All Forum Posts by: Christopher J Lemmon

We eventually found the former owner in prison and paid him a small sum of cash to sign the proper foreclosure papers. It took a while. He was not properly served when the county foreclosed on him. We rehabbed the house and sold it.  

@Jake Riordan could you message me your LO contact at Bank of the West? 

You are free to share you opinion. Healthy debate is good and well. I am giving you my answer. I disagree with parts of your critique. 

What's the neighborhood? Which school district are you in? The rent estimate might be low.

You might want to push vacant up to at least one month a year, 8%.

I could count on one full month of a vacancy each year. The repairs look high. Instead of a percentage I typically budget $50/month in KC. I have about 6 years of history with units there and I always average across the board in the $40-45 range over a year per month. 

PM - if you have a company already committed at 8% year, I would be interested in who they are.

But I see most close to 10% being the going rate. 

It looks like a decent deal. Have you flown into KC to checkout properties? 

@Tom Olson - My insurance deductible is $2500, but my 2 year home warranty is $75 and covers everything except the roof and foundation, so for the first two wears as we get to know the property and work the kinks out, my costs are under control. Do you have an insurance referral for a better deal? I use REI Guard right now for everything.

@Dennis M.   -- What do you consider accurate an vacant rate? I start with 12% and I have beat that every year on every single unit I have. 

The taxes in this county are what they are. That is not an estimate, that's the actual amount from the county ($54/month). -- REALLY.  I own several other properties Wyandotte County, so I know what it is. I don't know what real estate taxes are like in Erie, PA. But I know my market here. 

Seems like you like tearing other people's deals down. Just from what I have seen on other posts. The index fund suggestion is dumb. There are other benefits to owning this rental than cashflow, like appreciation in the neighborhood (6% steady growth in KCK with Amazon expanding there), the neighborhood is already on the upswing with new builds going up all around this house, and millions of dollars about to be pumped into it downtown a couple blocks away, plus loan payoff by the tenant, that I am not paying for, and depreciation that protects a chunk of the income I am making. Rent can easily be bumped up 3-4% a year. $900 is the low end for a 3/2 house in the area. So grow potential is already there.   

There is more to it than just cashflow. 

The roof is not that hard to repair if it needs it. I have a guy who patches it along for each leak at $200-400 per spot, that can go on for years, until I am ready to do a full scale roof replacement. 

Sure, more cashflow would be nice, but I will take a single all day rather than sit on the sidelines watching for the ultimately awesome deal that may just be a fantasy. 

Hey, I sympathize with your situation. I lost my job and had to move too recently.

A couple of comments, I don't think capital gains applies if you are forced to move because of work. I checked in to that myself with several CPAs and I got the same answer every time, if you make money but you were forced to move because of work, you are okay, there is an exception for job loss.

Here is another idea, not an answer. I bought a house that I was not planning to turn into a rental, then I got laid off. 

I took my own pictures of the inside and outside of my house and ran my add 6 months before I knew I was going to move. My ad was a bit fake. I used Craigslist. I priced it really high for my area and lowered it until I started to get hits for renting it. Then I knew what price I could get for it. Clean your place up real nice, stage it best you can and take pics your self, then see what you get on your ad. You might be surprised at the rent you can get.

I would not take Property Management Companies word for it on the rent amount. Just like realtors want to sell your house super cheap (often) so it sells quick for them, PM often low ball the rent they will lease it for you, it makes their job easier and means it is filled quickly. They just make the one month rent and a percentage. An extra $100-$200 bucks is change to them, but makes a big deal to you. Don't assume they care or have your best interests in mind.

Last, you won't hear many people say this on hear, but if you have at least one trusted friend in your city where your house is, you can manage your property long distance. 

Get any pesky maintenance issues fixed now, before you move. Look for one friend you can trust who could be identified as a property manager, maybe even offer them a little cash for a trip here and there, and rely on them.

Here is why I say this, it sounds like you need a little time for the property to go up before you can sell. You can manage long distance for one year, if you have a friend who helps you, every once in a while. If this is your only property, you don't have other ones to worry about, you could do this.

I am currently managing a property long distance, its been fine. I have a friend who is a neighbor who lives across the street, and she can make a quick trip over if I ask her. You only have one property, it could be done.

I know this is like completely against the BP Bible, but there are landlords who self manage long distance. That is actually done, and rather than take negative cashflow, I would take that chance for a year.

Last, don't list with a realtor if you do try to sell. With Zillow and Craigslist, you can list your house on the internet without using them and losing thousands of dollars you cannot afford to lose.

It is possible to sell your house, without a realtor, this is where a good friend, who cares about you might come in handy. 

You can offer to pay them a little to babysit a walk through for a potential buyer and save thousands of dollars.

I know lot of people might disagree with me on some of these suggestions, but I have done every one of them myself already, and saved thousands of dollars. Good luck, and don't beat yourself up, its a learning game and this is on the path of your learning curse. You can bounce back. 

All utilities are paid by the tenant, per lease terms. Its the same with every property in KCK. The tenant pays everything and does everything, snow, cut the grass, pay the sewer, all of that. 

There are rental inspections occasionally, but I have several other properties in KCK and they have not inspected any of mine in the last 5 years. Its $25 a unit every other year for a license. 

If I was in your shoes I would consider getting into a trade that would help with real estate investing, like HVAC, plumbing, or electrician. You could get on track to make a good W-2 income, which you will need to start buying investment properties, and you will have a valuable skill that could allow you to do work on bargain properties. If you are not sure you want to go to college, don't feel pressured to do that. Its not the right path for everyone. It all depends on what you are wanting to study and what your goals are. If I could start all over again, I would learn a trade that could save me 10s of thousands of dollars in work on a property. If you did this, you might also be able to trade work with people who know other trades on a rental or flip, and that gives you a huge edge over other investors when you are starting out.

You are very smart to be thinking about this stuff this early. Life is a journey and an adventure!

Thanks @Jane S. I have been hold out for a duplex for a while but I kept getting out bid. I decided to look at SFH and I found this one in the area I like to invest in.