All Forum Posts by: Leo Tsang

I come across a single family with 4 bedrooms and 2 baths in Baltimore recently. The asking price is less than 70K which comes with a Section 8 tenant who has been living there for 3 going to 4 years for $1600/mth (tenant pays all utilities). The purchase has to be in cash. The market value I am told is 200K by looking at the comps that the seller provided. I need to verify but by looking recent sale records online of the surrounding, the selling price is at least 120K in the same neighborhood.

I am thinking to get a HELOC out of my primary residence in NJ. But I didnt know if my math is correct and need your help.

So let say I would buy the property with cash for 70K. In theory, I can refinance it right away for 120K (or more if the market value is higher but for now let's stick with 120k) that I could pay off the HELOC immediately and keep the 50K. 

I estimate that for 120K mortgage at current interest rate of ~5% for 15 yr, the payment would be 10K/mth. I usually set aside ~25% of rent for capex and vacancy, plus 10% management fee. The net gain is 40 = 1600 (rent) -1000 (mortgage) - (1600*35% (capex+vacancy+management)). 

It seems to be a good deal to me although it doesnt cash flow a lot. To make it a better cash flow deal, I could go for a longer term e.g 30 year so the mortgage payment becomes less than $700 making the net gain to $340. I am not sure if it is a good idea. What if the market there was not good and I could not sell the house at 120K in the future e.g. 5 years

Since it is my first attempt of long distance investment, I would like to be more cautious and would like to have a second set of eye on my math. Any comment/advice is very welcome.

I tried to use the bigger pocket rental property tool to run number for this scenario. I dont know how I should put the number if it is a cash deal using HELOC and then refinance, paying off HELOC and using the rent to cover the mortgage hopefully with additional cash flow.

I would like to get an appraiser to estimate the market value of the property. Do you think if it is worth it? 

Since the property is occupied, I would not be able to conduct a throughout inspection. What is your opinion and advice in such situation? Any real life experience to share?

Thank you very much in advance.

#HELCO #LongDistance #Rental #Cash #Refinance #tenantoccupied 

Happy New Year

Do you have any recommended person here so I can connect to? Thanks

Thanks Laura. 

Yes I didnt want to take the commission from him. I rather have people earn more so to keep a good business relationship than a one time thing which is not sustainable.

Thank you very much for your suggestion.

I talked to my agent. He is willing to give me a discount. Great! Thanks again.

I am using an agent to fill my rental property hoping that he would have a much bigger network and be able to find a tenant much quicker.

At the same time, I also advertise by myself.

What if I could find a potential tenant before the agent could? Should I just screen and sign the contract with the tenant without going thru the agent? Or should I refer the potential tenant to the agent? 

If going down the first route, am I violating any contract with the agent? But the latter option will cost me a month of rent which, to me in my point of view, isnt worthy as it is not the agents effort.

What would you choose? And what's your suggestion? Thanks.

Good advice. Thanks

I got a call from the owner whom I sent a proposal to buy his property in Florence NJ. He is interested in one of my proposal which is a cash deal at signing with a monthly income for 30 years. I am happy to receive his call but now I am nervous because I dont know what to do next. 

One of the things is our agreement over the phone is not currently bound by any legal document (or under contract). And he will have another open house in this coming weekend. So I hope all of you who are experienced in this forum will be able to help me with the following questions:

1. I know I need an attorney to put all these agreements in black and white. But before that, should I find an agent so s/he could get me the deal under contract? 

2. If so, should I use my own agent? or I should contact his agent? 

I am actually leaning toward calling his agent so he can represent both of us, the seller and buyer while I contact my attorney. If I contact their agent, I would also like s/he to find tenant for me. Do you think it is wise to do so?

3. The other thing is I have not looked at the property which I would like to once I got it under contract which I will be able to walk out if there are major issues that I find it not worth buying the property afterward. Do I have the same kind of right to do so if I simply go thru the attorney?

Many thanks.

Thanks.

Yes finding a property with positive cash flow is what I am trying to find.

Dear all BPers, I live in Central NJ. I am looking to buy my first investment property in the area. I struggle all the time where my first property should be. I would like it to be closer to me. However the housing price in the area where I am living in is relatively high. The next logical step is looking at the town next to me which is a college town. They have some good properties I could afford. The town statistics also show there are more renters than home owners. It is a good sign that I would find a tenant relatively easier yet the average rent is not as high as I would ask for. Then I see some areas where property prices are within my price range up in the north. When I look at town statistics their poverty rate is over 30%. It makes me worry that I would had difficulty finding a good tenant who would pay at medium rent and even worst s/he might not be able to pay or delay payment for months. My questions are: 1. For a rental property, what location criteria should I take into account? (am I just thinking too much?) 2. Is there a direct relationship with the poverty rate and the rent or frequency of delay payment? 3. Is crime rate a factor to consider when buying a property in a particular area? I also debating if the property should be an apartment/townhouse or a SFH. I love the idea of buying SFH such as duplex. In my town and where I would like to buy, duplex is not very common. Any advice and idea on it? Many thanks. New investor, Leo

Could you add  me too? [email protected]. Thanks