All Forum Posts by: Jessica B.

I too am debt averse. The 11 units I have are all payed for with no mortgage. The properties I invest in one would not get a mortgage for anyway, all have been less than $23,000. They're work but not having debt lowers the risks. 

My own house was bought with a mortgage (will be payed off in 11 months)

If they've been with you awhile and you want to keep them, then foot the bill. It's just the cost of doing business. Staying in the good graces of any tenant good or bad is an investment and a worthwhile one. 

Is there anyway that you can bill the boyfriend? He's the guy at fault, not your tenants.

I've used Turbo-tax to report my rental income for the past few years. It was pretty easy and made fewer mistakes than the CPA I hired. Well... At least I hope it made fewer mistakes. 

@C. Timothy Murphy III

As promised, I did a break down of my expenses.

Taxes: 15%
Water: 6.8%
Gas/Electric: 6.1%
Trash: 4.8%
Management: 7.8%
Labor: 32.7%
Misc Supplies: 7.4%
CAP Improvements (roofs): 19.1 %

I would say at this point I have about 200,000 invested in the properties. Majority are in C neighborhoods, 1 is in D and two are in B. The division is a little off, because some are duplexes. Regardless, the result is the same, cheap properties. All except a few of them were foreclosure, or sheriff sale houses.
On the low end my return on that investment would be 6% assuming the properties are not appreciating and I lose all that I am putting into them for repairs and improvements. On the high end I could believe Zillow. Which says all of my properties are worth two to four times what I paid. I tend to assume that some of what I'm doing is improving the property. Therefore, I would say my return would be on the low end 8%. I could mess around with my numbers on the high end to show crazy good returns, but that would be misleading. 

Wow these are really good questions. The average rent is currently $510, which is up from $470 at the beginning of the year. Occupancy has been effected by 1 eviction, 2 folks moving out and the addition of a new rental. The average cost per house is about $12,000. With a low of $8,000 and a high of $26,000. Each were bought needing repair, none were turn-key. As for the "improvements" vs "repairs." I would have to guess at that percentage right now.

I don't know what CoC is.

@Steve Baldwin Thanks, for the offer. I've got a good team right now. 

It's in central Ohio. Not too far from Columbus. 

The expenses are mostly physical. Stuff from Lowes. A small portion are bills, for utilities. None of the expense is for debt, the houses were all cash buys. I'm trying to bring down those expenses by putting more utilities in the tenants names. I can do a better break down of expenses  after I sit with my spreadsheet for a while. 

Here are my numbers (rounded) for the first three quarters. It's for 11 units in rundown-rust-belt Ohio. I know I could be making more money, if I did not continue to invest in the houses. My plan is to continue to invest majority of my profits back into the portfolio in some way.
I thought this data would be useful to others who are thinking about buying cheap houses that seem to always need work, in distressed areas. When the 50% rule or the 2% rule fail, to capture the situation, there's data!

Q1:

94% Occupancy
$15,100 Gross
$6,200 Expenses
$1,700 Taxes
$4,100 Labor
$3,100 Profit

Q2:

81% Occupancy
$11,400 Gross
$2,300 Expenses
$1700 Taxes
$4,100 Labor
$3,334 Profit

Q3: *Added new property
79% Occupancy
$12,000 Gross
$2,900 Expenses
$1,980 Taxes
$4,400 Labor
$2,700 Profit

At that price it would be an easy decision to sell, but I do not see there being a buyer at that price. Would it being section 8, be that much of an incentive. What I see are duplexes on the market, fully rented/half rented, selling for less or not selling at all. None of these are section 8, however.

Okay here's my plan. 

What's done: Raised the lower unit's rent from $250 to $400, which is closer to median rent in the neighborhood. If this tenant leaves I will work on this unit and get the rent closer to $500, which is closer to my average. 

What I'm doing now: fixing up the upper unit and will be renting it for $350-400. Painting, refinishing floors, cleaning, putting in dropped ceiling to cut down on heating bills, screening in upstairs porch. 

What I might do: Get it section 8 approved.