All Forum Posts by: Katy C.

Originally posted by @Christian Beyer:

Hi Katy,

This probably comes down to your tolerance for risk, because anyone here will likely say there is not a ton of meat on that bone. If you guys are looking for comfort with low risk and low returns this may fit the bill. If you see a chance for appreciation in the area based on home prices over the last few years (or some insider information like a new hospital opening in the area) and you can stomach breaking even on the month to month for the shot at a higher price in 5 years this could work.

Otherwise I would probably try and hold out- there is probably a sexier deal somewhere in town with similar benefits and a lower price tag.

Good luck!

Low risk low returns is a good way to put it, thanks. We are ok with that, although I never thought I'd say that. Honestly, at the purchase price listed, it probably would be too small of a return for me (basically break-even month-to-month). I think we can get the purchase price down about $15k, which makes it a bit more appealing (albeit still on the lower end for immediate returns). 

Hey BP world, looking for some advice / criticism / validation / whatever. 

I currently have a SFR in Gilbert, AZ that has a great property manager, solid renters, and although it wouldn't meet the income parameters a bunch of people on this site strive for, it works for us. I lived in that house for 4 years prior to it becoming a rental property, so it wasn't scrutinized in the same way as a new rental property would be. Basically any positive cash flow meant we kept it, and if that changes, we will sell.

Now we're looking to invest in another. 

Purchase Price (max): $199,000
PITI (after 20% down): $981/month
Estimated Rent: $1450/month
Vacancy est. @7%
Repairs/Maintenance (none needed immediately) est. @1% of purchase price/year
HOA is $80/month
PM fee is 8%

Clearly there is not a huge amount of positive cash flow month to month. However, it's a market that we're comfortable with, great schools, and high-quality long-term renters are common. Our goal for REI is not necessarily income replacement, but more for future planning (retirement is still 30 years away for us).

Your thoughts? 

@Paulina Purnama My 1 yr return on a 500 index fund is 17.3%; across all funds is 13.2%.

@Jim Viens Thanks, I'll PM you!

I've made extra payments since I closed on my first home in 2009. I lived in it for 4 years and knew I would want another house soon so I needed to build up equity if I was going to keep the first. I just "rounded up" my payments from $1230 to $1500/month (PITI), and you'd be surprised what that does. It changes the payoff to 19 years from 30. I've paid off about 20% of the original loan amount in 5 years. However, I personally don't go for the shorter term mortgages. They work for some people, and can get you a slightly lower interest rate in some cases, but you never know what will happen or what else you might want to do with your extra cash each month 5 or 10 years down the line. Maybe double payments work for you today, but are you sure they will for the length of the loan? I prefer to keep the monthly payment obligation low and just go above and beyond when I can. Another note - if you send in extra payments, you may need to call your bank to ensure they apply the extra to principal. I didn't do that at first, and they just held the extra cash as if I was paying part of the next month, but didn't apply it until the date the next payment was due, so it wasn't saving me any interest or paying down the loan as intended. A quick call fixed the whole thing.

Hi BPers,

I have a possible deal in KCK. Nicer neighborhood, good schools, big backyard... Should be able to rent this 2 br / 2 ba, 1,500 sqft SFR for around $1,200/month.

Purchase price: $105k, 20% down

Repairs/upgrades: $5k

P&I: $426/month

Anticipated expenses and reserves (vacancy, taxes, insurance, property management, maintenance & repairs) come to about 50% of rent

Cash ROI: 8%

Total ROI: 13%

My question is - should I be concerned that it takes 8 years to generate enough cash offset the initial cash outlay? I know that down payment is immediate equity in the property, but it is cash that is then tied up and not making 10-20% in the stock market. Apologies if that's a newbie question... but I'm new, so there you go :)

Thanks!

Oh yes, definitely take out that wall between the kitchen and living room. It will help so much to have a more open space, and will make the kitchen feel bigger when you're in it.

Excited to see the updates as you go along. Good luck!

If you are getting $150/month additional rent, that's great. You could add a non-refundable cleaning deposit if you don't already have one, or increase it if you think that's appropriate. I've added some verbiage to the lease to define which animals are permitted to live on the premises. Here's the excerpt, in case that helps you. The clean-up service I refer to is having a pooper scooper coming to the house every 2 weeks, because the HOA does not allow pet waste to be in the yards (a rule I appreciate!). Wouldn't really apply for the condo, but it's what I used.

• A)  One domestic dog (NAME, TYPE) has been approved to live on the Premises. Any other animals are subject to prior approval by Landlord and additional pet deposit and rent at the discretion of the Landlord. Tenant is responsible for cleaning up after approved animals both indoors and outdoors. Should the Tenant fail to fulfill this requirement, clean-up services will be hired and any cost added to Tenant’s monthly utility cost.

Ah, yes, I am looking at the map now and everything I've been considering is outside the 435, which is good news! There are some nice 3/1.5 houses that have some real potential. What I'm not sure about yet is the rent I can get in those specific areas. I guess I should begin my search for a PM so that I don't get in somewhere too sticky. Thanks guys

It's not a rule to live or die by, but I still believe targeting 1.5-2% is a good litmus test for me to start finding out whether a property might meet other ROI goals. Again, it's a target, not a hard requirement.

I live in San Diego, where I rent a 950 sqft apartment for about $2,000/month. To own this condo would probably cost $4,500/month after HOA if I bought today, so I'm happy renting for now. I do my investing out of state. But again, that's just the way the market is here in SD, and if I could afford to be in a good equity position and still have the liquid capital to invest, I would. I see no valid reason not to own a home if you can afford it and still afford to invest!