All Forum Posts by: Lane Forhetz

Congrats @Austin Fruechting! Glad to hear this strategy works well and we get to see a real life example. Thanks for sharing!

David Faulkner , thanks for the reply. I couldn't agree with you more. Here in St. Louis, it seems like there is a "feeding frenzy" of sorts. I've lost countless deals due to people bidding it up well past where the property makes sense. I buy all my long term rental deals with ~20% equity after repair, $400-$500 cash flow(before maintenance and vacancy considerations), and the way I finance I only have about $8k or less of my own money into the property after refinance. Which allows me to have none of my own money in after about a year or so. I appreciate your, and others, responses as it bolsters my confidence in my strategy, having never been through a market crash/downturn. Good Luck!

So let's say a crash did happen. If you're a long term investor with multiple leveraged rentals, what would the issue be? Property values don't matter at that point as you've already gotten your loan. The only issue I see is if rent dips down or you can't find a good tenant. And all that does is hurt cash flow in the short term. Am I missing anything?

Bill, if you're looking to learn the areas, I just spent the last year learning just about everything you'd like to know about St. Louis County. This market is tough, but provides great deals! Feel free to send a message.

I am trying to do what Avi is doing. I am glad to see someone succeeding at it. 

@Avi Garg, what property manager are you using?

@Tiffany Campbell, those numbers would be awesome to find, and as Avi said they probably are out there, but I would imagine the house would need more than $10k to fix up, and would not be a common occurrence. 

I live in St. Louis, so I have the ability to tour these homes, which is great. One thing that is disconcerting to me is the possibility of the tenants destroying the home either inadvertently or purposefully. What is everyone's thoughts? Here are some numbers I have been mulling over:

Home purchased at $30k
Rent $850/month
Cash Flow after expenses: $300/month
Maintenance @ 10% after 1 year = $1020

I imagine that replacement of carpet and paint alone would take out the $1020. So anything above and beyond that would be lost profits. Does anyone have any experiences with this?

Hello BP Community!

I am looking into 3/1 rental properties in the 63137, 63136, and 63138 zip codes. My question revolves around whether the risk is worth the investment. Here is my strategy, please feel free to poke holes:

Purchase property with cash for about $15-$25k put $5k to $15k in renovations have home appraise around $45k, pull out most if not all money invested, then rent property for $800 to $850 per month. I would continue to do this with multiple properties to increase monthly cashflow.

This will leave about $300 cash flow after all expenses (Prop Mgmt, Maint, Vacancy, insurance, prop taxes, loan payment) but before income taxes. However none or little of my money is actually invested.

Obviously, appreciation would not be there, but I would be looking to hold these properties for a long time.

This seems to me to be a good strategy, however I am hoping someone may have some knowledge and/or experiences they are willing to share.

Thanks in Advance!

Originally posted by @Mackal Smith:

Welcome Lane, 

You have found a great place to converse, ask questions, and learn. Use all the resources here at BP to help you figure out how to be successful. I am a local investor (formerly from Ballwin so right out in your neck of the woods but now living in Saint Clair). I invest in the Dutchtown area, I would be happy to talk with you about my experiences investing in St Louis. My cash on cash returns are more in the 25% to 45% return area. The return you are talking about above is more like 4.6%. I paid 80K cash for a duplex that rents for 1500/mo. After figuring all my opex costs and debt service, I still bring home more than $950/mo which overall gives me my lowest cash on cash return at 16%. I would be happy to show you where I'm investing and how I'm generating those cash flows. My experience is that St Louis is well above the national average in terms of ROI for buy and hold properties (at least for the 13 units I own now and the 3 I have offers out on...)

- mac

 Wow, that is very impressive Mac! Thank you so much for offering to talk with me, I am definitely interested. I am very happy to hear that St. Louis is above average for ROIs; I guess I have just been looking incorrectly.

Originally posted by @Graham Parham:

I am an investor myself and work with investors. Many that are in the St Louis market. My main business is providing loans to investors. I think you are being mislead by you current lender about the season of being a landlord for a year. We give you rental income back on the subject property day 1. www.missouriinvesorloans.com

Graham, thank you for that important bit of information. I will definitely look into this further and check out your website. This would significantly change the dynamic for my rental strategy!

Originally posted by @Darren Eady:

@Lane Forhetz

I am purchasing properties in three states currently and St. Louis is one city I own six properties and offers in on six more right now.  I think the cash flow is great there in the C+/B- markets.  If you can qualify for conventional financing on a couple now, that would be a great way to use some of your cash.  

Let's connect and we'll talk over the phone about how to buy in your market.  I even have a friend/partner that could find some turn-key rentals for you like he is finding for me.  @Chris Erwin

@Chris Erwin

 Thanks Darren, I will do that!

Thanks for the insight @Michael Sedillo! You're right, I do need to make a decision regarding my niche. I am leaning toward flips right now, but I need to do more research and think about it further.

I really appreciate the link about turnkeys!