All Forum Posts by: Leo Koonan

@Gerald Arnold   any major issues with the property?  (full rehab is needed/ liens/high taxes)

@Anthony Antonucci   nah man 1% rules mean "above the 1%"  not at least.  The most dangerous thing you can do with cash flow is "play with tight margins"   like purchasing a house for 275k while the rent is below  aprox 2900$/m 

and thats roughly ... as i would never risk that much money on high end rental because they fluctuate too much  (nearby developments, markets going up and down, someone decided to raise taxes again ...etc)

cuz just imagine ...today you are going to make 2700/m from 275k which roughly means your cash flow is going to be ... $150-200 bucks a month after everything ( PM, taxes, P&I, some other Opex and Capex) and dont quote me on that exact number its just meant to show how tight of a margin you will get. Now imagine you have 1 month vacancy

so you would still need to pay P&I, Taxes (some ******* PM would charge you even with vacancy and then additional fees for screening (run away from those)).  And thats how you easy end up in  - 3k in cash flow in just one month... 

now 3k negative  to 200/m margin ... thats about a year and a half of profits ...gone in less than one month.

Same applies for any market shift that can eat up that margin and you will get stuck with negative cash flow. 

Trust me ... i know how strong is the desire to get into the market and already start doing something, but be patient or you will end up feeding someone elses desire to buy a non performing note for 30c on the dollar... and trust you me he will buy your note, and rent that place for 50 cheaper than you have with 20% ROI because the banks wont care who they sell your NPN to as by then they will make enough off of your Mortgage.

Hope that makes sense man and  feel free to ask any questions

my 2 cents ... never buy a property that is over the 1% rule unless you have disposable cash that you dont mind losing. Almost 99% of posts you see ( here on the marketplace or on redfin/zillow/mls in general) that paint how you will get your ROI in high 20%s and how your property is going to appreciate from now on. Or how many of them simply put depreciation and equity predictions into the ROI pro forma.... If you ask me... i treat brokers/agents that do that as scammers.... They are trying to push assets at market values as an investment "cat in the bag" to a bunch of unsuspecting newbies. It is extremely rarely that you will actually buy something at market value and get both cash flow and equity. Usually its just one or the other and cash flow for me is always the king because it guarantees two things.. 1. if you got cash flow from a house in a really good area that means the prices are still low and the market is up and coming. 2. if all else fails ... that house will consistently bring you money. Also check the tax history... if you see that the price of the house is more than double of what it was ever sold prior to this date.... its probably not worth your time unless the market is exploded (like in seattle) but then you are probably already too late.

my rules:

1. buy appreciation only when the bellow apply:

a. its a 30% rehab (when your contractors quote the rehab for less than 30% of the purchase and subsequently ARV value is going to be 30% higher than purchase price+rehab

b. you somehow figured out the market you are in is just on up and up ( first 6 months to a year of explosion) and you absolutely sure its only going to go up ( but stay away from turnkey companies, agents that use words like "cash flow cow" and "guaranteed ROI in double digits" because no one can guarantee you anything in this life... everything has to do with proper number crunching and a bit of luck.

c. ( and thats when you REALLY but REALLY want that house)  when you check comps and know that your house is atleast 10% cheaper than every comp in that same area.  It is rented for at least 1% of the value and it has no debts/liens etc.

You could say that numbers like these are impossible to find any more ... and trust me i know it is HARD ...but think about it this way....  what would you prefer: lose the money to satisfy your sense of adventure or save that money waiting for the right deal?  The hardest part is the markets everywhere are topping out right now, so finding a deal right now is almost close to impossible, but ...patience is a virtue my friend :)

so its package deal ?  2 duplex  each   grossing $700 x2  ( aka 4x$700) ?  

how about multi family and commercial multi family? 

@Jaron Walling   agree,  for some reason the condition of most rehabs i saw in indy is "tear em down and build a new". I guess the market there is still pretty hot and those are the only ones left that no one really wants to touch. TK is pretty much barely break even for long-term then?  Has Indy entered into "equity appreciation" phase?

@Jaron Walling how is Indianapolis market as far as long-term rental goes? is it still worth investing with expectations of 10% CoC?

I am more focused on  memphis market but  from what i see  Indy has no decent real estate in C+ B-+ areas bellow  80K that you can rent for 900+, or am i looking in all the wrong places?

 @bill   its when the PM screens vets and puts your renters in. 

@Jay Raught how did you find out there was a sewer lien on it? ( i know its been some time) but how do you find  those kind of liens on it?

@Charles M.   #1 rule in real estate - buy with your head ...not your eyes... :)  numbers never lie... they just sometimes in the wrong place, and you need to be smart enough to know what place those numbers should be at :)