All Forum Posts by: Brant Richardson

I use -10% for maintenance and -10% for property management.  With a solid rent like you have you could drop that maintenance down to 5%.   Have the tenant pay for any utilities you can, some areas require the owner to pay others do not, your friend doing property management should know for your area.   So it looks like you would be getting $1000/mo cash flow max.

Phoenix is known for being a good market to invest in and you will be there long enough to get to know it.  From a pure cash flow perspective phoenix is probably the better bet.  If you really want to hold onto your home you could refinance/heloc the money out to invest in Phoenix.

10% maintenance includes CAPEX.

The 10% vacancy has turned out to not be an overestimate.  Turnovers are rarely only one month.

Usually people go to hard money because it is quick or because they are unable to get traditional lending.    If you can get traditional lending, the time frame will not jeopardize the deal and it covers the rehab then that will be the much cheaper route to take.

 $1000-1200/mo cash flow sounds pretty good but I have to question it since we don't know your experience level.   Could you break down the cost of each thing you deducted from your cash flow?  Make sure to include property management, maintenance, vacancy, principal and interest, property tax, insurance.  How much is the rent on a $610k home?

Does the place you are moving have a good market for investing?  Will you be there 5+ years? 

Millions of people have successfully done this.  It is a tried and true strategy.  Any particular questions?

An investment property should not use up all of your savings regardless of whether or not there is a recession.  You need to have reserves.  If a tenant thrashes you rental and you go vacant for a few months while doing expensive repairs, you need to have cash in reserve.

If you have flipped a property then you have sold it and rent shouldn't matter, unless you are using the rent as a selling point.  

Padmapper.com is useful, it shows craigslist rental ads on a map so you can pick the ones near your house and see how much they are renting for.  

It sounds like this was not an investment property but a home to live in.  In which case whether it was a good deal or not is basically just based on whether she got it below market value and whether it needs repair.  For a personal home there are a lot of other non number values that are important like a nice view, it is close to work or the kids schools etc.  

$250k profit your first year.  Doesn't sound like you "have a lot to learn".  Outstanding.

"In 2019, I'll fix & flip 3 properties".  That sounds like at least one is not sold yet.  It doesn't sound like you need the money so why not hold one as a rental then sell it later with capital gains rules instead of earned income rules, as others suggested.

Hi Nathan, thanks for revisiting, I missed this interesting post the first time through.  

I look for a minimum of $100 estimated cash flow using relatively conservative numbers. Actual cash flow has turned out to be higher. I'm investing in B, B- suburbs of Kansas City, in 2019 they are 100-120k properties. They were all done with BRRR, so they have $0-10k of my money still in them except the last two which are held free and clear. 100% of the money I receive from my property manager goes into an account which is used for repairs and further acquisitions. The reserves are in place when needed whether they were considered cash flow or ear marked for maintenance in my original calculations . I got lucky with my timing, entering the market in 2013. Although the mid West is considered a no/low appreciation area I have done very well between the instant equity and actual appreciation.

Estimated cash flow formula:  Rent -10% vacancy, -10% maintenance, -10% property management, -principal/interest,-property tax, -insurance.