All Forum Posts by: Michael Cerny

If you live in a state that allows you to completely exclude your primary residence from bankruptcy proceedings, it can be a good way to protect assets if you are in a line of work where bankruptcy is a concern.

I'm looking at a SFR in Houston that the seller wants $80/ft for. Comps + rental numbers + rehab mean that $55-60 is a more reasonable estimate of value.

How do you approach the negotiation for this? Do you just throw an offer over the transom? Do you query the listing agent to find out whether the seller has any room to move? When you make the offer, do you put any effort into explaining why you think your number is better?

Originally posted by @Franklin Romine:

The beauty about cash out refinance is it's a tax free pay day.

In the same way that any loan is a tax free pay day.

I look at condo/townhouse deals like this in Houston from time to time and I can never make the numbers work for cash flow with those condo fees.

What are your assumptions for vacancy, insurance, property management and repairs?

Thank you very much for the feedback.

Are you able to get rent ready houses at 70-75% or do you mostly have to find rehabs to get to that number?

I don't know much yet about investing in real estate, but from purchasing my personal residences over the years, I know we ended up making a lot of offers on different homes before we could even get someone down to 85-90%.

Is it just a matter of making a lot of failed offers for every completed transaction?

At 120k, I'd be getting a lot of equity that would boost the IRR significantly if held for a while (assuming historical neighborhood value trends).

At 150k, I'd be getting about 4% COC and around 10% IRR after five years (if sold).

It seems like for purposes of making offers, I need to consider both the COC and the IRR. In my mind, I'm thinking something like Max Offer is the one that generates BOTH COC of at least 3% and IRR of 10% if sold after five years.

I don't know if that's too conservative, too aggressive, or just plain the wrong way to think about the investment.

Yeah, I agree that I don't love the deal at that price.

I'm trying to figure out the ballpark price where'd I'd be a buyer.

Assuming that the FMV is actually 170k, do you like the deal at 150? 160?

SFH in established, nice, stable Houston neighborhood.

Asking Price: 170k
Rent Comps: 1650/month (19800/year)
NOI: 9603 with 50% rule after 3% vacancy allowance

I'm assuming 25% down with 6% on the balance.
House is currently a primary residence and shouldn't need much work to be rent-able.

Not sure if the 50% rule is sufficient. Taxes and insurance are high here. Taxes are 4500 and insurance is probably 2000 or so.

What would you offer on this property?