All Forum Posts by: Marcus Johnson

My philosophy is that you make your money when you buy the property. So unless your embarressed by your offer it's too high. A general rule I use is 20-30% off the average comps in the area, minus the expenses to fix it up. That is how I arrive at my numbers. I currently have an offer out on a property that sold for 187k in 2007, it's a short sale where they listed it for 150k and then lowered it to 139k. I offered 105k and will need to spend 5-8k to fix it up for renting. I'm looking for good deals when I buy. You can never make that up with cutting back in other areas.

Don't tiny dogs poop and pee? So doesn't that mean they can still damage your property. I have an offer on a sfh that I plan on renting and I won't allow pets because I don't want to repair the damages and have the place start smelling.

Using the 2% rule your rent is 1.23% so isn't that really low. Also using the 50% rule if your rent is 1200 that means expenses will eAt up $600 your mortgage is 500 so you might just break even.

Thanks for the explanation on your use of Arm mortgages. So that means if you carry the property for 10 years you could be at 8% per property. Ouch! I just like to think of worse case scenarios. The other question I have is "If you have 10 properties that cash flow, then why do you need to borrow money anymore?". Are you not making any money?

My biggest question would be "why would you divan arm when interest rates are at an all time low and can only go up. What happens if you hold it past 5 years and rates go to 10%.

Question that no one has asked. Why is your sisters family allowed to live in this house for free? Shouldn't the free rent be deducte from her portion of the house? I'm not trying to be a jerk but why can she not afford rent somewhere.

IMO, if your going to be doing a lot of hands on work, don't buy the cheap stuff like Ryobi or craftsman. I'd suggest brands like Rigid, Milwaukee, Dewalt, Bosch. Once I jumped into bigger jobs, I've had to buy all new equipment because I went cheap. Some commonly used tools to own would be: Chop saw, skil saw, cordless and corded drill, table saw and a very good multi-level ladder that can break down and fit in a car or small truck. Trust me don't buy cheap.

I initially wanted to flip a home but found that the homes I was looking at would require 15k to 20k down and another 40k to rehab, so I've turned to a kind of mixture of that idea. I just put an offer on a sfh, 1380 sq. ft home, 3/1/3 that I am planning on spending 5k to 8k to rehab and rent out. I'm putting 15% down and offered 105k with 3% closing costs.

Do you have a long term relationship with your bank, because it sounds like you need to find a different bank that is willing to work with you. I have belonged to my credit union for 30 years and they are willing to make the deal work with an 85% loan.

Remind you that all foreclosures occur with someone who has a mortgage. When you pay in cash you don't have that risk. I have calculated my own risks when borrowing money and have a backup strategy in place if something should happen, but if you have no money and no assets and all you do is borrow money your in for a hurting. In addition if you don't calculate risk when borrowing money from someone else you will certainely lose your shirt and it won't just be your credit score. You'll file for bankruptcy and lose your car, your home and no credit score which means good look trying to rent an apartment and your insurance premiums go up. Never assume that the worse case scenario won't happen, Murphy has a way of rearing it's ugly head.

Here's my thought. So would you rather have 10 properties all worth 100k with 20% down cash flowing $600 with the 2% rule or have 3 properties all paid for cash flowing $1066.00. I guess it depends on your level of risk, right?