All Forum Posts by: Anthony Gayden

@Chris Blount I calculated the cash on cash return dividing my estimated annual income after all expenses by my initial investment (down payment and closing costs). In my case that was $6982/$50,465 = 0.1383533141781433 or approximately 13.8%

@Jacob Ehrgott actually yes there is room to increase rents. As of right now, two of my units are paying $525/month, and the other two are paying $500/month. I would like to bring all rents up to $525 a month. Also I decided to start charging the tenants the sales tax. Finally, new tenants with pets will be paying $20 extra per month per pet, and a pet security deposit of $300. All of those recommendations were made by my property manager, and I thought they sounded like good ideas to increase income.

@Kimberly T. it is located in Paradise Valley.

My opinion is that you should start by buying a duplex or apartment building. That will start the snow ball effect.

The thing is that money is the only thing that matters in this game. Period. We all want to make money, and anyone who would not work with you solely based on your appearance has the mindset of a loser, and will never be successful.

On another note, your attitude is very negative and defeatist. You seem to be giving up before you have even gotten started. To be successful in whatever you want to do in life, you need to be optimistic.

Well my first deal is done. I am the proud owner of a 4 plex in Phoenix, AZ. Before I go into the details with the numbers, I should tell you about my goals. I want to get into commercial multi-family real estate investing. I knew from the beginning that multi-family is where I wanted to work.

Phoenix, AZ, 4 - 2 bedroom/1 bathroom 800 sq. ft. units. Built in 1984, single level, well maintained and completely remodeled a few years ago.

Purchase Price $179,000

Down payment $45,500

Closing Costs $4965

Gross Annual Income $24,600

Vacancy Loss 10% $2460

Adjusted Gross Income $22,140

Property Mgmt. 8% $1771

Maintenance/Supplies $1064 (calculated using the average of actual numbers from 2011,2012,2013)

Water/Utilities $2458 (calculated using the average of actual numbers from 2011,2012,2013)

Annual Mortgage $9865 (includes insurance and taxes in payment)

Estimated Total Annual Expenses $17,618 (mortgage/taxes/insurance, vacancy loss, maintenance, property management, utilities)

Estimated Annual Income $6982

Cash on Cash Return 13.8%

I had a real estate agent arguing with me that my offer price on a property was too low. After I politely explained to him that my offer was based upon, not the Pro-forma rents which were $25-50/month higher than identical buildings surrounding it, but the average rents for the area. I explained to him that the price the seller was listing the property was $30,000 higher than all of the comparable buildings around it. I explained to him that if I paid the asking price, my cash on cash return would be negative after all of my expenses.

Finally I explained to him that I would not be working with him anymore.

@Bruce L. could you use a 1031 exchange to purchase other rental properties?

@Mark Nugent I'm an investor here in Arizona as well, and I am closing on my first 4 plex in Phoenix tomorrow. I am still learning a lot, but since I have gone through the entire process recently, I might be able to get you some very up to date information.

Start looking in the inner city. I know you might see yourself above living in "the hood", but the truth is that the inner city is one of the only places where you will find landlords willing to accept tenants with extra baggage.

I couldn't even find a 80% LTV loan for multi-family. Not saying it doesn't exist, but I had multiple lenders point out the Fannie Mae rules limiting LTV of non-owner occupied 2-4 units at 75%.

Just remember that Ramsey did say that the mortgage on your house was almost the only acceptable debt. He also said that if you were to buy a house using debt, put at least 20% down, and get a 15 year mortgage.

btw, there are ways to do real estate investing without debt, but it will involve very inexpensive properties in places like Indianapolis, or Kansas City that are cheap and have good cash flow.