All Forum Posts by: Kevin S.

@Bryce McBride I'd check listings on Zillow, Craigslist, and facebook market place to find comparables. You can also use the website rentometer to get a range for your area, just know it's not as reliable as using actual comps from your area. Good luck!

@Shondell Alford First two things you want to do are 1) get your credit score up and 2) start socking away money for a downpayment. Once you're score is up in at least the mid-600's (preferably 700's for best interest rates/terms) and you've got enough saved for a down payment you'll be ready to look for your first property. Then it's really just a rinse and repeat, where you then save up another down payment and buy your next one, etc. Good luck!

@John Stark My recommendation would be to invest in yourself first and foremost. Much of the information on this site is about how to obtain rental property while minimizing the amount of your own personal cash you invest in it, however they key word there is "minimize". You still have to have cash to be able to continually make purchases, and REI is mostly a long-term game. I would recommend you focus on identifying what you want to do to support your REI goals, do you want to go to college, get a degree and (hopefully) a good-paying job to finance your REI? Maybe you want to get a trade job so you can both earn money for REI and also get knowledge of how to do things on your property yourself, such as becoming an Electrician or a Plumber. Or maybe you want to become a Real Estate Agent or some other job in the RE industry itself. Basically, you need to make sure you can continue to provide money for down payments, repairs, vacancies, etc. that come up until you reach the point where REI can support you by itself, which can be a long road.

I would also recommend you look into "house-hacking" where you purchase a property (usually a duplex, triplex, or fourplex, but occasionally people buy SFH's and rent out extra rooms to roommates) and live in one unit while renting out the other(s). The benefit of this is it allows you to take advantage of the low down payment requirements for owner-occupied properties (3.5% FHA or ~5% conventional depending on the lender). There are plenty of articles on this site about house-hacking, just do a quick search if you're interested. Good luck with your REI path!

@Matt Barker if it were me I would point out to my renter that their lease specifically says no dogs unless discussed with you, say you are not comfortable having a dog in your property, and therefore you are going to have to decline the request. As @Vance Courtney said, what if it's longer than a month? If they are there >30 days, in some states that grants tenancy and you'd have to legally file an eviction to get them out if they chose not to leave. 

Also, do yourself a favor and change the wording of your lease when you renew with them next time to just state "no animals", drop the whole "unless they discussed with me" part, having that in a lease just makes more work for yourself, especially since you clearly don't want animals in your property.

@Chase Griffin Use the BP calculator to look at cash flow, cash on cash return, etc. You can use rentometer/zillow/etc to gauge local rents. If you want a quick and dirty (but not always super accurate) way to estimate expenses, you can use 5% of rents for repairs, 10% for CapX, 8% for Vacancy, and 10% for management fees. You may also be able to get tax information off zillow or your county assessor's website. 

@Allen C Herring How are you determining market value of this property? If you're just going off Zillow, know that their valuations are often wrong. Have you looked at similar properties that have sold in the area? You mentioned that the true market rate for rent on these properties is $850 based off the market, well $850 x 3 = $2,550 (i know you're planning on living in one unit, but should still evaluate as if the entire thing was rented out). Based on the 1% rule you wouldn't want to pay more than $255,000, though that rule is really just an estimate. 

Two other things, first off run your numbers and stick to them, if you feel like you won't cash flow enough at $218k mortgaged but you will at $208k then stick to that and don't go over it. Second, if you are truly concerned about paying more than what the house is worth, remember that to get your mortgage you'll have to get an appraisal and if it comes in under the agreed upon price you can either re-negotiate or walk away. Good luck!

@Tristian Cavalli sounds good, feel free to shoot me any of your questions.

@Tristian Cavalli I know the property you're talking about, I own/live-in a duplex just a couple down from that one. It's well maintained, at least from the outside, and depending on the price could be a good investment. A couple of things to consider:

1)  I wouldn't bother trying to contact the owners to get ahead in buying this, it's already been on Zillow for days and I'm sure they are getting numerous contacts already. I highly doubt (this is my opinion) they will bother to sell before it goes on the market unless you offer over ask. Also be prepared for there to be several offers on the table, when I purchased my duplex in that neighborhood I got it by finding an off market-deal. Before that 3 other duplexes in the same neighborhood had gone up for sale and all had multiple offers on them.

2) based on the listing the owners want to continue to live there for 3 years @ $1200/month, which is fine enough (though you might want to see about building in a rent increase every year), however the other side is also rented. Depending on how long is left in the contract, you may not be able to owner-occupy the property. I'm not sure if that affects your loan @ 2.75% down or not, but something to consider. 

3) you listed the P&I @ $1,062, however that's approximately an interest rate of 3.45%, I'm not sure rates are that low currently (I haven't really priced them, but I'd be budgeting for more like 3.75-4%)

4) Vacancy should be around 8% as this gives you approximately 1 month saved per year (1/12 = 8.333%), CapX should be at 10% considering the age of the property, Insurance should be more like 8-9% (believe me, I priced insurance on duplexes like crazy and the best I could find was from State Farm and was around 8-9%, if you find cheaper let me know lol)

5) I'm not familiar with Native American loans, but do they come with PMI? Just want to make sure you consider that

Good luck, and let me know if you have any questions about the neighborhood!

@Lei L. no, it's free. But just my recommendation, have a pre-written general response ready for FB as you'll get a ton of messages that just say "Is this still available?" who didn't even read your post and know nothing about the property. I always reply with something like: 

"Yes the property is still available. It's a 3 bed, 2 bath 1500 sq foot [SFH][Duplex][etc] renting for $XXX per month. The property does not accept renters with animals, it is a no-smoking property, and we are looking for renters with a credit score above XYZ and 3 x rent in monthly income. Would you like to schedule a tour?"

Just adjust the wording to match your original FB post and copy/paste it as a reply to all messages about the property and you'll save yourself a lot of back and forth messaging for people who aren't truly interested or wouldn't meet the qualifications.

@Adam L. to summarize, yes the price was too high