All Forum Posts by: Lesley Resnick

I have been seeing a lot of finished concrete slabs in rentals.  Has anyone used this flooring approach?  I would think its going to be durable and long lasting.   They typically have a texture, making easy to touch up.  I have seen estimates around $2 a square ft installed by a professional.  I expect it can be found cheaper.  

They charge $65 for each visit.  I am not sure if they charge $65 for the filter visit or if it is a lesser charge since it is a monthly service.

First American Home Warranty offers the service for investors.  They list a price for duplex and quads.  If you have over 5 units they ask you to call in for a price.  

The upgrade to premium which includes filters is $100.  It was not clear if there was a visit charge $65 for a filter.  They offer a price for duplex and quads, I assume that means rental.

Has anyone purchased a Home Warranty?  I am looking for feedback on this idea.    

The cost is between $400-600.  A quad would cost $1,100  ($275 a unit).  Typically, the cost of maintenance is estimated in the 1% of purchase price  range, this seems to fit the numbers.  It may not be cheaper, but it seem easier.  The cost should not be any more expensive either.  There is something to be said for smoothing out highs and lows of expenses associated with maintenance. 

It is not something for every property, but there are a few areas I think it would be a good fit?

1. Out of town owners - One number to call for all service

2.  War Zone properties - they have an option to change the AC filters monthly

3.  Multi units - at $275 per unit

4.  Highly leveraged properties with our significant cash reserves. 

Not a big fan of COC. It is not a good measure since it is unduly influenced by financing.

1. What is the COC on a property that you pay cash for. COC is horrible, cash flow is great.

2. What if you could finance a property for zero down, your COC is infinite.

After the first year or once you cover your cash, the number is not very telling.

I generally like to keep it simple.  Look at the Gross rent multiplier.  This tells you the performance of the asset independent of financing.  Second, I look at the cash flow.  After you pay all your bills, what is left over.  There is a lot of art to figuring out the expenses, you can use 50% as a rough default.  Is the building in good condition or bad?  What type of people will live in it?  What is the vacancy rate, is it in a hot part of town? etc.  

The argument the municipality will use is zoning.  You could not get a hotel approved to be in a residential neighborhood, so why can a single room hotel be allowed?  In truly residential areas, there is a valid point.  I live in an old beach town and there are hotels and retail next to residential housing.  They will have a more difficult time passing a law to limit these rentals.  The fact is they were never expressly legal, only in a grey area.  Under 7 months rental in Florida is a hotel and requires a bed tax.  I believe in time municipalities will allow a limited number of  licenses to rent short term.  This will limit the number and regulate behavior.  The municipality will then get its cut.    

It does not seem like it would work if you stayed under the 5k price point. 

There are currently 8 empty lots for sale in Jacksonville that are under 5k.

With a 25% tax bracket you would have to pay less than $1250 to work.

The example above sites a property bought at 1k that appraises for 20k.  Getting a bank loan against it sounds like it could be a better play if the property would appraise at 20k, assuming you would find a lender to write the loan. 

Jacksonville Florida is a great place to invest.  I can not say why, but the numbers just work.  Florida is a landlord friendly state.  The market is coming back strong, we were hit hard by the crash.  Florida is a legislative state which means it was slower than other states in getting the foreclosed inventory on the market.  As a result we are seeing steady growth and the inventory is still coming online, keeping prices under control.  Rents have been steadily going up as employment increases.

If you are interested in more info you can PM me.

The problem with 10% on $200k is the monthly  P&I 1,755 plus tax and insurance.  This is going to be tough on a $200k buy and hold property.

I think the play is to borrow enough money for the down payment on a property.  You should do a commercial property 5+ units, so the evaluation is on the property not your credit.  You could theoretically leverage a $1m property.  The bank loan would be more in the 5-7% rate.  Which is a viable place on a multi family.  

The firs question is do you want to live in that neighborhood?  If the answer is no, then pass on the house hack.

If you want it as an investment, buy it in an LLC, not in your name, should it go sideways you have exit strategy. Beyond that you have the potential for great cash flow. I have not see many places rent for less than $500, regardless of location condition. Given that as a rental floor, as long as you stay well under $50K all in, you should be fine even with property management. You will need top make sure the repairs are not going to push you over the top.