strategy or point in the right direction to learn?

The question I always ask myself is "where is the highest percentage". If your ROI % is higher than your student loan, then stick with that. The other question I ask myself when paying down a loan (if i'm paying principal), is "can this money have a higher yield if used somewhere else". I then go from there. If i can afford the loan payment, and my money can make more money elsewhere than what the interest on the loan costs me, then I use that opportunity to invest elsewhere... keeping the debt. If not, then I pay on the debt.

Personally I hate debt, and when i had "bad" debt, i worked really hard to get out of it as quickly as possible. This however was debt at a high percentage rate that I didn't feel I could beat elsewhere.

My 2 cents..

My dad used to always say, in any negotiation, the person who wants it the most, loses.

Good Morning BP!

I'm looking for some advice. I currently own a home and will be moving next year sometime around March (I'm military). Right now I have a unique opportunity to push for a couple of areas and I wanted to know what your opinions on those place are - in regards to beginning REI. I can get San Antonio, CO Springs, or a FL location (Tampa, Ft Walton Beach, Cocoa Beach).

Here's what I am thinking for my strategy. The home I currently own was bought using the VA. I have bonus entititlements available which I was planning on using to purchase a forclosure property to live in. This will be my "practice flip" because I can live in it and work on it at the same time.

My main course of action will be buy and hold (more flips to come later possibly). I think (and your opinions are much appreciated on this) I should focus on cash flow. However I don't know if want to do multi family units or go the forclosure, fix and rent route. This purchase will be via a traditional loan or some other kind of financing. I'm using the remainder of my time at my current location to prep for action in this new area (research, savings, education, etc).

So initial research that I've done on the markets in each of the locations is as follows (please correct/advise me if I am wrong):

CO Springs- I've lived here before. Love the area, however home tend to be built in mass production with very little differentiation and close together. The taxes are low. Lots of military and professionals living in the area. Strategy might be to buy 3bd 2ba SFRs with a rental price range of $1200-$1600/mth (~120,000-160,000 purchase price).

FL- Haven't done much research in this area, only because taxes have kind of deterred me from the area. However, where I would move, would have a high military population, which is great for renting. Focus here would be the E5 - O4 BAH price rang of $1000-1600 / mnth.

San Antonio- This area, from what I've looked at so far, seems very promising. There are lots of forclosures in what I would assume to be nice areas based off of city-data. There is a lot of military and seems to be a booming town. However, I have never been to San Antonio, don't know the area as well as the other two locations, but am willing to take the leap if it looks promising.

So, any advice is appreciated. I would love to hear what you all have to say. Thanks for your advice!

-Drew

When I first bought my home, I was under the impression that I would be able to rent it when I moved. However,I just did the calculations on my home and it is looking like i will not be able to rent my home out when I PCS without having to dump money into the property. This is mainly because property taxes jump from ~4% to 6% putting my annual taxes for the property around 3400/yr. This along with management fees, insurance, maintenance, it's just not going to happen. That also being said, where I am located the average time on market is 180 days or more. I am confident that I can make a little money from the sale of the home, however the 180 days of being on the market worries. I'd rather not have to float two mortgages when I move.

So my question is, are there any alternatives I should consider? I had thought about owner financing, but I don't know the in's and out's of that process and am concerned about forclosure/damage to the property in the event of a forclosure.

Other than that, I see selling the home as the only option to get out of this without much damage being done to my wallet.

Does anyone have any advice or alternatives I might look into?

-Drew

@Bryan L. I think I am l looking more towards the buy and hold strategy to start off with. Currently I'm just getting my noggin wrapped around all this by reading as much as possible. I will be PCSing in the near future and will be looking to start then. I think I would love to do apartments eventually, but for now I will be starting small.

My question for the day!

I'm reading the Pre-Forclosure Property Investor's Kit by Thomas J. Lucier, and he discusses the pro's and con's IRT the 3 forclosure markets (obviously leaning more towards the short sale side of things). My question is, what are your opinions on which is easier? More profitable? Less risky?

Any other thoughts on the subject are welcome! Thanks guys and gals.

-Drew

I apologize. I mixed up my lingo... one of the burdens of learning something new!

I was referring to seller financing. Where I am located a primary residence is taxed at 3% and non primary is taxed at 6%. I was thinking that an option would be to purchase the property at discount, fix up, and sell under a seller finance option. That way I make the profit on home plus interest, avoid the taxes and maintain the property in the event of a default. Does this sound about right?

Hello All!

My questions for the day is about buy and hold basics. I'm a bullets kind of guy so here it goes:

• What is considered a "good" cash flow for a single family rental home... $50? $100 $200? In my simple mind, I tend to want to look at how long it would take me to build a 6 month reserve of "float" money based off of my net cash flow from the home. What do you all recommend you look to net?
• Taxes. The area that I live in has outrageous taxes for non-primary homes. We're talking 6% of the assessed property value... I've crunched a few numbers and it seems that just because of taxes, I am forced to search for deep discounts on homes. Is there anything taxes-wise that I can look into in order to reduce this cost, or another method that would allow me to net more at the end of the month? I had considered buy a forclosure then using a wrap to avoid taxes. Thoughts?
• Umbrella insurance or LLC. My concerns lie with both protecting my assets and reducing the impact of taxes. What are your suggestions?

That is all I have at the moment. Thank you for being awesome!

-Drew