All Forum Posts by: Kyle Eckert

@Anthony Parsons

We are looking at this situation right now.

Us: Own a house thats worth 350-400k, looking to sell or rent soon.  

Rent:  Owe 89k at 3.25%  Should rent for $2300,  Mortgage is $900/month. Checks the 50% rule.  Cashflow should be $500+ per month, not including principal paydown. Lets assume $7.2k profit, these calculations assume reserves build for maintenance, capex, vacancy.

Sell: Assuming a sale at $350k - $2.5% for realtor (Im listing it) - 89k debt =$250k "tax free profit"

So, how long would it take to make up that difference if we rent it?  $250k/$7200/year = 35 years Not adjusting for taxes paid, which would be income tax.

In the end, I ended up setting a threshold for the sale at $300k.  If we can sell above that, Ill be happy in selling it.  If we can't sell it for thatt much, then we will hold it for a rental.

It might make sense to sell your current place and reinvest in a better cashflow market anyway, if youre going for cashflow.

Maybe that helps?

@George P George III

Just curious, what area are you working in where the ARV is below $100k?

I also have a lender who can write loans of 100k, but not under.  I can connect you if you would like.

Cheers.

@Brandon Carlson

To my knowledge, STL city does not have any restrictions when it comes to STRs, and the individual neighborhoods cannot impose stricter rules.  Lafayette Square, our most prosperous historic district has the most restrictive rules when it comes to housing due to historic preservation, has a high number of STRs.

Here is my golden rule for STL city rentals.  As long as you're taking care of the property and adding value to the street, neighborhood, and city, they will stay out of your way.  I haven't heard much to counter that.

@Jason Rhodewalt

I have high hopes for the West End (not to be confused with CWE).  Its still a rough neighborhood, but I have been watching it for 5 years now, and it has come a long way.  Close to Delmar and the Loop, as well as part of Washington University's satellite campus, I think it is prime for development as the first stop for investors willing to cross the Delmar Divide.  Page Blvd on the northern edge is still very rough though.

As always, feel free to reach out for a deeper discussion. 

Cheers

@Jason Rhodewalt

STL has a huge amount of small commercial multifamilies.  These are highly sought after and are frequently bid up and go off market.

Personally, I would focus on the areas which are next to the nice areas.  Tower Grove South is over priced, but Tower Grove East is currently being developed.  Benton Park can be overpriced, but Benton Park West is currently being developed.

Focusing on these areas which haven't been already developed can put you at the perfect cross section of cash flow and appreciation, especially long term with rents expected to rise.

Feel free to reach out to discuss your strategy, I'd love to connect.

@Ryan Sparks

That is a good looking building.  The mandatory update of the water supply line can be rough if you don't see it coming, it broke a deal for me a couple years ago.  Galvanized pipes in STL are a nightmare, and almost all of them in the city are at the end of their lifespan, good news is correcting those issues is a major bonus when buying a remodeled house.

We are still seeing multiple offers on properly put together houses in nice neighborhoods, so you should have clear skies when you go to sell if nothing changes.  Good luck!

BTW, dont forgot to file your intent to sell notice soon.  Forgetting to file that makes for a very messy sale and it can be a pain in the neck for everyone.  Had a messy sale last year due to this, so just a heads up.

Cheers

House hacking right now is tricky as an investor, depending on how you're running your numbers. Some house hackers are looking to cash flow WHILE living there, and that just isnt possible for most deals.

Make sure you're making offers based on fully occupied with paying tenants.

FHA is also the weakest offer you can make, so I would focus on making conventional offers to increase your chances.

Id be happy to review your strategy in depth, if that would be helpful. Feel free to reach out.

@Michael Helfant I'd love to connect, I'm looking to build relationships with investors interested in STL.

I'll shoot you a PM.

@Justin Dragon  My favorite way to give a win-win to everyone is a tiered renewal option.

1. Renewal at $100/month increase at M2M.

2. Renewal at $50/month increase for a 1 year lease.

3. No increase, but she starts paying the water bill, 1 year lease.

The ability to choose their path, even if they are predetermined paths, is a great way to keep tenants happy.

Question I hope to ask every year in Saint Louis, what towns or neighborhoods are you seeing turning around this year? What signs are you seeing to suggest it?

We discussed this in the office, so I thought I'd write it down. Something to keep in mind when running the numbers on BRRRR property:

1. Rent after the renovations is a key number to have dialed in. The rent will determine cash flow, and cash flow will determine how much cash you can pull out on Refi. Check and double check that number.

2.  Do good renovations. You are essentially flipping this property to yourself, so you will have to deal with any cut corners down the line.

3. Leave some money in the deal is an option. I have heard of some people pulling out cash until the property runs at a 10 CAP. I think that's brilliant and a healthy way to think about it.

4. It's not a bad BRRRR deal if you leave some money in it. If you can secure a fully renovated property for 10% down instead of 25%, that's a win in my book.

5. If you take the thought in number 4, you could rate BRRRR on the following baseball scale:

Homerun: Zero money left in the deal.

Triple: 5% down payment left, still great.

Double: 10-20% down payment, good.

Single:  25% equity left in the deal. Bright side, you now own a nice building with hopefully all the problems solved.

Musing for the day, lemme know what you think!

Dang it, meant to put that in BRRRR forum, someone move it plz!