All Forum Posts by: Luis Fernandez

@Carlos Altamirano

I understand that leveraging provides a better ROI but I'm not interested in debt though I know it is the good kind. What I want is to pay cash and get the best price - cash is king. I'm looking to get the property paid off within 5 years as in getting my cash back. I want nothing less than a duplex preferably more units in a building or lot. Do you know of something like this?

@Charles Worth

Good points made here.. A friend of mine has gone through the ropes with what you've mentioned here. He's from California and buying property here in STL since 2012 - 21 units and climbing. He's mentioned the issue with local handymen and their cynicism with doing business from out-of-state land owners. It has taken him some time to build a relationship with a few good men and is willing to give me their contacts and introduce me to them as a head start. He's also had his issues with management. He currently gives his manager free rent and it has worked out ok so far - been about a year into it. However, my friend takes the house calls in the form text messaging and then gets in contact with his handyman, when the job or issue is resolved, wires the payment via an app. The manager is more of a messenger and his eyes and ears if he needs someone physical. He's have to spend some time in-state to resolve similar issues you've mentioned once being about 4 months which was due to a drop in vacancy of 6 out of 8 tenants over night. He resolved it and now has 100% filled by dropping the rent from $500 to $450 and doing some marketing - he learned this through trial and error after trying several things which he said gave much insight and was very educational. However, my friend is also making a 40-something% return and is expected to pay off this 8-plex in 4 years. I think it depends heavily in how much flexibility you have in your profession. He's a software developer that works on contracts. I am a hotel business owner. Less flexible than his situation, however, if I had to I can catch a plane relatively with short notice to attend, for example, an eviction. I'm interested in cash flow - high risk = high returns. 

@David Ferrette I'm good with understanding the difference between revenue and cash flow. I've mentioned them both with the context I had in mind. As far as understanding the numbers, apart from knowing things such as the cap rate, following the 1% rule or the 70% rule, etc.., estimated margins, estimates for repairs based on both types of inspections and appeal, rehabbing, taxes, vacancy rates, market trends, local rental amounts, service providers, ..etc what other criteria do you use to assess a good or bad investment? There comes a time when you have to put the literature down and get rolling with the practice. I never read a book on hotel management until a couple of months after I started running it. I actually never finished the book - got to about 3/4 of it. Yet, I was able increased revenue, yes revenue, by over a 100%. 

@Steve Christensen a deal similar to your client's is something I'd be interested in. I want to be able pay off the property within 5 years. My simple equation is this which I'll use your client's purchase as an example: $1,200 rent per month potential divided by 2 (50% of the monthly income goes to taxes, insurance, non-vacancies, bills, damages, etc..) which leaves us with $600 per month in cash flow. Now I divide $600 into $30,000 and that give me 50. Which is 50 payments of $600 to pay off $30,000 which is 4.16 years. So it's less than 5 years to pay off the property. Do you have any more deals of this nature? If possible, triplex and above.

@Jared Carpenter 

Yes this would be my first and I am the only investor.

@Michael le can you go into details why the expenses would be higher in that type of area apart from the rehabbing?

@Cody L. A friend of mine, which is now more of a mentor, bought an 8-plex at $82,000 + $20,000 in rehab in the hood in STL, MO. The 8 units are renting for $450 - all are studio units. He's pulling in $3,600 per month in revenue. He bought at the beginning of last year. Though they're less common than the past This is what I'm looking for.