All Forum Posts by: Kevin Siedlecki

@Victor Spencer II - I'm not following. Is the other investor asking you to use your investor to fund her deals, too? And she's giving you 12% of the profit from those deals in exchange for you putting up the money that isn't yours to begin with? That seems unethical, and probably unworkable, since the first investor you mentioned is giving the money to you to do deals, and I would imagine wants to see the plans for the deals before he gives you the money. If I misunderstand the situation, please correct me.

@Todd Magin - that's what I was going to suggest. Tax returns will be the best way to keep them honest, but they are under no obligation to show you.

@Tony Stancato - Just checked again - no management expenses on there either. That's another $7,000-8,000. All tolled, the NOI might be only 50-60% of what they are claiming. They might have made what they claim there in their best year ever, but that's not a sustainable number.

@Tony Stancato - it looks decent, but I wouldn't trust the numbers. Expenses look a little low everywhere. Most significantly, the idea that a building grossing $80k a year is only reserving $200 a year for cap expenditures is absurd. $10,000 is a better guess. $160 for vacancy reserve is also ridiculous. That's .2% vacancy. $5000-8000 would be a more realistic guess.

@Jake Oreskovich - I transitioned to property management when self-managing 5 units with a full-time job got to be a little too much. I then immediately bought another duplex, to justify the expense of the management company. So it was 5-7 units that I made that switch. Now that I have more units, I am considering going back to self-management, with some systems in place to take care of things as they come up. I am testing those systems on 3 units right now, and if it works out, I might go back, and save the thousands of dollars a year I am currently paying management.

@Bradley Sindt - Are you planning to buy cash? A mortgage and a few CapEx issues will wipe out that cash flow. If you're buying cash, then your COC ROI is going to be under 10% (unless you actually get it for $100k). Not trying to be a kill-joy; I just want to poke whatever holes I can in your plan so you think of everything and don't end up with a deal that isn't as good as you expect!

@Joshua Wilson - I agree with everything @Josh Sohar said. Your explanation of the exit strategy doesn't make any money either. Even if Zillow is correct, you've got $150-250 of room between your mortgage payment and the rent ceiling. After you pay taxes and insurance, you're losing money. Even at 2000, you're losing money. 

Is the 15k down and $2000/mo rent something you are confident you can get? I've never heard of a rent-to-own contract with such a high down payment. Why wouldn't that person just buy their own house if they have that money to put down?

And as I pointed out in my previous post, you're buying on the high endow market price, so cashing out in 2-3 years is not guaranteed to be a higher price. In fact, many expect a correction to come soon, meaning you'll be stuck with this cash-loser and it will be a lower value than when you bought it.

@Bradley Sindt - Check your numbers again. I don't see how it's possible to profit $1450/mo on such low rents. If all 5 units were rented at $450, that's still only $2250/mo gross. Let's say 2 of the units are at $250 - that means your gross is $1850. There's no way your expenses are only $400/mo. Run those numbers again!

I also think you might be on the ambitious side looking for 40% discount on the asking price! 

@Thoai Han - find a bank that will give you a cash-out refi based on your income and the property income. Use that money as a downpayment on a new duplex or triplex to house hack, or possibly one to house hack and one as just an investment. Save the money from the cashflow of those two properties for a couple years, and repeat. That should get you off to a good start. You could have 3 or 4 houses making some good cashflow by the time you're 25 or 26.

@G Pyros - That makes more sense! I bet most people here are closer to 3 units than 100. Personally, I plan to add one or two small multi-families per year to my portfolio. I am at 10 units now, and don't expect to go beyond 20. I also have a managemnet company and work a full-time job. It sounds like that's what you meant by "hobby."