All Forum Posts by: Kyle Myers

@Justin Bioc 

I decided on the turnkey route, due to our constant moves, deployment possibilities, and overall workload. Check out my two blog posts about why I chose that and how I chose the company and let me know if I can help you out at all. 

https://www.biggerpockets.com/blogs/8313/49711-par...

https://www.biggerpockets.com/blogs/8313/49783-par...

@Tameka Studevan ,  

My wife and I are military as well and we just decided on the turnkey route, due to our constant moves, deployment possibilities, and overall workload.  Check out my two blog posts about why I chose that and how I chose the company and let me know if I can help you out at all. 

https://www.biggerpockets.com/blogs/8313/49711-par...

https://www.biggerpockets.com/blogs/8313/49783-par...

@John Gonzalez It depends on what your goals are when choosing what numbering to use but be careful with just using Cash on Cash ROI. If I got a VA mortgage with 0 down% and maybe a couple points, any cash flow would make it seem like a great investment. The way I could determine if it really was a good deal would be by using the same methods and comparing multiple properties. Another thing you may have forgotten is private mortgage insurance (PMI). This could be a substantial additional fixed cost that would really cut into your ROI.

@Jesse Hachey Welcome!  Don't forget to checkout the BetterPockets Podcast and if you haven't already the Free Ultimate Beginners guide at betterpockets.com/ubg they both have been a big help for me.  

@John Gonzalez Immediately looking at the property it doesn't meet the 1% (or 2%) test.  Also, if you use the 50% rule the cash flow drops to about $100.  You definitely should add the vacancy expeneses and you should calculate costs for a property manager in all your deals unless you want to manage properties for the rest of your life.  I think once you figure in those costs you'll see that this might not be as good a deal as you thought.  Alos, if you're not including gas/electricity make sure they are metered separately for each unit. If you can get it for less than $300k the numbers probably start to look a lot better.  

@Keith Linne I'm no expert but I enjoy the practice of looking at deals. I can see you are being ultra conservative. The only thing I see with your expenses are that you have CAPEX but no maintenance, these should be different considerations and calculated differently. From what I've learned, CAPEX won't differ a lot with the price of the house/rent. It's to pay for big items in the future like a new roof, new water heater/furnance... big items that every house has. To calculate this you have to est cost and lifespan of each item and figure out a monthly budget for each. Maintenance costs, on the other hand, would be calculated as a percentage of rent. Research this and let me know if I'm way off.

Also,

As far as cash at closing I don't understand how you got $14,250...$16,250 down and $4,000 closing costs. I'm definately not a finance expert so I'm actually interested in what I'm looking at wrong.

BP finance experts or investors with recent expereince with HELOCs, 

We're looking to use a HELOC to fund a downpayment on an REI (we have excellent credit). What's the least amount of equity banks are requiring you to leave in your house right now? What are rates looking like? Any specific bank recommendations for HELOCs?

@Melissa Dorman I think it's very realistic to do a couple times, but what if you need to find someone new?  What if you go out there and those people don't meet your expectations?  If you do choose that route I would make sure it's somewhere you enjoy visting. Another idea is to partner with someone in the area you're looking at, that way you're not traveling back in fourth all the time. 

I'm still on my journey to purchase my first turnkey so take this with a grain of salt. 14% ROI seems surprisingly high for a turnkey. Don't forget to add in vancancy rate, turnover fees, maintenance charges and CapEx. I would do as thorough review of the actual turnkey company you are using as I would the property. Here are some questions I have gathered together from the forums and blogs to ask turnkey companies:

1. Are you an investor?
2. How many investors do you work with?
3. How long have you been in the business?
4. What has been your biggest mistake as an investor?
5. Do you own all facets of the operation?
6. Do you actually own the homes you are listing?
7. Do you defer maintenance?
8. Do you manage the properties?
9. What is included in the listed price? Cash Price?
10. Do you have renters in all your homes?
11. What’s your normal lease term?
12. Do you have a rent guarantee?
13. Do you have any other warranties?
14. What percentage of your customers are repeat buyers?
15. Can you give me a list of referrals?
16. What’s your property management fee?
17. What’s your placement fee?
18. What’s the average stay of tenants?
19. Average vacancy rate?
20. How many properties do you manage?
21. How many did you turn over last year?
22. What company is financing the homes?
23. What happens to my property if that company goes bankrupt?
24. What’s your appreciation rate based on?
25. What’s your rent growth rate based on?
26. Do you have any special programs in place to keep tenants happy?
27. What is your process for keeping owners up to date?

@Jace Thornton Jace, rentometer.com is a good place to start.  After that check out comps on padmapper and craigslist.  Another good tool is to call local property managers, let them know you'd be interested in using them in a year, but you just want to know rent comps right now.