All Forum Posts by: Account Closed

@Bill Jacobsen thank you. I can hear the years of experience in your post. I needed  that extra perspective. When negotiating with the seller it will help keep me grounded. 

  @Jeff McCaskey appreciate it. 

whats your thoughts on the additional cashflow potential on the property? with the $2,280 of potential additional cashflow thats an extra $95/month per unit bringing the duplex cashflow upto $383/month. some will take time but I would say half of the increase such as the trash and lawn can be realized in the first couple months.

Your thoughts are appreciated!!!

currently negotiating:

Duplex, unit 1 = 2bed/1bath, unit 2 = 2bed/1.5bath. no garages but plenty of private off street parking.

Asking: $77k, currently negotiating, below expenses are assuming a negotiated 68k purchase price. 

Rent: 525(4yr tenant) + 575(7yr tenant)= 1,100/month, 

 This property is a C class, nearly a B class neighborhood.

Property ANNUAL Expenses:

$(660) 5% cap ex

$(660) 5% maint.

$(660) 5% vac., typically has longer term tenants

$(1,056) 8% prop. management, although will self manage foreseeable future

$(1,535) prop. taxes

$(840) prop. insurance

$(600) trash - this could be removed, he is providing a dumpster but city has free trash

$(1320) snow removal & lawn care, tiny yard

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$(7,331) total annual property expenses, not including mortgage

$(3,543) Mortgage 30yr, 5% fixed, $68k purchase price, 20%down =54k mortgage

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$(10,874) total expenses including mortgage

$13,200 total ANNUAL Rents

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$2326 - annual cashflow (average $193/mo), 

$15,000 - upfront cash invested, the 20% down on mortgage + 2k closing, misc.

$2,280 - additional annual cashflow potential through expense cutting and rent increases

there is about $7k of differed maintenance of mainly cosmetic interior updates/flooring once the long term tenants eventually move out. The current owner bought the property as condemned, in coordination with the city & permitting to get certificate of occupancy, he had to put in all new copper plumbing, new waste lines, new central HVAC, new siding, new windows, new roof. Also, the city has free trash but he has a dumpster in the property parking lot which costs are split with the next door duplex. I think its dumb, he says he uses it too occasionally when he needs to get rid of stuff they can use city trash at no cost just get some trash cans, that would be a $600/yr savings. Also rents are depressed because of him not raising rents on long term tenants, should be atleast $600/unit so there is another $1,200/yr in possible income in the future once deferred maintenance and some tenant turn over occurs. I also think the lawn care can be removed. extreemly tiny lawn only in front could be changed over to mulch with low maintenance basic landscaping which would be an additional $480/yr in savings.

this would be my official second investment property

should I do it at 68k? thoughts?

@Tyler Beley method ive used in the past and its worked: 

search for Sold listings under $50,000 in whatever search you use such as zillow. typical/conventional mortgages are generally not available/difficult to find under that price threshold. Most buyers under that threshold are investors and/or cash buyers because of that fact especially the lower dollar amount you go. find the addresses using that method, use the assessors site to find the name of the owner.... there you go! 

allot of the time you will find company names as the owner, then its just a matter of a simple google search for a phone number.

@Daniel Mohnkern  couldnt of put it better. dead on correct.

Why do you want to go to college? become a teacher or something to make wage and create debt?

Never fully understood college. Pay an institution 10's of thousands for years while making a crap wage just so you can end up having to work for a living, HA. 

Maybe its because I didnt even finish high school and yet it wasnt difficult to climb to the top of a company get a 6 figure income in my 20's while all my friends are paying on their degrees with their 30 or 60k/year unrelated jobs that their college education "helped" them get.

if you want to make money, figure out a way to make money, this is the easiest country to do it in. Truly amazing. It simply takes drive and motivation, something that will beat out any college grad if you have enough of it.

You know whats crazy, 12 years of free education offered in this country yet none of those years are focused on how money works when really 1/3 of those years should be dedicated to the topic. Then kids pay for more schooling and still dont learn what they need to know, most people will spend their lives working for something that they never simply took enough time to understand, it is truly sad. ( understand how money works = make you rich) 

Read the book "Rich Dad Poor Dad". Thats college education class 101. Seriously, read it.

Im terrible at reading books, poor attention span, probably less then 10 books finished front to back in my 29 years. That said, this book kept my attention, great book! Buy assets/stuff that puts cash in your pocket in life not liabilities sums it up. Its simple thought processes that just make sense and I think thats what makes it so great

 @David Krulac 

2% rule applies to ARV/total investment, it does account for maintenance. example, 70k property plus 30k maintenance = 100k, 2% of 100k. never 2% of purchase price.

same as 50% rule, its always total investment, as in once the property is made "turn key". Otherwise no matter what the rule or guide may be it would be impossible to use.

Both rules assume landlord doesnt pay utilities. or HOA's or mobile home park fees, etc.

Ben comes up with odd or extreme examples that where it doesnt work to try and disprove it. remember its a guide to start with as we all already know, anyone can come up with examples to disprove the 2% or the 50%, they are not meant for these extremes. I find that both rules can be used as a good pass or fail to allow me to not waste a bunch of time. Your "typical" rental investment which is what most of us are here dealing with.

not sure why its part of the lease, there is no benefit to you. at most it should be just a suggestion. I personally wouldnt want renters insurance if I was a renter, i understand they are supposed to because of your lease. 

In allot of cases insurance is simply a waste of money, If your renter is wise with how money works and doesn't have much value in his personal possessions then self insuring/no renters insurance would make the most sense. Kinda like when your at home depot and they ask you if you want to pay 20% more for the extended warranty on that $50 item..... just like anything there is a cost/benefit analysis, just because they are renters doesn't mean they are unwise with money. 

This is a very small issue for you to be wasting time worrying over, there will be larger issues in the future where you only wish your only problem was that your tenants have no renters insurance. Don't stir a pot that doesn't need stirring.

hi @Stacy Mcintosh 

feel free to add me to your buyers list if you land any wholesale contracts. Im picky but I will always atleast check out what your offering to see if I like it.