All Forum Posts by: Brant Richardson

@Fred Heller 

The 50% rule also includes property management. So it should be very conservative for somebody doing their own property management. P&I, HOA fees and utilities are not included. Also it is just a rough screening tool to see if a property is worth doing a deeper analysis on. I found the rule useful at first (and was amused to find it was pretty accurate) but once I got to know my area I found that I could just look at the rent to purchase price ratio and know whether it was worth doing a deeper analysis.

How are you feeling about investing in Houston vs KC?  These are two markets I strongly considered before deciding on KC for higher rent to purchase ratio but lower appreciation.

Check out the podcasts on this site, there are some great ones on wholesaling. You will find that the accomplished wholesalers are not getting their deals off the MLS so you probably don't have much use for a realtor at this point. You will need to put in time knocking on doors and put in money sending out mail to find deals which are not on the MLS.

If you quit your job you are no longer somebody the banks wants to loan to, they want a long stable work history. 

2% is attainable in lots of the midwest, I recommend against trying it as a out of state investor. You will only find 2% deals off the MLS in the rough sections of town. Areas where property managers don't really want to manage, for good reason. Locals with connections can get bargains on unlisted properties. You are better off investing in better neighborhoods where the theoretical profit is much lower but in reality is just as good. I have a great guy in Kansas City who I am working with who has helped me with acquisitions, rehabs and property management, shoot me a PM if you want more info on him.

@Michael Ratzken   The 2% rule would mean the rent is 2% of purchase price.  A home purchased for 100k would rent for 2k/month.

I remember reading a survey somewhere and the gift preferred by tenants was cash, by a long shot.  So my feeling is that something as close to cash as possible,like a grocery store gift card, is the way to go.  I like the "Turkey is on us" idea, makes the grocery store gift card a lot less generic.

You have locked in 30 year fixed rate loans at historically low interest rates.  Unless this is it, your done with real estate, then use the cash flow to save for you next acquisiton.  Most likely the loans you get in the future will have higher rates that you won't even be able to get at a fixed rate, those will be the ones to pay down.

If one loan is particularly small you might want to pay it off first to maximize your cash flow.

Ouch, that's brutal.  My insurance in the mid west is for full replacement value and it includes wind in case of tornado...$720/year.  If my insurance went up to 5k/yr I would be cash flow negative.

My approach and the numbers I look for are exactly the same as Tyler's.   About a 1.5% purchase to rent ratio.  I have 4 properties and started just about a year ago.  I'm buying foreclosures, rehabbing and have a property manager.  It's going very well so far.

Plug in the numbers for all the variable Hai Loc gave you and see what you come up with.  Unless that rent includes utilities, or property tax there is sky high, this should cash flow well. 

With very low rent like that you often have high turnover and difficult tenants.  Maybe you have that problem already solved on 2 out of 3 of the units.

Finance it.  Cash in the bank gives you all kinds of options.  Do you know what the market value is on it?  If it is much hight than the purchase price you could buy in cash and pull out all your money in a year with a cash out refinance.

You perked my interest so I checked out Edgecomb county NC.  Appears like a good place to buy a cheap house but rents are very low.

Very cool, I love that area.  Post up the numbers and some pictures as the project progresses.