All Forum Posts by: Lance Borden

Originally posted by @Dani Beit-Or:

@Lance Borden

You are in a transitional market (north dallas), in my opnion.

in recent years prices have gone up and rents did not keep up.

we bought many rentals in this area but once the rent-purchase price ratio stopped making sense we moved to other Metros.

we have an Analysis excel we use which we named realistic case scenario. It analyzes a rentals performance over 30 years for better and in depth "business plan".

The 1% rule is not equal across the board as property taxes and insurance rates will effect the bottom line cash flow. For example 1% rent rule will result in 150 cash flow in your area but 300 in Tampa. 

As for buy to rent vs. buying, rehabbing and then renting - if at the end of the day your costs in the 2 scenarios are similar I would not trouble w/ the rehab option unless it's the only way for me to acquire properties.

 Dan,

Thanks. How did you go about learning about the other metros before investing - as far as where in the metro to invest, etc. is there a shortcut way to do that without having "feet on the street"?

If the market is "transitional", what does that mean in regard to future - will the bubble pop or do you expect and transitional market to transition to a market where prices are always higher than rents?

Lance

Thanks, Larry! That is supremely helpful. Does the cap rate take into account the gain from the principal portion of your mortgage payment? Or does it count both principal and interest as a cost?

Lance

Originally posted by @Larry Fried:

@Lance Borden 

As an investor, 1% rent to purchase price is a bare minimum for me to even consider a turnkey investment.  I've always done better than that.  Then you have to look at expenses including property tax, cost of borrowing (if doing so) and other hard costs, as well as soft cost does as projecting a reserve for vacancy and maintenance. After all of that, I look for cash on cash return of 10-12% or better.

Larry - thank you. Can you give me an example of 10-12% cash on cahmsh return using easy math?

Lance

Bill,

Great advice. Thank you. Why a cap rate 3% above your cost of money? Why not more or less?

Lance

Strategy 101 question, If you have cash, and your goal is to make this an income producing business (to live off of) by purchasing buy and holds, is it better to use your own money to buy properties or to still use financing? I don't want to tie up my cash reserves, but if I use financing, obviously the payout is less until you get the properties paid off. Suggestions? Lance

BP nation,

In my market, turnkey (rent-ready) homes are going for $140K - $150K and renting for around $1 per sf. Now - you can get a distressed property for $110K - $120K, but by the time you fix the foundation and give it the TLC it needs, you're close to the same numbers. Am I aiming too high? Is rent at a rate of 1% of purchase price too low to invest? Originally I had a criteria of paying around $80-100K (all-in) and getting rents of $1300-1500, but I'm having a hard time finding those deals in what is a sellers market.

Any and all advice welcome.

-Lance

I need to find a good handyman that services Frisco, TX. Anybody have a good recommendation?

Thanks Jon and John! I really appreciate it. Very helpful. On the"scratch and dent" units - would the contractor have access to those, or where else would I find them?

I'm evaluating a home that needs a new HVAC system (never had it) and a gas line (currently uses propane for stove, etc.). How much should I estimate that will cost, and are there any gotchas that should make me walk away from the house? It's priced about $20K under market value as a result of these needed repairs. If probably use it as a buy and hold and rent it out.

Good to know you Suresh. I'm an RE investor in Frisco as well.