All Forum Posts by: Katherine S.

Hi everyone, I thought I'd introduce myself in this forum, closer to home!   This site has been really eye-opening...I didn't know how much I don't know about real estate, but I'm learning.

My husband and I have recently decided to build a rental portfolio for future retirement income.  We currently own three homes in Roseville, and would like to add a couple new properties this year.  So far we've been focused on single family homes.  But the prices are shooting up so fast, we're worried about making good choices.

I'm looking forward to getting to know you folks!

Thanks so much!

What paperwork is necessary?  How long until investment funds are available for use?

I'm giving serious consideration to setting up a solo401k to help us build a retirement rental portfolio.  I've read that you can take a property as a distribution and then live in it in retirement.

How is that valuated at the time it's taken as a distribution?  Is it considered ordinary income?  What taxes would be due?

@Greg Thibeaux

Cash flow, $3281 + equity accrual $800 + appreciation at 6.5% $4290 equals total return of $8371. Yes or no?

The house was leased for 18 months almost immediately, so I used a 100% occupancy.  I know that I can't expect that all the time, but I'm just trying to see how my numbers work now.

BTW, the house would easily sell for $75,000 less than 6 months after we purchased it, so the appreciation number is actually low.  Good for the equity in this house, but bad for our next purchase.

@Brian G.

What metrics would you use for a SFH?

I'm new to this site, and have just run our last rental purchase through the deal analysis outlined above.  I'd appreciate it if someone could check my math, so to speak, to see if I'm figuring this correctly?

Purchased a SFH 3/1 for $66,000 with 20% down, 30 fixed, PI $279/mo. Put just under $1000 of improvements before listing. Closing costs $2819. Property values increasing at 6.5% (this is actually low), equity accrual about $800.

Rent $1100/mo., property management 8%, plus first month's rent lease fee; taxes $2200/yr; insurance $710/yr; lawncare $185/yr; contingency 10%.  

I come up with:

NOI $6,629

CF  $3,281

Cap Rate  10.0%

COC 19.3%

Total Return $8,371

Total ROI 49.2%

I realize that the ROI is primarily due to the rapid increase in the value of the property, so assuming a 2% increase brings the total ROI to 31.7%.

Have I got this right?  Is this a typical return for a property of this size and type?

TIA!

I'm also interested in this topic.  We own and rent out three modest single family homes in Macomb County, and looking to buy one or two more this year.  I'm new to real estate investing and to this site, and learning a lot.

Hello!  I'm very excited to find this site.  After only a few hours here, I've already learned that I don't know much at all.

My husband and I have sort of backed into becoming landlords. A few years ago, we bought a 3/1 on a short sale as a place for our youngest daughter to live in while working and going to school. She basically covers the PITI. We jumped at the idea because we saw this house (with a full basement) as a way to get all her musical instruments, drums included, out of our home!

Then, we offered the same kind of deal to our eldest daughter if she would choose to move back to Michigan.  The house directly across the street went on the market, and we bought it.  Well, after we put some money into the house, she decided against moving, so we leased it out.

Then another house on the same block went up for sale which we bought last fall, so now we have three identical homes on the same block, all occupied.

I created a spreadsheet to try to figure out if we were making any money, and came up with a worksheet that is pretty close to the analysis I've seen here. My year 1 ROI on the second and third houses is 17% and 15.8% respectively, and the one our daughter occupies is just above breakeven.

So now we're excited about buying more properties.  Our objective is to create a large enough income stream to allow my husband to retire in a few years.  We figure we'd need at least 10 properties to do that.  However, due to my health issues (wheelchair), I think we need to strive for an even greater income stream in our future.

But I'm starting to run into a few problems...finding a lender to finance a fifth home (we have 3+ our current home), reducing the loan acquisition costs, finding properties that provide a similar return in a market where prices are going up, and finding the funds to invest.

I have found on-line forums on different subjects to be a terrific way to learn new things, and I expect nothing less here.  Thanks for letting me join!

Katherine