All Forum Posts by: David Zhang

not yet I am trying to get my second tenant in.  But the purchase has been good for me so far, I will look for another single family house next year

Hi BP community, I would like to form a real estate partnership with friends I've known for years to accumulate rental properties. My self included, there will be 4 members. This setup will allow us to accumulate down payment much faster thus allowing us to purchase at least one rental property each year. Our fund contribution may be unequal for each rental property we buy, what kind of entity is best suited for this type collaboration. Thanks.

@Joe, It looked like you did a fantastic job for your 2nd rehab....well done! Did you hire a general contractor to oversee the rehab or did you manage the whole process yourself? I always wanted to do a flip but having cold feet. From the before and after pictures, this was a major rehab. The rehab house looks very modern and sleek. How long did it take to complete this project and in your opinion what was the hardest part in the rehab process? Good luck on your next flip!

@Manny Cirino, I am also having trouble following your math. A $117,000 30 year loan at 6.75% paid over 8 years shouldn't produce an equity of $76,540. I haven't done a thorough calculation but it should be considerably lower around $20K.

I am so glad Grant has posted this question. I have a similar situation where I own my home free and clear. It is worth around $250,000. I am thinking about flipping homes next year after I educate myself on the process. I am thinking about doing 1 to 2 flips a year to supplement my income. Is HELOC the best or cheapest way to fund this project? Other than the interest rate, are there any large fees when it comes to getting a HELOC? Thanks!

@Cuong Le, since it was a cash purchase, I didn't buy insurance and it wasn't mandatory. The condo covers all external repairs so that's why I didn't buy any insurance. After reading the analysis here, I will look for single family residence for my next rental. I think I will have to go to the suburbs outside the beltway to find houses between $100000 to $150000 which can rent between $1000 to $1500. I suspect any home that rent higher than $1600 will have a harder time renting.

Thanks Sharon, I will study the cypress Fairbank area to see if it fits my criteria. I went on har.com and saw most homes on sale are already option pending. Something must be attracting buyers to buy there. I am a bit concerned that it's pretty far out from the city center and I wonder if the rush hour commute will drive renters away.

Thank you all for your insights. I knew the return on my cash was somewhere near 6 to 7 percent when I was contemplating whether to buy this property. At the time I wanted my first rental to be super conservative as I gain experience. I did learn a bit about the process of remodeling, how much and how long it takes to remodel. I also find that there are a lot hidden expenses when it comes to real estate. I had to pay a month of rent ($1000) to the agent to have her listed in Houston's MLS. If I were to financed my property, in the best scenario I might cash flow around $200 per month. That means it will take 5 month of cash flow just to have the property rented. I just feel like these cost are significant when using leverage, any hiccups in terms of vacancy or unexpected repair will wipe out an entire year worth of cashflow. I think the bottom line is that I don't understand the market all that well and that's why I am being extremely conservative. I will try to find a property without a hefty monthly maintenance fee but those town homes are all new builds in the 250000 to 500000 range if I want to be in the Texas medical center market. I am speculating it won't be easy to rent property at the $3000 to $4500 range. All older townhomes and condos in the area have significant maintenance fees.

I have stumbled across BP a week ago and is amazed at how we as a community so willingly share our real estate experiences and opinions. Needless to say, I wish I had found this site before I bought my first rental property this February. I want to provide the numbers to the community and see if you guys and gals can provide me with some inputs. First of all, I am a 35 year old passive investor located in Houston, TX that has a demanding day job. I am not handy at all when it comes with home repairs or maintenance. My goal is to have 5 to 6 rental properties in 5 years as a source of side income but have no plans of quitting my day job anytime soon. With my current job, I can save about $3500 / month which can be used to invest in future rental properties. Below is the a condo I bought near my work this February.

Area: Near Texas Medical Center in a very nice safe neighborhood with good schools.

Property Type: 860 sq ft 1bed/1bath Condo.

Cost: $81000

Remodeling Cost: $6000

Finance Term: ALL Cash

Currently Rent: $1000

Maintenance Fee: $285 / month

Property Tax: 195 / month

Repair Budget set aside: $50 /month

Cash Flow: $1000 - $285 - $195 - $50 = $470

Cash on Cash Return: ($470 * 12) / $87000 = 6.5% (approximate)

My question is if this is a good investment to own. After reading the discussion forums here, most investors are looking for deals close to 20% Cash on Cash return so my investment looks pretty bad in comparison. What I like about this rental is it is very very easy to rent, it literally got snatched up the first day my realtor put it up for rent. It is easy to manage as it is a condo and the maintenance fee covers all the external maintenance of the property. If you feel this investment is not a good one, please provide some alternative way to invest this capital. Thank you guys for taking the time to analyze my situation and any input is greatly appreciated.

Dave