All Forum Posts by: Kent Hall

Markets go up and markets come down. Buy a property if it makes sense, don't spend too much time gazing into the crystal ball of what may happen in the market .

If you have the cash to buy 10+ more properties then buy them slowly and make sure you stick to your numbers. Then you will likely the the benefit from dollar cost averaging. 

Keep in mind, everyone has been waiting for the collapse of the real estate market for at least the last 5-7 years. And just because the stock market is hitting a correction does not mean we are about to fall off the cliff of depression/recession again.

Hey @Jeff Benson,

To caveat from the beginning, your goals and objectives should drive your decisions. 

With that out of the way, I think that <$100 total cash flow for a duplex is a little bit to slim of a margin. That doesn't give much wiggle room for unexpected expenses (or expenses that are more than your estimates). 

Now, the property isn't all that expensive, and if you are prepared to break even, or take a small loss, in order to learn from the experience, seems like this would be a relatively safe way to do it. That is if the $26k you are putting in from the beginning doesn't totally strap you for cash.

Also, and this is a personal thing which may not be true for you, I always want the numbers to cash flow positive after including property management in the calculations.

Good luck.

Let me take this in a little different direction, not that I disagree with previous posters, but I want to try and answer your question as opposed to offering paternalistic advice. 

When I bought my primary residence in Norfolk, VA 8 years ago, I did not buy it to be a live in flip, but that is what it ended up being (in a manner of speaking). It was a nice house that need some TLC to maximize its potential.

After living in it for 6 1/2 years we sold it recently, as we moved out of the area, and the value of the house had increased nearly 100k (some of that is appreciation, but still it was now by far the most expensive house in the neighborhood). 

Here are the "simple things" that I did to add value:

- updating a 50's era bathroom. I ripped it down to the studs. I tiled the floor and bath tub surround, I put in new drywall and installed a new mirror (I chickened out with the new vanity and toilet and had a pro install those... I probably could have done it, but plumbing)

- ripped out and installed new baseboard and crown molding. This can make a big difference in the look and does not cost much in terms of materials. It takes some time and practice with the miter saw to get things installed right (especially crown molding, that can be a bear), but it was very satisfying and made the house look much less dated.

- tiled (again, this is a great skill to have) the backsplash in the kitchen

- My wife and I spent a TON of time on the landscaping and curb appeal. Pulling the weeds, cutting the grass, planting flowers and shrubs, rearranging the flower beds. I guess this may be area dependant, but I feel like it is not talked about enough, AND anyone can do it if you have a shovel and gardening gloves.

Best of luck.

Also, if you can live off your 9-5 job then you could focus your cash flow back into the mortgage to pay it down faster. Once a property is paid off, and you are no longer having to worry about principle and interest each month, the cash flow jumps quite a bit (depending on how much the mortgage was to begin with of course). So you may only need 75 properties if each is getting you $500-600 a month in cash flow (after the note is paid off) to reach your goal. I don't know how scalable that plan would actually be, but it seems like if you take all the cash flow from multiple properties and focus it on just one mortgage, get rid of the mortgage (cash flow increases) focus on the next property, ect, ect, it could start a large rock rolling down hill with ever increasing momentum to get you to the place you want to be.

But if you are refinancing to pull out cash for down-payments on additional properties then this may not work for your plan. It just of depends on which camp you are in, the more aggressive highly leveraged more upside but more risk camp OR the more conservative less debt lower risk but potentially lower reward camp.

But those are great goals you have set, good luck.

@Casey Maeda - I sent you a PM, lets exchange notes.

I also wanted to thank everyone who has weighed in and helped me, I know this is very delayed, but better late then never... right?

@Darrin Carey and @Ozzy Smith Thank you both so much for taking the time a couple months ago to drop knowledge on me when I was JUST JUST starting out, I know I am still green, but I was practically neon fluorescent green when I talked with you guys. Also, Christina has been helpful along the way answering a few questions.

@Account Closed Thank you also for taking the time to give me some insight into the management world in Dayton.

I closed on my first property about a month ago, so heres hoping it will be a success and lead to even bigger and better things.

Thanks again everyone.

I think income steam analysis is the best bet for any buy and hold rental investment.

Even at the single family level (unless you are trying to calculate in appreciation) you need to make sure that you will be meeting your investment goals at the agreed upon purchase price. That is why buying SFH for rentals does not work in many areas, because owner occupiers may be driving up the property values out of the range of numbers that will work for investors.

Now with that said, if the property is appraised as an 8 unit, the appraisal will be based primary (or solely) on the income. But if they are assessed as two separate 4 units then (from my understanding) it is appraisers choice on using comparables vs income.

On a recent appraisal on a four unit for me the appraiser used comps as opposed to revenue.

Good luck.

If you are looking to do multi family in and around Dayton you should definitely reach out to Zac Rosson with KW. You can thank me after. 

@Colleen Murphy, if you are interested in multi-family (4 units and up) you should reach out to Zac Rosson. He is with KW in Dayton.

If you haven't already found it, I would recommend checking out the White Coat Investor (book, blog, and podcast). A lot of the info may be "below" you because it is geared toward teaching high income earners who do not have much financial knowledge (ie doctors) how to better manage their money.  And given your profession you probably already have most of that knowledge in your back pocket.

But some of the benefit of reading through that stuff is in the mindset. And there is also great advice and strategies on dealing with mountains of student loans (which you and your wife may be having to deal with now).

What is your wife's specialty?

@Ryan E. Thanks a ton for taking the time. Sounds like a pretty solid way to “invest” in yourself. Kind of like a round about self directed retirement account.